NITYA GOPALAKRISHNAN,USA vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE INT TAX 1(3)(1), NEW DELHI, DELHI

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ITITA 15/DEL/2026Status: DisposedITAT Delhi25 March 2026AY 2016-177 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had satisfactorily explained the sources of funds invested in the purchase of immovable property. The Tribunal noted that the assessee furnished requisite evidence demonstrating that a loan was taken from Bank of America in the USA, and an amount equivalent to USD 1,10,000/- was received in the assessee's Indian account on 05.01.2016. This amount, along with the opening balance in the account, was utilized for the payment of consideration of Rs. 1,88,95,500/- (including registration charges) towards the property purchase. The Tribunal found these facts evident from the chart and supporting documents placed on record. Consequently, the addition of Rs. 1,81,00,000/- under section 69 was deleted. Regarding the addition of Rs. 784/- on account of interest income from the NRE account, the Tribunal held that this income is exempt under section 10(4)(ii) of the Act. Therefore, no addition was called for, and this amount was also deleted. As the appeal was allowed on merits, the legal grounds raised by the assessee were rendered academic and not adjudicated upon. The operative direction was the deletion of the additions.

What were the facts?

The assessee, Nitya Gopalakrishnan, a non-resident, is in appeal against an assessment order dated 26.12.2025 passed by the Assessing Officer (AO) under section 147 read with section 144C of the Income Tax Act, 1961, for Assessment Year 2016-17. This order was passed pursuant to an order dated 16.12.2025 by the Dispute Resolution Panel (DRP) under section 144C(5). The primary dispute concerns an addition of Rs. 1,81,00,000/- made by the AO under section 69 for unexplained investment in immovable property. The AO initiated reassessment proceedings under section 147 after flagging information regarding the property purchase. The assessee had not filed a return for the relevant AY. The AO proposed the addition as the assessee could not establish the nexus between a loan taken in the USA and the purchase of property in India. The DRP upheld the AO's view, citing a lack of clear fund trail. The assessee's appeal before the ITAT challenges both legal and merit-based grounds.

What were the issues?

The Income Tax Appellate Tribunal (Tribunal) had to decide the following issues: 1. Whether the reassessment proceedings initiated vide notice purportedly issued on 16.04.2023 are without jurisdiction, as the same was not served upon the Appellant, and whether the conditions for income escaping assessment were satisfied (Section 147, Section 148, Section 148A(d)). 2. Whether the order passed under section 148A(d) dated 16.04.2023 is beyond the limitation period of six years, and whether the applicable time limit for issuance of notice under section 148 should be construed as three years, as the AO allegedly lacked possession of books of account or other documents revealing income chargeable to tax represented in the form of an asset or expenditure (Section 148A(d), Section 153(2)). 3. Whether the addition of Rs. 1,81,00,000/- under section 69 is erroneous, as the nature and source of investment were explained by documentary evidence, and whether the nexus between the US loan and Indian investment remains unsubstantiated (Section 69). 4. Whether the AO erred in insisting upon the production of Foreign Inward Remittance Certificate (FIRC) when there is no such requirement for credits to an NRE account (Exchange Control Regulations). 5. Whether the addition of Rs. 784/- on account of interest income earned from the NRE account is erroneous, as the same is exempt under section 10(4)(ii) of the Act, and whether the benefit of the basic exemption limit should have been given (Section 10(4)(ii)). Assessee's Contentions: - Reassessment proceedings and notice under section 148 are without jurisdiction due to non-service and non-satisfaction of conditions for income escaping assessment. - Order under section 148A(d) is time-barred as it is beyond six years, and the three-year period should apply as the AO lacked crucial documents. - The addition under section 69 is erroneous as the source of funds (US loan from Bank of America) and its utilization for property purchase in India are substantiated by documentary evidence, including loan notes and fund transfers. - The AO wrongly insisted on FIRC, which is not required for NRE account credits. - Interest income from NRE account is exempt under section 10(4)(ii), and the basic exemption limit should apply. - The AO acted behind the assessee's back by not providing copies of section 133(6) notices and third-party replies, breaching natural justice principles. - Additional evidence filed did not pass the muster of Rule 46A, which is inapplicable to section 144C proceedings. Revenue's Contentions: - The AO and DRP orders are to be upheld. - The assessee failed to show that the loan taken in the USA was specifically for purchasing property in India. - The trail between the loan taken and payments made for property purchase was not established before the AO.

Which sections of the Income-tax Act were involved?

Section 147,Section 144C,Section 144C(5),Section 148,Section 148A(d),Section 69,Section 153(2),Section 10(4)(ii),Section 133(6),Section 234A,Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI

Before: SHRI VIKAS AWASTHY, HON’BLE & SMT. RENU JAUHRI, HON’BLE

For Appellant: Adv. Sh. Shyam Gopal, Adv, Adv. Sh. Manish Kumar, Adv
Hearing: 17.03.2026Pronounced: 17.03.2026

IT ITA15_Del_2026_Nitya Gopalakrishnan vs ACIT

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’, NEW DELHI BEFORE SHRI VIKAS AWASTHY, HON’BLE JUDICIAL MEMBER & SMT. RENU JAUHRI, HON’BLE ACCOUNTANT MEMBER

IT (IT) A No. 15/DEL/2026; Assessment Year: 2016-17

Nitya Gopalakrishnan ACIT 2 Camas Court, Plainsboro, NJ Circle International Tax 1(3)(1) 08512, USA New Delhi (APPELLANT) (RESPONDENT) PAN No. BEZPG0002A Assessee Represented by: Sh. Manuj Sabharwal, Adv. Sh. Shyam Gopal, Adv. Sh. Drona Negi, Adv. Sh. Manish Kumar, Adv. Revenue/Department Represented by: Sh. Saroj Kumar Dubey, CIT (DR) Date of Hearing: 17.03.2026 Date of Pronouncement: 17.03.2026

ORDER PER RENU JAUHRI :

The assessee has filed the present appeal against the impugned assessment order dated 26.12.2025 passed by the Assessing Officer [for short, AO] u/s 147 r.w.s 144C of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for A.Y. 2016-17 in consonance with the order dated 16.12.2025 passed by the Dispute Resolution Panel (DRP) u/s 144C(5) of the Act.

2.

The grounds of appeal raised by the assessee are as under: “1 a) That, the reassessment proceedings initiated vide notice purported to have been issued on 16.04.2023 is without jurisdiction as the same has not been served upon the Appellant as the e-mail 1 | P a g e

IT ITA15_Del_2026_Nitya Gopalakrishnan vs ACIT sent to the Appellant on 16.04.2023 does not contain any attachment/ such notice, and also no service is effected through postal means. b) That, without prejudice, the notice under s. 148 is without jurisdiction as the conditions governing income escaping assessment have not been satisfied. 2. That, the order dated 16.04.2023 passed under s. 148(A)(d) of the Act is beyond the limitation period of six years (from the end of the assessment year) and is thus time barred and re-assessment proceedings on such basis are without jurisdiction. 3. That, without prejudice, the applicable time-limit for issuance of notice under s. 148 shall be construed as three years and not six/ ten years as the Ld. AO was not in possession of any books of account or other documents or evidence which revealed that income chargeable to tax is represented in the form of an asset or expenditure or entries in the books of account.

4.

That, without prejudice, the Ld. AO, while passing the order under s. 148(A)(d), mentioned that the matter pertains to “payments to non-resident” – which is egregiously erroneous, and thus, conclusively, he does not have any information regarding the transaction much less any evidence or books of account or documents which is a sine qua non for invoking extended period of limitation. 5. That, the Appellant, being a non-resident had purchased (and not sold) the immovable property in question (made investment and not earned income) and hence there is no question of any income arising in respect of the purchase transaction. 6. That, the Ld. AO has erred in not completing the assessment within limitation prescribed under s. 153(2) of the Act, and hence the final assessment order dated December 26, 2025 is time-barred. 7. That, on the facts and circumstances of the case and in law, the addition of Rs. 1,81,00,000 under s. 69 is erroneous as the nature and source of the investment stands explained by documentary evidence furnished by the Appellant before the Ld. AO/ Ld. DRP. 8. That, the Ld. AO/ Ld. DRP, has erred in concluding that the nexus between the US loan and the Indian investment remains unsubstantiated. 9. That, the Ld. AO/ Ld. DRP has failed to appreciate that the Appellant has demonstrated cogent evidence in respect of the investments made during the year, particularly the fact that the amounts have been remitted by the Appellant from its own bank account in the US to its NRE account in India.

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IT ITA15_Del_2026_Nitya Gopalakrishnan vs ACIT 10. That, on the facts and circumstances of the case, the Ld. AO erred in insisting upon production of Foreign Inward Remittance Certificate (‘FIRC) in as much as there is no requirement under the exchange control regulations to issue an FIRC in respect of credits to an NRE account.

11.

That, on the facts and circumstances of the case and in law, the Appellant, being a tax resident of the USA is not liable to be taxed in respect of alleged “Other Income” as India does not have any taxing right to tax such income.

12.

That, the Ld. AO has erred in not providing the copy of s. 133(6) notices along with the reply received from the third parties and thus acted behind the Appellant’s back and hence, there is a breach of principles of natural justice.

13.

That, the Ld. AO/Ld. DRP haserred in holding that the additional evidences filed by the Appellant do not pass the muster of Rule 46A of the Income-tax Rules, 1962, whereas the said rule has no application in respect of cases which are subject matter of proceedings under s. 144C of the Act, and hence the said conclusion is vitiated in law. 14. That, the Ld. AO erred in making an addition of Rs 784 on account of interest income earned from the NRE account as the same is exempt under 10(4)(ii) of the Act. Even otherwise, the Ld. AO should have given the benefit of basic exemption limit as the Appellant is an individual. 15. That, the Ld. AO, has erred in assessing the total income at Rs 3,62,00,784, leading to a double/ excessive addition of Rs 1,81,00,000 while drawing up the computation sheet whereas the addition in the assessment order was pegged at Rs. 1,81,00,000. 16. That, the Ld. AO has erred in levying and computing tax and education cess payable under the provisions of the Act/ Finance Act.

17.

That, the Ld. AO has erred in levying and computing interest under s. 234A of the Act. 18. That, the Ld. AO has erred in levying and computing interest under s. 234B of the Act. All the aforesaid grounds are mutually exclusive and without prejudice to each other. The Appellant craves leave to add, amend, alter, delete, rescind, forgo, or withdraw any of the above grounds of appeal either before or during the hearing before the Hon’ble Tribunal”

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IT ITA15_Del_2026_Nitya Gopalakrishnan vs ACIT 3. The assessee has raised multiple legal grounds besides the grounds on merits. The substantive issue in this appeal pertains to the addition u/s 69 of Rs. 1,81,00,000/- on account of unexplained investment in purchase of immovable property by the assessee. We first take up the grounds on merits. 3.1 Brief facts are that the assessee is a non-resident who had not filed his return for A.Y. 2016-17. Subsequently, based on information flagged by the risk management strategy of the department, regarding payment of Rs. 1,81,00,000/- for purchase of immovable property and Rs. 784/- on account of payment received, a notice u/s 148 was issued to the assessee on 16.04.2023. 3.2 As the assessee did not file his return in response to the notice u/s 148, the assessment was completed u/s 147. In response to the show cause notice, the assessee explained that the source of investment in purchase of property was the loan taken from Citibank in U.S.A. The documents evidencing the loan taken in U.S.A. were also furnished. However, Ld. AO observed that the assessee could not establish that the said loan was taken/utilised for purchase of the property in question. He, accordingly, proposed to add the entire amount of Rs. 1,81,00,000/- to the assessee’s income u/s 69 of the Act vide draft assessment order. 3.3 Aggrieved, the assessee filed his objections before the Dispute Resolution Panel [DRP, in short]. Vide DRP Order dated 16.12.2025, the proposed addition was held to be justified as the assessee could not furnish evidences to establish a clear fund trail from the Bank of America Loan Account to the purchase of

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IT ITA15_Del_2026_Nitya Gopalakrishnan vs ACIT property in India. Accordingly, assessment was completed at an income of Rs. 1,81,00,784/- vide order dated 26.12.2025. 3.4 Aggrieved, the assessee is in appeal before the Tribunal. 4. Before us, Ld. AR has submitted that USD 2,40,000/- were transferred out of loan taken from Bank of America to the assessee’s Indian NRE Account. These funds were in turn utilised to purchase the immovable property in India. In support of his submissions, the Ld. AR has filed the following chart showing availability of funds for purchase of property.

Requisite supporting evidences such as the loan note dated 23.12.2015, transfer of funds from Bank of America and payments made for purchase of property have also been placed on record. In view of above, the Ld. AR has argued that the onus to prove the source of funds has been adequately discharged by the assessee and hence the impugned addition is liable to be deleted.

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IT ITA15_Del_2026_Nitya Gopalakrishnan vs ACIT 5. On the other hand, Ld. DR has heavily relied on the orders of the Ld. AO and DRP. He has argued that even though loan was taken by the assessee in USA, he has not been able to show that the same was specifically taken for purchasing property in India. Further the trial between loan taken and payments made for purchase of property was not established before the Ld. AO. Hence the addition made by the Ld. AO deserves to be upheld. 6. We have heard the rival submissions and perused the material placed on record. We note that the assessee has furnished requisite evidence to show that the loan had been taken form the Bank of America in USA and the amount equivalent of USD 1,10,000/- was received in the assessee’s account in India on 05.01.2016. This amount together with the opening balance in the account were utilised for payment of consideration of Rs. 1,88,95,500/- (including registration charges) towards purchase of property. These facts are evident from the chart reproduced hereinbefore. We are, therefore, of the considered view that the assessee has satisfactorily explained the sources of funds invested in purchase of immovable property and hence the addition of Rs. 1,81,00,000/- is hereby deleted. 7. As regards the addition on account of interest of Rs. 784/- earned from the NRE account, Ld. AR has submitted that the interest income of NRE account is fully exempt u/s 10(4)(ii) of the Act. Even otherwise, the amount being small, the same would be non-taxable considering the basis threshold limit. After

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IT ITA15_Del_2026_Nitya Gopalakrishnan vs ACIT hearing both the parties, we hold that the interest income on NRE account being exempt u/s 10(4)(ii), no addition was called for and the same is hereby deleted. 8. Since the assessee’s appeal has been allowed on merits, the legal grounds raised by him are rendered academic and hence, not being adjudicated upon. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 17- 03-2026.

Sd/- Sd/- (VIKAS AWASTHY) (RENU JAUHRI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25. 03.2026 Pooja Mittal, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi

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