Listen to this article in summarized format
When Mr Kalwani, who used to work in Dubai since 1993 used his savings to buy a property in India, he was sent a tax notice for unexplained investments. Subsequently on January 19, 2024, a Income Tax Officer from the International Tax wing, Ahmedabad, passed an order against Mr Kalwani, a resident of Baherampura Road, adding Rs 56.15 lakh due to unexplained investment in property purchase.
Income Tax Guide
Income Tax Union Budget FY 2026-27 LiveIncome Tax Slabs FY 2025-26Income Tax Calculator 2025
Feeling aggrieved, Kalwani filed an appeal with the Commissioner of Appeals (CIT A). However, CIT (A) confirmed this income addition and gave no relief to Kalwani. Thus he filed an appeal in ITAT Ahmedabad. The main reason he received a tax notice and subsequently an order was passed against him was because the tax department deemed that Kalwani could not explain the source of the funds he used to buy the property.
Kalwani’s counsel, Mr Samir Vora told ITAT Ahmedabad that Kalwani is a NRI and resident of the United Arab Emirates (UAE) since 1993 and has only earned income in India from the bank interest on his NRI accounts.
Kalwani also showed that the entire amount was transferred from his Dubai bank account. Additionally, his son had also contributed some funds for buying this property, which he explained to ITAT Ahmedabad also. Thus according to him, the transaction for the property purchase by Kalwani and his son was genuine and should not be classified as unexplained investment.
Kalwani argued the funds used in the property purchase question were invested from his income earned in Dubai, which was transferred from his Dubai bank account to his Indian bank account and further invested in the property. Thus he contended that the lower authorities had no grounds for making/confirming the impugned addition, which should be deleted.
Also read: UAE based taxpayer earned Rs 4 crore income in India on which TDS was deducted but didn’t file ITR, got tax notice; wins case in ITAT Delhi
Annapurna Gupta, Accountant Member and Sanjay Garg, Judicial Member of ITAT Ahmedabad listened to his arguments and the appeal was allowed in the Open Court on January 30, 2026 (ITA No.383/Ahd/2024). Thus Kalwani won the case.
Also read: Dubai-based taxpayer gets I-T notice for unexplained investment in Rs 2 crore Mumbai property; he fights back and gets relief from ITAT Mumbai
What should NRIs note about this judgement?
Chartered Accountant Priyal Goel Jain, Partner and NRI Tax Expert, Dinesh Aarjav & Associates, said to ET Wealth Online that ITAT Ahmedabad’s ruling brings much-needed clarity and judicial discipline to NRI taxation in India.
Jain says: “It reaffirms a fundamental principle of tax law that overseas income lawfully earned by a non-resident and remitted through authorised banking channels cannot be arbitrarily characterised as unexplained investment merely because it is deployed in India.”
According to Jain, this decision of ITAT Ahmedabad is particularly significant in the context of increasing scrutiny of NRI property transactions, where additions under Sections 69 and 69B are often made despite clear banking trails.
Also read: UAE residents investing in Indian mutual funds: Key Indian tax rules you must follow to claim India-UAE DTAA benefits
Jain says: “This judgment will serve as a strong precedent in ongoing and future NRI tax litigation, especially for Gulf-based NRIs, and should guide assessing officers to focus on substance and evidence rather than suspicion-driven assessments.”
aniltikotekar4sme.com 