Rahulkumar Narshibhai Patel Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, partly allowed an appeal filed by a Non-Resident Indian (NRI) against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2019-20. The dispute concerned additions made under Section 69A of the Income-tax Act on the basis of balances reported through the Statement of Financial Transactions (SFT) system in the assessee’s NRE bank accounts.
The assessee, an individual employed in Kuwait, did not file an original return of income for the relevant assessment year. Based on SFT/Insight information showing balances of ₹2.49 crore with HDFC Bank, ₹1.09 crore with ICICI Bank, and ₹3.77 lakh with ICICI Prudential Life Insurance Company, reassessment proceedings were initiated. The assessee subsequently filed a return declaring nil income. During reassessment, the Assessing Officer (AO) sought details of bank accounts, deposits, and reconciliation of the SFT figures. According to the AO, the assessee failed to provide complete documentary evidence or reconcile the reported balances. Consequently, the AO treated the entire SFT-reported amount of ₹3.63 crore as unexplained money under Section 69A and taxed it under Section 115BBE.
Before the Commissioner (Appeals), the assessee contended that the balances represented capital accumulated from foreign salary earned in Kuwait and remitted to India through NRE accounts. The assessee also argued that the AO had relied mechanically on SFT data without furnishing the underlying working or bifurcation of the reported figures. Additional evidence, including foreign bank statements, salary records, NRE account statements, and supporting documents, was admitted under Rule 46A, and the matter was remanded to the AO for verification.
