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Facts
The assessee, a non-resident Indian employed in UAE, purchased an immovable property and mutual fund units. The Assessing Officer treated these as unexplained investments and added them to the assessee's total income. The assessee claimed the funds were transferred from his UAE earnings to his NRO account in India. The CIT(A) dismissed the appeal regarding the immovable property but allowed it for mutual funds.
Held
The Tribunal held that the CIT(A) erred in not considering the bank statements and the fact that the assessee is an NRI who transferred funds from Dubai to his NRO account for the purchase. The Tribunal found that the source of funds was sufficiently proved and the observation regarding creditworthiness was incorrect.
Key Issues
Whether the immovable property and mutual fund investments made by the NRI assessee were sufficiently explained with regards to the source of funds, and if the lower authorities correctly appreciated the evidence submitted.
Sections Cited
69 of the I.T. Act, 1961, 115BBE of Income tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN
Before: SHRI INTURI RAMA RAO & SHRI SOUNDARARAJAN K.
PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 30/04/2025 in respect of the A.Y. 2017-18 and raised the following grounds.
The assessee had not filed his return of income for the A.Y. 2017-18. Based on the information available with the department, the AO had found that the assessee had purchased an immovable property and purchased some units in mutual funds and also made payment to non-residents. Thereafter notice u/s. 148 and notices u/s. 142(1) were issued on 27/01/2022 and 14/02/2022 in which some details were required by the AO. The assessee had not responded to any of the notices and therefore the notice u/s. 142(1) was served through speed post. Since the assessee had not responded to any of the notices, the AO had made the assessment by treating the purchase of immovable property as unexplained investment u/s. 69 of the Act. Similarly, the purchase of units in mutual funds were also added as income u/s. 69 of the Act. The AO based on the form 26AS had estimated the amount received at Rs. 1,32,612/- on which TDS of Rs. 30,677/- was deducted as income of the assessee. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The assessee filed an appeal before the Ld.CIT(A). The assessee also submitted the written submissions and also the assessee furnished the bank statements through online and submitted that the entire funds for the investments were through the accounting channel of the assessee. The assessee further submitted Indian and therefore for investments made in the property as well as the units, he had the sources. The assessee also further submitted that for the notices issued by the AO, the authorised representative had not properly responded and therefore the AO had made the ex-parte assessment. The Ld.CIT(A) without considering the said facts and the documents, had dismissed the appeal by saying that the explanation and the material submitted are not found sufficiently proving the credit worthiness of the assessee. Insofar as the investment made in mutual funds, the Ld.CIT(A) had allowed the appeal.
As against the said order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR submitted that the Ld.CIT(A) had not considered the facts that the assessee is an NRI and transferred the amounts from UAE to his NRO account maintained with Dena Bank and from the said credits available in the said NRO account, the immovable property was purchased. The Ld.CIT(A) had also not considered the bank statements filed by the assessee to show that the assessee is having enough funds in his bank accounts to purchase the said immovable property and therefore submitted that the order of the Ld.CIT(A) is an arbitrary one liable to be set aside.
The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
From the facts as narrated above, we understand that the assessee is an NRI and employed in UAE and also doing some small business in Dubai and from the said earnings, he has transferred the monies to his NRO account in India and out of the said amount available in his bank account, the assessee had purchased the immovable property. We have also considered the submissions that the assessee had submitted his bank accounts statements in support of his claim that he is having sufficient funds to purchase the said immovable property. The Ld.CIT(A) without considering the said bank statements and also the fact that the assessee is a non-resident and employed in UAE had observed that the credit worthiness of the assessee was not proved and dismissed the appeal.
We do not find that the said reasoning is correct since the assessee had transferred the funds from Dubai to his NRO account and from that account, the consideration was paid and purchased the property. In such circumstances, the observation of the Ld.CIT(A) that the credit worthiness of the appellant was not proved with sufficient documents is not correct.
We, therefore set aside the order of the Ld.CIT(A) and remit the issue to the file of the Ld.CIT(A) to consider the materials furnished by the assessee in support of his claim that he is having enough funds in his NRO account to purchase the said immovable property. We do not think that when the assessee has transferred the amounts from Dubai to his NRO account in India, there is no need to prove his credit worthiness.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 26th August, 2025.