DEV PRAKASH NIHALANI,AHMEDABAD vs. THE ITO, WARD-1, INT.TAXN., AHMEDABAD

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ITA 576/AHD/2025Status: DisposedITAT Ahmedabad06 May 2026AY 2016-176 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee's claim of foreign remittances through NRE accounts for the investment was not comprehensively examined. Therefore, the matter was restored to the Assessing Officer for fresh adjudication.

What were the facts?

The assessee, a non-resident, purchased an immovable property and faced additions for unexplained investment. The Assessing Officer and CIT(Appeals) made additions, but the CIT(Appeals) deleted one addition as a duplicate.

What were the issues?

Whether the source of investment in property from foreign remittances through NRE accounts was properly verified and whether principles of natural justice were followed.

Which sections of the Income-tax Act were involved?

Section 69,Section 147,Section 139,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri S. N. Divatia, AR & Shri Samir Vora, AR
For Respondent: Shri Rameshwar P Meena, Sr. DR
Pronounced: 06.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.576/Ahd/2025 (Assessment Year: 2016-17) Dev Prakash Nihalani, Vs. Income Tax Officer, 702, Popular Domain, Ward-1, S.G. Highway, Satellite, International Taxation, Ahmedabad-380054 Ahmedabad [PAN No.AGDPN6459P] (Appellant) .. (Respondent) Appellant by : Shri S. N. Divatia, AR & Shri Samir Vora, AR Respondent by: Shri Rameshwar P Meena, Sr. DR 05.05.2026 Date of Hearing Date of Pronouncement 06.05.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), Ahmedabad-13 vide order dated 30.01.2025 passed for A.Y. 2016-17.

2.

The assessee has raised the following grounds of appeal:

“1. Errored Addition of Unexplained Investment: The learned Assessing Officer (AO) erred in making an addition of the purchase amount of the property, The AO failed to cross-check whether the transactions were made from the appellant's bank account or not, resulting in an unjustified addition. 2. Double Addition of Rs. 50, 00,000/-: The AO, in the remand report, admitted that the amount of Rs. 50, 00,000/- represents TDS deducted on the payment made to the builder for the purchase of the property. The AO further stated that the transaction is duplicate and already accounted for.

ITA No. 576/Ahd/2025 Dev Prakash Nihalani vs. ITO Asst.Year –2016-17 - 2–

Despite this admission, the AO made a double addition of the same amount, which is contrary to the facts of the case and the remand report. The addition of Rs. 50, 00,000/- is, therefore, erroneous and requires deletion. 3. Improper Consideration of Transactions by CIT: During the assessment proceedings, the appellant disclosed all relevant facts regarding the source of funds for the property purchase, including the transfer of funds from the appellant's foreign bank account to his Indian bank account. The CIT, however, did not properly consider these transactions in passing the order under Section 250. The CIT failed to request additional information or clarification, despite the appellant being ready to provide all necessary documents. The order passed under Section 250 is, therefore, passed without proper verification and should be reconsidered. 4. Failure to Adhere to Natural Justice in CIT’s Order: The CIT passed an order under Section 250 based on the remand report of the AO, allowing an addition of Rs. 50,00,000/- as a duplicate transaction without seeking further clarification or giving the appellant an opportunity to explain the facts fully. This is in violation of the principles of natural justice, as the appellant was not provided with an adequate opportunity to present the necessary evidence. 5. Non-Consideration of Source of Funds and NRE Account Transactions: The appellant is a non-resident individual (NRI), and all funds for the purchase of the property were transferred from the appellant's bank account to the seller. These transactions were legitimate and supported by documentary evidence, which was not properly considered by the AO or CIT. The failure to account for the NRE account transactions in the assessment proceedings has led to an erroneous addition that should be deleted. 6. Inadequate Verification of Transaction History by the AO and CIT: The appellant had disclosed the source of funds for the property purchase, including details of the remittance from the foreign bank account to the Indian account. The AO and CIT failed to verify the transaction history, including the supporting bank statements. This oversight resulted in the wrongful addition of unexplained income. The addition made by the AO is, therefore, unjustified and should be set aside. 7. Violation of Fairness and Equity in Tax Assessment: The appellant has complied with all legal requirements, including filing the return in response to the notice under Section 148 and disclosing all necessary facts. However, the AO and CIT failed to apply principles of fairness and equity in their assessment and order, leading to unjustified additions. Therefore, the appellant requests the Hon'ble IT AT to consider the appeal in a fair and just manner, with due regard to the facts and evidence provided.”

ITA No. 576/Ahd/2025 Dev Prakash Nihalani vs. ITO Asst.Year –2016-17 - 3– 3. The brief facts of the case are that the assessee is an individual who had not filed his return of income for Assessment Year 2016–17 within the time prescribed under section 139 of the Income-tax Act, 1961 ("the Act"). Based on information available with the Department that the assessee had entered into high-value transactions in immovable property, the Assessing Officer reopened the case under section 147 of the Act after recording reasons and obtaining necessary approval. In response, the assessee filed return of income declaring income of ₹3,96,340/-.

4.

During the course of assessment proceedings, the Assessing Officer observed that the assessee had made investment in purchase of immovable property amounting to ₹1,00,00,000/- along with stamp duty and other charges aggregating to ₹1,05,90,020/-. The Assessing Officer was of the view that the assessee failed to satisfactorily explain the source of such investment despite being afforded opportunity of hearing. Further, the Assessing Officer also noticed that a sum of ₹50,00,000/- was paid to the builder, reflected in Form 26AS with corresponding TDS, for which also the assessee could not establish the source. Accordingly, the Assessing Officer treated the said amounts as unexplained investments under section 69 of the Act and made additions of ₹1,00,00,000/- and ₹50,00,000/- respectively.

5.

In appeal, the CIT(Appeals) examined the assessment order, submissions of the assessee, additional evidences, remand report of the Assessing Officer, and rejoinder filed by the assessee. The CIT(A) observed that the assessee had indeed purchased the property and made

ITA No. 576/Ahd/2025 Dev Prakash Nihalani vs. ITO Asst.Year –2016-17 - 4– payments through his own bank account, however, he failed to discharge the onus cast upon him under section 69 of the Act, to satisfactorily explain the source of such investment with cogent supporting evidence. The CIT(A) further noted that the claim of partial ownership or contribution from other sources was not substantiated by any documentary evidence, and even the additional evidences filed did not adequately rebut the findings of the Assessing Officer. Therefore, the CIT(A) held that the burden to prove the source of investment squarely lies on the assessee, which remained undischarged in the present case. Accordingly, the addition to the extent of ₹97,90,020/- (after excluding ₹8,00,000/- pertaining to a different year as admitted in remand proceedings) was confirmed. However, the CIT(A) deleted the addition of ₹50,00,000/- on the ground that it represented a duplicate addition already forming part of the total investment considered by the Assessing Officer. Thus, the appeal was partly allowed.

6.

The assessee is in appeal before us against the order passed by the CIT(Appeals) partly allowing the appeal of the assessee.

7.

We have carefully considered the rival submissions and perused the material available on record, including the additional submissions made by the ld. counsel for the assessee before us. The ld. counsel has contended that the assessee is a non-resident individual carrying on business in Dubai and that the entire investment in the property was sourced from funds remitted from foreign bank accounts to NRE accounts in India. The ld. counsel for the assessee submitted that that the Assessing Officer as well

ITA No. 576/Ahd/2025 Dev Prakash Nihalani vs. ITO Asst.Year –2016-17 - 5– as the CIT(A) failed to properly verify the bank transactions and did not afford adequate opportunity to substantiate the source of funds with supporting evidences. The ld. counsel for the assessee further been contended that the addition has been made without proper verification of bank statements and without appreciating that the transactions were routed through banking channels. The ld. counsel also argued that there has been violation of principles of natural justice.

8.

On a careful consideration of the entire factual matrix, we find that although the assessee has taken a specific plea regarding source of funds being remittances from abroad through NRE accounts, the same has not been comprehensively examined either by the Assessing Officer or by the CIT(Appeals). While the authorities below have highlighted the failure of the assessee to substantiate the source with adequate evidence, it is equally evident that the claim of foreign remittances and banking trail requires proper verification with reference to bank statements, fund flow, and supporting documentation. The issue, therefore, hinges on proper factual verification, which in our considered view, has remained incomplete.

9.

In the interest of justice and fair play, and considering the submissions made before us, we deem it appropriate to restore the matter to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall examine the claim of the assessee regarding source of investment, including verification of foreign remittances, NRE bank accounts, and corresponding fund trail, after affording adequate opportunity to the assessee to furnish all relevant evidences. The assessee

ITA No. 576/Ahd/2025 Dev Prakash Nihalani vs. ITO Asst.Year –2016-17 - 6–

is also directed to fully cooperate and place on record all necessary documentary evidences in support of his claim.

10.

Accordingly, the appeal of the assessee is allowed for statistical purposes and the matter is restored to the file of the Assessing Officer for fresh consideration in accordance with law.

11.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 06/05/2026

Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 06/05/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

1.

Date of dictation 05.05.2026 (Hon’ble Member dictated on his dragon software) 2. Date on which the typed draft is placed before the Dictating Member 05.05.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 06.05.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 06.05.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 06.05.2026 7. Date on which the file goes to the Bench Clerk 06.05.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………… 10. Date of Dispatch of the Order……………………………………

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