Tribunal holds SFT data alone insufficient and directs verification of foreign remittance claims.
Meetu Kumari | May 4, 2026 |
Unreconciled SFT Entries Not Enough for Addition, Rules ITAT
In Rahulkumar Narshibhai Patel v. Income Tax Officer, the assessee, a non-resident Indian working in Kuwait, faced reassessment under Section 147 based on SFT/Insight data reflecting large financial balances in India. The Assessing Officer treated the total amounts of Rs 3.63 crore appearing in HDFC Bank, ICICI Bank, and ICICI Prudential as unexplained money under Section 69A due to a lack of reconciliation and inadequate compliance during assessment. During appellate proceedings, the assessee furnished additional evidence, including foreign bank statements, salary records, and NRE account details, to establish that the funds were sourced from foreign earnings.
The CIT(A) admitted additional evidence and called for a remand report. Based on verification, partial relief was granted, but additions of Rs 2.49 crore (HDFC Bank) and Rs 5.52 lakh (ICICI Bank) were sustained for want of reconciliation.
Issue Before Court: Whether additions under Section 69A can be sustained in respect of NRE bank balances where the assessee claims the source to be foreign remittances, but reconciliation with SFT data is incomplete.
Tribunal Decided: The ITAT partly allowed the appeal in favour of the assessee. It deleted the addition of Rs. 5.52 lakh relating to ICICI Bank, holding that once the nature of the account (NRE) and primary source (foreign salary remittances) are accepted, a small unreconciled residual amount cannot be treated as unexplained without independent evidence.
With respect to the major addition of Rs. 2.49 crore in HDFC Bank, the Tribunal noted that the addition was based solely on unverified SFT figures without any transaction-level analysis. At the same time, since the assessee could not provide a complete one-to-one reconciliation, the Tribunal restored the issue to the assessing officer for fresh examination. The AO was directed to obtain complete details from the bank and verify whether the funds indeed represent foreign remittances or redeployment thereof, in which case no addition should be made.
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