The Income Tax Appellate Tribunal (ITAT) in Ahmedabad has provided partial relief to an NRI working in Kuwait regarding an income tax case involving unexplained money additions.
- The case involves Specified Financial Transactions (SFT) reporting for the Assessment Year 2019-20 with total reported amounts reaching approximately ₹3.63 crore.
- The Assessing Officer had treated these entries as unexplained money under Section 69A after the taxpayer failed to provide adequate reconciliation.
- The ITAT ordered fresh verification for a specific HDFC Bank entry of ₹2,49,75,347 while deleting an addition of ₹5.52 lakh.
On April 24, 2026, the ITAT's 'D' Bench issued an order deleting an addition of ₹5.52 lakh, ruling it could not be sustained as unexplained money based on available evidence. The case is Rahulkumar Narshibhai Patel versus ITO, Ward-2, International Taxation, Ahmedabad. However, the tribunal ordered fresh verification for a specific HDFC Bank entry of ₹2,49,75,347.
The taxpayer had argued that these funds originated from foreign salary earned in Kuwait and accumulated overseas savings transferred to NRE and NRO accounts at ICICI Bank and HDFC Bank. While the ITAT accepted the remittance trail and fixed-deposit rollover documents for the ICICI Bank side, including an ICICI Prudential policy value entry, the HDFC Bank records remained unclear. The Assessing Officer has been instructed to conduct a transaction-wise verification of the ₹2.49 crore entry. The tribunal emphasized that if fresh verification confirms the funds represent remittances of overseas income or redeployment of foreign money, the addition should not be maintained solely because the money was deposited in an Indian bank account. The case highlights the importance of maintaining detailed documentation, including salary slips, foreign bank statements, SWIFT transfer records, and year-wise reconciliations for Gulf-based NRIs.
