Case Details: Rajnish Kasturchand Ostwal vs. Income-tax Officer, International Taxation [2025] 180 taxmann.com 628 (Mumbai-Trib.)
Judiciary and Counsel Details
- Amit Shukla, Judicial Member & Girish Agrawal, Accountant Member
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Fenil Bhat for the Appellant.
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Satya Pal Kumar, CIT DR for the Respondent.
Facts of the Case
Assessee, a non-resident Indian, had been living and working in Dubai since 2001 and returned to India in 2021. During the relevant year, the assessee made a payment of Rs. 2 crores towards the purchase of a residential property in India, and the balance consideration was paid in succeeding years.
Since no return of income had been filed in India and information regarding an investment in property was received, a notice under section 148 was issued. Assessing Officer (AO) made an addition of Rs. 2 crores under section 69 on the allegation that investment in a residential property during the relevant year was unexplained, questioning “credentials” of the foreign employer or “authenticity” of the foreign bank statements.
The matter reached before the Tribunal.
ITAT Held
The Tribunal held that the assessee had produced a complete trail of funds, including bank statements, authorised dealer certificates issued by remittance service providers showing remittance to India, and corresponding inward credits in the NRE account from which the investment in the property was made.
It was further noted that the assessee had furnished additional evidence and clarified each component of the fund trail. Under Section 5(2), a non-resident is taxable in India only with respect to income that is received or deemed to be received in India or accrues or arises or is deemed to accrue or arise in India.
Thus, what is not taxable under Section 5(2) cannot be brought to tax indirectly through a deeming fiction under Section 69. Since the assessee had furnished a complete, satisfactory and credible explanation supported by independent evidence, the addition made under Section 69 was wholly unsustainable.
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