ITAT Ahmedabad Deletes ₹56.15 Lakh Addition on Alleged Unexplained Investment

NRI Status and Overseas Income at the Core of Dispute

The Ahmedabad “D” Bench of the Income Tax Appellate Tribunal has allowed the appeal filed by an NRI assessee, Vashdev Darianomal Kalwani, for Assessment Year (AY) 2015–16, deleting an addition of ₹56,15,441 made on account of alleged unexplained investment in immovable property. The sole issue before the Tribunal concerned the addition sustained by the Assessing Officer, Ward-2 (International Taxation), Ahmedabad, on the ground that the assessee failed to explain the source of funds used for purchasing property in India. The Revenue treated the investment as unexplained under the Income Tax Act, 1961.

Tribunal Accepts Source from Dubai Bank Accounts

Counsel for the assessee submitted that the appellant is a Non-Resident Indian, residing in the UAE since 1993, and does not earn any income in India except nominal bank interest on NRI deposits. It was demonstrated that the entire consideration for the property was transferred from the assessee’s Dubai bank account, as well as from his son’s overseas account, to the assessee’s bank account in India, from where the property purchase was made. Accepting this explanation, the Tribunal held that the investment was clearly sourced from overseas income earned in Dubai and duly remitted through banking channels. It observed that the case did not involve any unexplained investment warranting addition. Accordingly, the impugned addition of ₹56.15 lakh was ordered to be deleted.

The appeal was allowed in full