ITAT Deletes Rs. 56.15 Lakh Addition for Alleged Unexplained Property Investment

Shri Vashdev Darianomal Kalwani filed an appeal against the order passed by the Income Tax Officer, Ward-2 (International Taxation),  for AY 2015-16, whereby an addition of Rs. 56,15,441/- was made, treating investment in purchase of immovable property as unexplained. The Assessing Officer held that the assessee failed to establish the source of funds for the said investment.

Before the Income Tax Appellate Tribunal, the assessee submitted that he is a Non-Resident Indian residing in the UAE since 1993 and had no taxable income in India except bank interest on NRI deposits. It was explained that the entire investment amount was remitted from his Dubai bank account and partly from his son’s Dubai bank account to his Indian bank account, through banking channels, and thereafter utilised for purchase of the property.

Main Issue: Whether addition of Rs. 56,15,441/- towards unexplained investment was sustainable when the assessee established that the funds were remitted from Dubai bank accounts out of income earned abroad.

ITAT’s Decision: The Bench accepted the assessee’s explanation. The Tribunal recorded that documentary evidence showed transfer of the entire investment amount from Dubai bank accounts to the assessee’s Indian bank account, followed by utilisation for purchase of the property.

The Bench held that the case did not involve unexplained investment but an investment made out of foreign income remitted through proper banking channels. Therefore, the addition of Rs. 56,15,441/- was deleted and the appeal was allowed.

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