ITAT Relief: Overseas Earnings Legally Remitted Cannot Be Treated as Unexplained Investment:

ITAT Relief: Overseas Earnings Legally Remitted Cannot Be Treated as Unexplained Investment The ITAT Ahmedabad allowed the NRI assessee’s appeal, holding that the property investment was not unexplained. The funds were earned abroad in Dubai and legally transferred to India through proper banking channels. Therefore, deleted the entire disputed Rs. 56.15 lakh addition. The present appeal has been filed by Vashdev Darianomal Kalwani against the Income Tax Department in the ITAT Ahmedabad, challenging an order dated January 19, 2024, passed by the Income Tax Officer, Ward-2 Int. Tax, Ahmedabad. The case is related to the Assessment Year 2015-16.

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The key dispute is related to an addition amounting to Rs. 56,15,441 made to the assessee's income by the lower authorities on the grounds of unexplained investment in the purchase of property. The addition was made by the tax authorities, which was later confirmed by the lower authorities. The assessee thereafter approached the ITAT Ahmedabad, challenging the order. The assessee stated that he is an NRI (Non-resident of India) and has been living in the UAE since 1993. Also, highlighted that he has not earned any income in India except for the interest earned on the amount deposited in India's NRI bank account. The assessee further highlighted that the money used to purchase the property was entirely transferred from the assessee's bank account in Dubai and partly from his son’s Dubai bank account. This money was legally transferred from Dubai to the assessee’s bank account in India, and the same thereafter was used to purchase the disputed property.

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When the tribunal examined the facts of the case, it noted that the present case is not an unexplained investment. The money invested in the purchase of disputed property came from income earned by the assessee abroad in Dubai, which was properly transferred to India through proper bank channels. Hence, the lower authorities were not justified in sustaining the additions made by the tax authorities. Therefore, in conclusion, the tribunal allowed the assessee's appeal by deleting the impugned addition.