Kuldeep Marwah Vs DCIT (ITAT Delhi)
Background: The assessee, Mr. Kuldeep Marwah, a permanent resident of the Republic of South Africa, was subjected to reassessment under Section 147 r.w.s. 144C(13) of the Income Tax Act, 1961, after certain high-value financial transactions were flagged under the CBDT’s Risk Management Strategy (NMS cases). These included:
- Investment in mutual funds: ₹19.2 lakh
- Time deposits: ₹1.3 crore
- Cash deposits: ₹19.1 lakh
- Closing balances in MF accounts: ₹18.93 lakh
- Foreign inward remittance (u/s 195): ₹58,998
The assessee had not filed his return for AY 2018–19, prompting reassessment and issuance of notice u/s 148 on 31.03.2022.
Disputed Issue:
The key issue pertained to a credit of ₹28.69 lakh received from Ms. Luo Jianxia, a resident of Hong Kong, which the assessee claimed to be repayment of a loan he had advanced abroad in earlier years. However, the Assessing Officer (AO) rejected the explanation under Section 69A r.w.s. 115BBE, holding the amount as unexplained money, primarily because:
- The assessee failed to furnish documentary proof of giving the loan.
- No bank statement of the loan transaction was submitted.
- Only a confirmation letter from the borrower was provided, which the AO found insufficient.
The DRP upheld the addition on similar grounds despite accepting the confirmation and attestation by the Hong Kong High Court.
