ITAT Reduces S.69A Additions on NRI’s Account to ₹63,133 from ₹2.28 Cr [Read Order]

The bench of the Income Tax Appellate Tribunal, Ahmedabad, has partly allowed an appeal concerning additions made under Section 69A of the Income Tax Act, 1961. The Tribunal ruled that except for an amount of ₹63,133, the assessee had satisfactorily explained the sources of deposits in his NRE/NRI accounts, thereby setting aside the majority of the additions proposed by the Assessing Officer (AO).

The appellant, Somnath Bandopadhaya, a non-resident, had not filed his return of income for the Assessment Year 2018-19. Based on information received, the Revenue observed substantial financial transactions and issued a notice under Section 148 of the Income Tax Act.

In response, the appellant filed a return declaring a total income of ₹3,86,620/-. The AO, however, issued a draft assessment order under Section 144C of the Income Tax Act on 17-03-2023, proposing an addition of ₹2,28,14,293/- as unexplained money under Section 69A read with Section 115BBE.

The appellant filed objections before the Dispute Resolution Panel (DRP), which considered two remand reports dated 30-11-2023 and 21-12-2023. The DRP concluded that the nature and source of funds were not adequately explained.

Consequently, the AO passed the assessment order dated 19-01-2024, sustaining the full addition of ₹2,28,14,293 as unexplained money.

Represented by P.F. Jain, the Appellant argued that all deposits were explained with supporting evidence, including bank statements from HDFC Bank and SBI, investment details, and an employment verification letter. It was contended that the remand reports acknowledged the explanation of most entries and confirmed their verification. The appellant contended that ignoring these verifications and treating the entire deposits as unexplained was unjustified

Represented by Prathvi Raj Meena, the Revenue contended that the appellant failed to satisfactorily discharge the burden of proving the sources of deposits, thereby warranting the additions made under Section 69A of the Income Tax Act.

The Bench of Dr. B.R.R. Kumar, Vice President and Suchitra Kamble, Judicial Member observed that the remand reports themselves recorded verification of almost all transactions. The only unexplained entry was for ₹63,133/-, while the rest were adequately substantiated through bank statements and supporting documents.

The Tribunal held that disbelieving the employment verification letter and other evidence without basis was unjustified.

Accordingly, the Tribunal ruled that only ₹63,133 was liable to be added as unexplained money under Section 69A.

Consequently, the balance addition of over ₹2.27 crore was deleted and the appeal of the assessee was partly allowed.

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