In a significant ruling for Non-Resident Indians (NRIs), the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench granted complete relief to a US-based NRI in a case involving Section 69 unexplained investment, reassessment under Section 148, and NRI property purchase in India 

This judgment is highly relevant for NRIs facing:

• Reassessment notice under Section 148
• Addition under Section 69 for unexplained investment
• Cash deposit scrutiny in NRE/NRO accounts
• Stamp duty and registration charges disputes
• DRP proceedings under Section 144C
• Property investment in India by NRIs

If you are an NRI investing in Indian real estate, this case provides critical guidance on documentation, compliance, tax planning, and NRI investment in India tax defense strategy.

Case Overview – NRI Property Purchase and Reassessment Proceedings

The assessee:

• Was a Non-Resident Indian residing in the USA since 2002
• Purchased a residential flat in Mumbai for ₹79.90 lakhs
• Made payments through:
  • NRE account
  • NRO account
  • Assistance from an NRI relative

Since no original Income Tax Return (ITR) was filed for AY 2016-17, the Income Tax Department issued a notice under Section 148 initiating reassessment proceedings.

The Assessing Officer passed an order under:

• Section 143(3) read with Section 144C(13)

Proposing an addition of ₹57,24,172 as unexplained investment under Section 69.

DRP Order – Partial Relief but Sustained Addition

The matter went before the Dispute Resolution Panel (DRP).

The DRP:

• Accepted explanation for ₹51,90,500
• Sustained addition of ₹5,32,280 comprising:
  • ₹1,00,000 – Cash deposit
  • ₹4,00,000 – Stamp duty
  • ₹32,280 – Registration charges

The assessee appealed before ITAT Ahmedabad.

Key Legal Issues Before ITAT

Cash Deposit of ₹1,00,000 – Addition under Section 69

The Assessing Officer treated the cash deposit in the bank account as unexplained investment under Section 69.

Assessee’s Defense:

• Cash withdrawn earlier from NRE account
• Supported with:
  • NRE bank statements
  • Evidence of withdrawals
  • Travel history showing India visit

ITAT Ruling:

The Tribunal held that:

• The source of funds was properly explained
• Documentary evidence was sufficient
• Addition was based on assumptions

Addition of ₹1,00,000 deleted

Stamp Duty and Registration Charges – ₹4,32,280 Addition

The department treated:

• ₹4,00,000 – Stamp duty
• ₹32,280 – Registration charges

As unexplained investment under Section 69.

Evidence Submitted:

• Bank challan for stamp duty payment
• Registration receipt issued by Sub-Registrar
• Notarized affidavit from builder confirming:
  • Stamp duty and registration were part of total consideration
  • Payment formed part of flat purchase transaction

ITAT Decision:

The Tribunal observed that:

• Registered documents supported the claim
• Payments were linked to property purchase
• Source was adequately explained

Entire addition of ₹4,32,280 deleted

Final Verdict – Full Relief to NRI

The ITAT Ahmedabad allowed the appeal in full and deleted the entire addition of ₹5,32,280 made under Section 69.

This ruling reinforces that:

Proper banking trail + documentary evidence = Strong defense in NRI reassessment cases.

NRI Property Purchase Tax Implications in India

This case answers critical tax queries frequently searched online:

Can NRIs receive notice under Section 148?

Yes. Failure to file ITR or mismatch in financial transactions can trigger reassessment.

Can stamp duty be treated as unexplained investment?

Yes, if proper documentation is not maintained.

Are cash deposits in NRE/NRO accounts taxable?

Not automatically. However, unexplained deposits can attract Section 69 addition.

How to defend unexplained investment addition?

Maintain:

• NRE/NRO bank statements
• Fund trail documentation
• Builder confirmation letters
• Stamp duty challans
• Registered property documents

If you are an NRI investing in India:

Always File Your Income Tax Return (ITR)

Even if no taxable income arises, filing prevents future reassessment issues.

Maintain Complete Fund Trail

Especially for:

• Property booking payments
• Stamp duty
• Registration fees
• Loans from relatives
• Remittances from abroad

Respond Properly to Section 148 Notice

A technical and well-documented reply can prevent large additions.

Seek Professional Representation in DRP & ITAT

Improper handling at draft assessment stage can lead to prolonged litigation.

How Dinesh Aarjav & Associates Supports NRIs

At Dinesh Aarjav & Associates, we specialize in:

• NRI income tax return filing in India
• Handling reassessment under Section 148
• Representation before DRP and ITAT
• NRI property purchase tax advisory
• India–USA cross-border tax matters
• DTAA Consultancy and compliance

With over 25+ years of experience in NRI taxation and cross-border advisory, we provide structured, documentation-backed defense in complex tax matters.

Conclusion – A Strong Precedent for NRIs

This ITAT Ahmedabad ruling provides major relief for NRIs facing additions under Section 69 for property transactions, including issues arising during sale of property by NRI cases.

The decision clearly establishes:

• Mere suspicion cannot justify unexplained investment addition
• Proper documentation overrides assumptions
• Stamp duty and registration charges must be examined in totality of transaction

If you are an NRI who has received:

• A notice under Section 148
• Addition under Section 69
• Reassessment for property investment

Early professional advice can significantly improve your outcome.