MARIRAJAN PERIASAMY,CHENNAI vs. INCOME TAX OFFICER, WARD-5(3)(4), BANGALORE

MARIRAJAN PERIASAMY [assessee/appellant] filed this appeal against the order dated 31-10-2025 passed by the Ld. National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] for Assessment Year 2017-18. By the said order, the ld. CIT(A)

The relevant facts, in brief, are that the assessee is an individual seafarer who earned foreign-sourced salary during the relevant financial year, which was deposited into his Non-Resident External [NRE] account and Savings Bank account.

The ld. AO observed that the assessee had not filed any return of income and, treating him as a non-filer under the risk management strategy, recorded that he had a strong financial background. After following the procedure prescribed u/s. 148 of the Act, notice was issued on 15.2.2024. The ld. AO noted that the assessee had earned interest on securities from HDFC Bank amounting to Rs.2,26,369, on which TDS was deducted u/s. 194A. As per SFT005 information, the assessee had made time deposits of Rs.59 lakhs with HDFC Bank Ltd. and Rs.7 lakhs with SBI. Notices u/s. 142(1), including a show cause notice, were issued. Since no response was received, the ld. AO issued notices u/s. 133(6) of the Act to HDFC Bank and SBI. Based on the information obtained, the ld. AO noted that the assessee had made a fixed deposit of Rs.59 lakhs with HDFC Bank and earned interest of Rs.2,26,639, and that total credits of Rs.18,81,231 appeared in his SBI bank account. In the absence of any reply, the ld. AO made an addition of Rs.80,07,600 u/s. 69A of the Act and assessed the total income at that amount by passing the reassessment order dated 20.3.2025.

The assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) issued three hearing notices dated 26.5.2025, 4.7.2025 and 22.8.2025; however, the assessee sought adjournment only in response to the notice dated 26.5.2025. Referring to the taxpayers’ charter, the ld. CIT(A) held that the assessee was expected to make timely submissions and, accordingly, upheld the AO’s action and dismissed the appeal.

The assessee appeared in person and submitted that, being a seafarer, he remains onboard ship for about 6 to 9 months in a year. For this reason, he was unable to respond personally to the notices issued by the AO and the ld. CIT(A).

He submitted that he had filed his return of income on 19.3.2025, before the assessment order was passed. Had the return been considered, the addition would not have been made. He further submitted that, along with the return and his submissions before the ld. AO, he had furnished complete payment details for several years, tabulating his salary income, and that TDS had also been deducted in his case.

Regarding the HDFC Bank account, he explained that the fixed deposit of Rs.9 lakhs was made from the balance of Rs.12,39,151 available as of April 2016. He further submitted that the fixed deposit of Rs.10 lakhs made in July was also funded from the bank balance of Rs.15,55,087. The fixed deposit made in August, according to him, was created from the redemption proceeds of an earlier fixed deposit of Rs.9 lakhs, redeemed one day before the new deposit. He referred to each fixed deposit receipt and identified its source in the HDFC Bank account. He further stated that, since the AO had obtained the HDFC Bank statement, the narrations therein would themselves have shown that no unaccounted income existed in that account.

With respect to the SBI account, he submitted that his monthly salary of approximately Rs.1,70,000 was credited to that account. Out of the yearly balance of about Rs.17 lakhs, deposits of Rs.10 lakhs and Rs.7 lakhs were made on 9 March. He further stated that his salary certificate and payment advice had been furnished, but the addition was nevertheless confirmed. According to him, the addition was made only because there was some delay in submitting the details.

He further submitted that his return of income reflected gross total income of Rs.30 lakhs and a refund due of Rs.18,480. He stated that, as a non-resident, his interest income was exempt u/s. 10(4), and that the salary of Rs.22,98,043 received from a foreign vessel was also exempt. He also submitted that he had filed a rectification application u/s. 154 before the ld. AO, which had not yet been considered.

The ld. DR submitted that both the ld. AO and the ld. CIT(A) had issued several notices to the assessee and, in the absence of any response or supporting information, the addition was rightly made.

We have carefully considered the rival submissions and perused the orders of the lower authorities. We have also examined the return of income filed by the assessee in response to the notice u/s. 148 of the Act, along with the income declared therein and the relevant provisions relied upon to claim exemption. However, the return was filed only one day before the assessment order was passed. The assessee has also explained that, due to the nature of his employment, he remains onboard ship for most of the year.

On verifying the assessee’s HDFC Bank account, we find that most deposits were made either from the accumulated bank balance or from the maturity proceeds of earlier FDRs. The bank statement itself discloses the sources of the FDRs noted by the ld. AO. Since ld. AO had already obtained the bank statement u/s. 133(6) of the Act, the source of funds for the FDRs was evident from that statement. The ld. AO could also have sought specific details of the FDRs reflected therein. In these circumstances, had the bank statement been properly examined, the addition could not have been made.

On examining the assessee’s SBI bank statement, it is clear that the deposits were sourced from his monthly salary received from employment on a foreign ship. The account itself is identified as the assessee’s NRE account, and each credit entry reflects salary received by transfer. Had the ld. AO sought even basic details from SBI, he would have known that the assessee was drawing salary from Carnival Cruise Line Inc.

The SBI and HDFC Bank statements themselves clearly establish that none of the additions was warranted.

The assessee filed his return of income on 19.3.2025, apparently one day before the assessment order was passed. We also note that the assessee had total prepaid taxes of Rs.22,637, which formed one of the bases for initiating the reassessment proceedings. Had these details been objectively verified, the addition would not have been made.

In the Statement of Facts filed before the ld. CIT(A), the assessee had clearly set out the above facts and also referred to the return of income filed by him. However, the ld. CIT(A) dismissed the appeal without considering these materials. Since Form 35 specifically requires a Statement of Facts, the ld. CIT(A) could not have ignored it while deciding the appeal; otherwise, the requirement to file such a statement before the First Appellate Authority would be rendered meaningless.

In view of the above, we restore the appeal to the file of the ld. Assessing Officer for fresh adjudication. The assessee shall furnish all relevant information within 30 days from receipt of this order. The ld. AO shall thereafter decide the matter afresh after verifying such details and considering our observations regarding both bank accounts.

In the result, appeal filed by the Assessee is ALLOWED for statistical purposes. Order pronounced in the open court on 19th June 2026.