From Rs 2.28 Crore to Rs 63,000: ITAT Ahmedabad Rules in Favour of Non-Resident Taxpayer

A non-resident Indian (NRI) taxpayer found himself at the centre of a taxing ordeal when the Income Tax Department issued a draft assessment order adding a total of Rs 2.28 crore as "unexplained income", raising his total assessed income to Rs 2.32 crore.

What made the case notable was the fact that he had filed his return belatedly, declaring his income to be Rs 3.83 lakh. Despite this, the department had alleged that he failed to explain several high-value transactions, invoking Section 69A of the Income-tax Act, 1951, which is unexplained money.

Case Taken To ITAT Ahmedabad

The non-resident taxpayer refused to accept this claim and took his case to the Dispute Resolution Panel (DRP) in April 2023. The DRP called for two remand reports from the assessing officer to cross-check the taxpayer's claims. After reviewing the reports, the DRP rejected most of his explanations and upheld the alleged amount to be his final income as the verdict.

This matter was further taken to the Income Tax Appellate Tribunal (ITAT) in Ahmedabad, where the allegations of unknown sources of income were slashed, and a cut of 97 per cent was given as a revision to the initial amount of Rs 2.28 crore to just Rs 63,133.

The reasoning by ITAT was clear: the taxpayer had produced all bank statements, fixed deposit details, investment records, and insurance documentations as proof of his explanations.

The ITAT also criticised the DRP and the assessing officer for ignoring the evidence and relying on assumptions. In the end, the appeal was partly allowed, and his unexplained income was reduced to a mere amount of Rs 63,133.