A Dubai-based non-resident Indian (NRI) has successfully challenged a ₹3.41 crore income tax addition after the Income Tax Appellate Tribunal (ITAT) in Jaipur ruled that the assessing officer had mistaken Japanese yen figures for Indian rupees. The case involved two Foreign Currency Non-Resident (FCNR) term deposits held jointly with her husband, Kishan Chand. The deposits, denominated in yen, were opened in 2017 and 2018, but the tax officer incorrectly treated the yen amounts as rupees, leading to the disputed addition under Section 69A of the Income-tax Act.
The tribunal's order, dated 22 September 2026, upheld the Commissioner of Income Tax (Appeals)' decision to delete the addition. It found that the deposits were funded through a joint Non-Resident External (NRE) savings account, with bank records tracing the money to transfers made through banking channels. The tax department had previously accepted the explanation for the same deposits in the husband's assessment, further supporting the tribunal's decision.
The tribunal noted that the principal of the two deposits was approximately 3.38 crore yen, while the actual rupee amount invested was about ₹2 crore. The addition of ₹3.41 crore did not correspond to any amount in Indian rupees found in the taxpayer's possession. Bank records confirmed the transactions, and the department did not dispute the authenticity of the statements.
The ITAT dismissed the tax department's appeal, emphasizing that the same deposits could not be treated as unexplained money in the wife's case when their source had been established and accepted in her husband's assessment. The ruling relates specifically to Kavita Khanwani's case, with her husband's separate proceedings not decided by this order.