ITAT Remands Rs.80 Lakh Addition Against Seafarer After Finding Bank Records Explained Deposits

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has restored to the Assessing Officer the case of a non-resident seafarer whose bank deposits and fixed deposits aggregating to Rs.80.07 lakh were treated as unexplained money under Section 69A of the Income-tax Act.

The assessee, Mr. Marirajan Periasamy, worked as a seafarer and earned salary from employment on a foreign vessel. Based on information relating to fixed deposits and bank transactions, the Assessing Officer reopened the assessment for AY 2017-18 and, in the absence of responses to notices, treated deposits of Rs.80.07 lakh as unexplained money under Section 69A. The first appellate authority also upheld the addition.

Before the Tribunal, the assessee appeared in person and explained that he spent six to nine months each year onboard ships, which prevented him from responding promptly to departmental notices. He submitted that the fixed deposits in his HDFC Bank account were either funded from existing bank balances or from maturity proceeds of earlier fixed deposits. He further contended that deposits in his SBI NRE account originated from salary received from his foreign employer and that relevant salary records and payment details had already been furnished.

After examining the material, the Tribunal found that the HDFC Bank statements themselves revealed that most fixed deposits were sourced either from accumulated balances or from redemption of earlier deposits. The Bench observed that since the Assessing Officer had already obtained these bank statements under Section 133(6), the source of funds was apparent from the records.

The Tribunal also noted that the SBI account was an NRE account and the credit entries reflected salary receipts from employment on a foreign ship. According to the Bench, even a basic verification of the bank records would have shown that the credits represented salary income and not unexplained money.

The ITAT further observed that the assessee had filed a return of income before completion of reassessment proceedings and had also disclosed the relevant facts in the statement of facts filed before the Commissioner (Appeals). However, those submissions were not adequately considered while deciding the appeal.

Holding that the bank statements prima facie explained the source of the deposits and that the matter required proper verification, the Tribunal set aside the orders of the lower authorities and restored the issue to the Assessing Officer for fresh adjudication. The assessee was directed to furnish all relevant information within 30 days, after which the Assessing Officer would decide the matter afresh in accordance with law.

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