2 weeks ago
ITAT grants NRI relief over ₹79 lakh flat tax notice
A man from India who now lives in America bought an apartment in Mumbai.
He paid for it from a special bank account that Indian people living abroad use.
For many years he did not tell the tax office about his money.
The tax office got curious and sent him a letter asking where the money came from.
They said he owed taxes on a large amount of money.
A group called the Dispute Resolution Panel looked at his proof and removed most of the amount.
The man still disagreed about a small amount of cash, so he went to a higher court called ITAT.
The court looked at his bank statements and said the cash was explained, so they removed that too.
In the end, the man won most of his case.
Keeping proof of where your money comes from can help you win tax disputes.
An NRI and US citizen living in America since April 2002 received an income tax notice over the source of funds used to buy a ₹79.9 lakh flat in Kandivali West, Mumbai.
He booked the property in 2011, executed the sale agreement on July 20, 2015, and made payments from 2011 to 2018, mostly via his NRE/NRO account with HDFC Bank; his NRI brother also made some payments.
Because he had not filed an income tax return, the tax department issued a Section 148 notice on March 23, 2023, and later proposed assessing his total income at ₹57,24,172.
The Dispute Resolution Panel (DRP) deleted ₹51.9 lakh as satisfactorily explained but confirmed a ₹1 lakh cash deposit and ₹4.32 lakh in stamp duty and registration charges as unexplained.
ITAT Ahmedabad deleted the ₹1 lakh addition after the NRI explained the cash deposit with HDFC Bank statements, and he submitted bank challans and documents for the stamp duty and registration charges.
- Who
- An NRI and US citizen living in America since April 2002, who bought a flat with some payments made by his NRI brother.
- What
- The Income Tax Department issued a Section 148 notice questioning the source of funds for the flat; ITAT Ahmedabad later deleted a ₹1 lakh addition after the DRP had already deleted ₹51.9 lakh.
- Where
- Kandivali West, Mumbai; the appeal was heard by the Income Tax Appellate Tribunal (ITAT) Ahmedabad.
- When
- The property was booked in 2011, the notice was issued on March 23, 2023, and the draft assessment order was dated March 26, 2024.
- Why
- He did not file an income tax return, prompting the tax department to reopen his case and question the source of the funds used for the purchase.
NRI Homebuyer
Income Tax Department / DRP
Source of ₹1 lakh cash deposit
NRI Homebuyer
The ₹1 lakh cash deposited in his HDFC Bank account in 2015 was used for advance booking of the flat and was traceable to his bank statements, so it should not be taxed.
Income Tax Department / DRP
The cash deposit lacked a clearly established source and was included as unexplained income in the draft assessment.
Stamp duty and registration charges
NRI Homebuyer
The ₹4 lakh stamp duty and ₹32,280 registration charges were paid to the builder, and bank challans and supporting documents confirm the payment.
Income Tax Department / DRP
These amounts were not fully explained and were confirmed as part of the assessment by the DRP.
Key facts
- Property Location
- Kandivali West, Mumbai
- Property Consideration
- ₹79.9 lakh
- Sale Agreement Date
- July 20, 2015
- Payment Period
- 2011–2018
- Section 148 Notice
- Issued March 23, 2023
- Draft Assessment Income
- ₹57,24,172 (Section 144C, March 26, 2024)
- Amount Deleted by DRP
- ₹51.9 lakh
- Amount Deleted by ITAT
- ₹1 lakh
Sources
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