ITAT Remands Case for Proof of Foreign Investment Source

Case Details: Atanu Banerjee vs. Deputy Director of Income-tax (Investigation) - [2026] 185 taxmann.com 533 (Delhi-Trib.)

Judiciary and Counsel Details

• Vimal Kumar, Judicial Member & Ramit Kochar, Accountant Member
• Ms Priyanka Garg, CA for the Appellant.
• S.K. Jadhav, CIT

Facts of the Case

Assessee-individual was resident in India for the relevant assessment year. During the assessment proceedings, the Assessing Officer (AO) noticed that the assessee maintained a foreign bank account in the USA. The assessee furnished the details of the said account and the credits therein, including USD 4,05,000 on account of the sale of a house property situated in the USA.

The said property was purchased in 1999 and sold in 2016, and the assessee claimed that it was acquired during his stay in the USA out of foreign earnings and a mortgage loan. The transaction was disclosed to the US tax authorities, and, on computation under the Income-tax Act, 1961, it resulted in a long-term capital loss. However, the AO treated the amount as unexplained and added it as undisclosed foreign income under the Black Money Act.

The matter reached the Delhi Tribunal.

ITAT Held

The Tribunal held that the assessee was required to substantiate that the asset had not been acquired from an amount chargeable or assessable to income-tax in India at the relevant times. The assessee, being a resident during the relevant assessment year, failed to furnish the necessary evidence to support its contention, viz., status as non-resident when the said house was acquired in 1999, evidence related to sources of making investments in the said house acquired in 1999, and evidence related to his employment in the USA during 1993-2004. The assessee has chosen not to file such evidence before the Tribunal.

It is also contended by the assessee before the Tribunal that he is old and, being very old, and that if some more time is granted to the assessee and, accordingly, if one more opportunity is provided to the assessee, then the assessee will get all the relevant documents to support his contentions. However, it is observed that the assessee has stated that he is more than 70 years of age, suffering from a disease, and is old. The statute, being new albeit stringent, the assessee has contended that one more opportunity be provided to produce the relevant evidence/documents.

Thus, keeping in view of the peculiar facts and circumstances of the case, fairness to both the parties and in the interest of justice, the Tribunal was of the considered view that one more opportunity is required to be provided to the assessee to furnish details/conclusive evidence/explanations w.r.t. sources of investing in the said foreign assets, sources of making repayments of mortgage loans and also to prove its residential status during the previous years in which the payment for acquisition of the said property or repayments of mortgage loans were made. Thus, the assessee’s appeal is allowed for statistical purposes.

List of Cases Referred to

• Chitturi Subanna v. Kudapa Subbanna & Ors AIR 1965 SC 1325 (para 2.2)
• National Thermal Power Co. Ltd. v. CIT [1998] 97 Taxman 358/229 ITR 383 (SC) (para 2.2).