Rajnish Kasturchand Ostwal Vs ITO (ITAT Mumbai)
NRI Salary Savings Fully Explained: ITAT Mumbai Deletes ₹2 Cr Addition—Complete Foreign Fund Trail Proved
In this appeal, the NRI assessee challenged reopening u/s 147 & the addition of ₹2,00,00,000 u/s 69 on the allegation that investment in a residential property in India was unexplained. Assessee had been living & working in Dubai since 2001 & returned to India only in 2021; hence no income arose or accrued in India during AY 2016-17.
During assessment & DRP proceedings, Assessee produced a complete, contemporaneous, & verifiable trail of funds:
– RAK Bank (Dubai) withdrawals of AED 12,00,000 (Sept 2015)
– Authorised dealer certificates for AED 11,65,000 remitted to India
– Axis Bank NRE account credits of ₹2,00,52,630
– Salary contract, UAE residence visa, Ministry of Labour employment listing showing employment since 2006
All payments towards the property were made from the NRE account sourced exclusively from foreign salary income.
Tribunal held that:
- Assessee is an NRI with no Indian income, & foreign salary is not taxable in India u/s 5(2).
- The entire fund trail from Dubai to NRE account to property investment is fully documented & matches withdrawals, remittances, & INR credits.
- Revenue did not rebut a single document nor undertake any verification despite having full powers u/s 133(6).
- DRP’s objections about “credentials” of employer or “authenticity” of bank statements were speculative & unsupported.
- Section 69 can apply only where investment represents income chargeable to tax in India, which was not the case here.
Since the explanation was fully proved & the source of funds clearly established, the Tribunal held that the addition u/s 69 was wholly unsustainable, & deleted the entire amount.
