ITAT Jaipur dismissed a ₹3.41 crore tax notice against a Dubai-based woman on September 22, 2026. The tribunal struck down the Income Tax Department’s attempt to treat her FCNR deposits as unexplained income under Section 69A. This ruling clears a major hurdle for Non-Resident Indians investing in India.
The department had issued separate notices to the woman and her husband for ₹3.41 crore deposited into two FCNR term deposits. The husband, the primary account holder, had already cleared these funds in his own assessment. Yet the Assessing Officer (AO) proceeded to add the same amount to the woman’s income, citing her status as the second holder. The AO’s mistake was glaring: he treated the deposit value in Japanese yen (JPY) as Indian rupees. The actual rupee equivalent was significantly lower, but the AO ignored this and imposed a massive addition.
The tribunal found the AO’s assessment fundamentally flawed. The bank had already confirmed the source of funds via a Section 133(6) notice response. The money came from a jointly held NRE account, funded by the husband. Since the primary holder had explained the source, the department could not double-dip by treating the same funds as unexplained in the second holder’s hands. The ITAT also corrected the AO’s error in classifying the woman as a resident, affirming her non-resident status based on her Dubai address and NRE account details.
This case highlights a critical gap in how tax officers handle NRI investments. Many NRIs face similar notices due to clerical errors or a lack of understanding of foreign currency mechanics. The ITAT’s decision is a strong signal that the department must align its assessments with factual bank records and the legal status of the taxpayer. For the woman, the relief is immediate and total. The department may still appeal, but the odds of success are slim given the clear documentary trail the tribunal relied upon.