When Mr and Mrs Saudagar from Mahim West, Mumbai purchased a property in India for Rs 1.4 crore, Mrs Saudagar landed in a dispute with the Income Tax Department. She had paid Rs 58.5 lakh from her Indian bank account, while her husband, who was working in Dubai, UAE, sent the remaining Rs 80 lakh directly to the seller through a Dubai Exchange Bureau.
During her assessment, the Income Tax Department accepted the payments made from Mrs Saudagar’s bank account but raised questions about the Rs 80 lakh her husband paid directly to the property seller through the Dubai Exchange Bureau.
Since she couldn’t provide documentary proof, like the Dubai Exchange Bureau’s remittance records, to validate the overseas transfer, the Income Tax Department treated it as an unexplained investment under Section 69 of Income Tax Act, 1961. Consequently she was issued a tax notice and the tax department added Rs 80.10 lakh to her taxable income.
She chose to fight this tax notice before the Income Tax Appellate Tribunal (ITAT) Mumbai. ITAT Mumbai heard her case on May 5, 2026 and passed its judgement on June 11, 2026, ruling in her favour and deleting the tax notice.
CA Dinesh K. Jain, founding partner, Dinesh Aarjav & Associates, told ET Wealth Online that in an increasingly globalized world, many Indian families, particularly NRIs, fund property purchases through overseas remittances, gifts, and direct payments from family members abroad.
Jain says: “Expecting taxpayers to produce every remittance record or exchange house document relating to transactions undertaken a decade ago is often impractical.”
According to Jain, ITAT Mumbai rightly observed that the absence of one historical document cannot override overwhelming documentary evidence supporting the transaction. This decision provides a much-needed certainty for NRIs, returning Indians, and taxpayers involved in legitimate cross-border financial transactions.
Keep reading to know how and why she won the tax case.
Summary of the judgement and why she won the case
Chartered Accountant Suresh Surana told ET Wealth Online: The Mumbai Bench of the Income Tax Appellate Tribunal allowed the appeal of the taxpayer in a case relating to Assessment Year 2016-17, and directed deletion of the Rs 80,10,000 added under Section 69 of the Income-tax Act, 1961.
What happened here was that the Income Tax Department officer saw an information flagged on their Insight Portal under the CBDT’s Risk Management Strategy, indicating that Mrs Saudagar had purchased an immovable property for a sum of Rs 1.40 crore.
Since Mrs Saudagar had not originally filed her income tax return (ITR), proceedings under Section 148A were initiated and thereafter tax notice under Section 148 was issued.
During the reassessment proceedings, Mrs Saudagar explained that the investment in the property was fully sourced from sale proceeds of her earlier property and financial support received from her husband, Mr. Saudagar, who worked in Dubai.
The Income Tax Assessing Officer noted that the total purchase amount was Rs 1.40 crore and, after deduction of TDS of Rs 1.40 lakh, the actual payment to the seller worked out to Rs 1.386 crore.
Thus the Assessing Officer accepted payments aggregating Rs 58.50 lakh, comprising Rs 40 lakh paid from the sale proceeds of Mrs Saudagar’s earlier property and Rs 18.50 lakh paid from funds received from her husband.
However, the balance amount of Rs 80 lakh was treated as unexplained investment under Section 69 on the ground that Mrs Saudagar could not produce direct remittance documents such as exchange bureau records, remittance advice, transfer instructions or bank statements evidencing debit from her husband’s account. A further addition of Rs. 10,000 was also made as alleged unexplained balance consideration. The CIT(A) sustained the additions.
Before ITAT Mumbai, Mrs Saudagar submitted a complete source-wise reconciliation of the entire purchase consideration. It was explained that Rs 48 lakh was received from sale of her earlier property, Rs 80 lakh was directly remitted by her husband to the seller through a Dubai Exchange Bureau in two instalments of Rs 40 lakh each, Rs 20 lakh was gifted by her husband out of which Rs 18.50 lakh was paid to the seller, Rs 10,000 was paid through a pay order issued from Jammu and Kashmir Bank, and TDS of Rs 1.40 lakh was duly accounted for.
Mrs Saudagar also furnished supporting documents, including the passport and residential identity documents of her husband, his income-tax records, seller’s bank statement evidencing receipt of Rs 80 lakh, registered sale deeds, affidavit of the husband confirming payment, gift deed, bank confirmation identifying the husband as remitter and copy of the pay order of Rs 10,000.
Surana says that ITAT Mumbai after hearing her arguments and the evidence, observed that Mrs Saudagar had explained not only the disputed amount of Rs 80 lakh but the entire investment of Rs 1.40 crore on a source-wise, payment-wise and document-wise basis.
ITAT Mumbai also noted that the Income Tax Department had not disputed the identity of the husband, his relationship with the taxpayer, his financial capacity, the receipt of Rs 80 lakh in the seller’s bank account, the gift deed, affidavit, sale transaction or the genuineness of the documents produced by the taxpayer. No finding was recorded by the Income Tax Department that the documents were false, fabricated or manipulated.
ITAT Mumbai held that the addition could not be sustained merely because the taxpayer was unable to produce remittance records of the Dubai Exchange Bureau after a lapse of nearly ten years, particularly when the overall transaction stood fully explained through corroborative documentary evidence.
According to Surana, ITAT Mumbai emphasised that once the primary evidence remained unrebutted and the Income Tax Department had not brought any contrary material on record, Mrs Saudagar’s explanation could not be rejected on the basis of suspicion and assumptions or technical deficiency in a part of the evidentiary chain.
So, ITAT Mumbai ruled that Mrs Saudagar had met her obligations under Section 69 by proving who the contributor was, showing he had the financial means, detailing where the funds came from, and explaining how those funds were used to buy the property.
Surana says: “Since the entire purchase consideration was reconciled with the registered sale deed, banking entries and supporting documents, the addition of Rs 80 lakh under Section 69 was deleted.”
Regarding the separate addition of Rs 10,000, ITAT Mumbai noted that Mrs Saudagar had produced the pay order issued from Jammu and Kashmir Bank and the corresponding entry in the seller’s bank account.
Since the payment formed part of the registered property transaction and was duly supported by documentary evidence, ITAT Mumbai held that there was no basis to sustain the addition. Consequently, the entire addition of Rs 80,10,000 was deleted and Mrs Saudagar’s appeal was allowed.
Surana says that Mrs Saudagar succeeded primarily because she was able to establish a complete evidentiary trail explaining the source and utilisation of the entire property purchase consideration.
ITAT Mumbai had found that the Income Tax Department had rejected the explanation only for lack of an additional remittance record, without disproving the documents already furnished or bringing any adverse material on record.
Surana says: “The ruling reiterates that an addition under Section 69 cannot be made merely on suspicion where the taxpayer has furnished cogent, corroborative and unrebutted evidence explaining the investment.”
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