An Indian working in Kuwait’s oilfields faced intense income tax scrutiny over a tax dispute after sending money to his family in the home country. For now, the Income Tax Appellate Tribunal (ITAT), Ahmedabad, has provided partial relief.
The details of the case are as follows:
- Case Name: RAHULKUMAR NARSHIBHAI PATEL, AHMEDABAD VS. THE ITO, WARD-2, INT. TAXN., AHMEDABAD
- Appeal Number: ITA 394/AHD/2026
- Assessment Year: 2019-20
- Filed On: 12-Feb-2026
This case highlights why overseas earners should maintain clear records of foreign income and remittances to avoid complications, psychological stress, and tax-related repercussions later on.
With these basics in mind, let us examine the key facts of the case and understand how the Tribunal ultimately granted partial relief to the .
Why did the income tax department issue a notice?
According to the facts of the case as detailed in the order provided on the official website of ITAT, Narshibhai is an Indian working in Kuwait. His salary there was consistently credited to the National Bank of Kuwait account. Later, from this salary, he transferred funds to his Non-Resident External (NRE) and at ICICI Bank and HDFC Bank in India.
The tax authorities received details and information about these transactions through the reporting system. This resulted in several glaring discrepancies. As of 31 December 2018, the reported figures include the following:
|
Financial holding |
Amount |
|---|---|
| HDFC Bank | ₹2.49 crore |
| ICICI Bank | ₹1.09 crore |
| ICICI Prudential policy | ₹3.77 lakh |
Note: Data discussed above is for explanatory purposes only. For complete details, refer to the official order available on the ITAT website.
The real complications started because Narshibhai had not filed an original income tax return. Furthermore, upon receiving a tax notice, he filed a return declaring ‘nil income’ but did not initially provide complete bank statements, account details and reconciliations.
Due to these reasons, the treated ₹3.63 crore as unexplained money under Section 69A of the Income Tax Act, 1961. These funds were taxed under Section 115BBE. These were the core legal provisions involved. Now, let us discuss what the ITAT Ahmedabad eventually decided.
What did ITAT Ahmedabad decide?
During the appeal before the ITAT Ahmedabad, Narshibhai submitted his Kuwait bank statements, salary details, Indian bank records and other essential documents as directed.
Post the same after going through the facts of the case and documents diligently, the tribunal found that the following relief was justified:
- ₹5.52 lakh addition deleted: The residual ICICI Bank amount could not be treated as unexplained merely because SFT figures did not reconcile with bank records. Which is why this addition was deleted.
- Around ₹2.50 crore remanded: The addition was sent back to the Assessing Officer for fresh verification. This was done to properly establish the origin of the funds, and hence, a review by the AO was instructed.
The tribunal further directed that no addition should be made if the funds are established to be foreign income remitted to India or if the redeployment of such funds is established.
What should common taxpayers and NRIs learn from this ruling?
This ruling, dated 24th April, 2026, clearly highlights several important aspects that NRIs and should pay attention to. One such aspect is that foreign salary remittances cannot be automatically categorised as ‘unexplained income’; still, taxpayers, on their part, must have the essential documentary evidence to establish the source and movement of funds without any doubt.
In order to ensure that no tax-related complications arise in the future, NRIs should retain:
- Foreign salary slips, account details, and bank statements.
- Indian NRE/NRO bank details and account statements.
- Remittance records for data matching and details.
- A reconciliation of SFT figures with actual transactions.
Other similar essential documents will be needed to corroborate facts.
In summary, the ruling offers the taxpayer partial relief, not a blanket exemption from tax scrutiny. Maintaining proper records, keeping an up-to-date list of all transactions, and responding to tax notices within the stipulated time are simple steps to avoid tax-related problems and
Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Due care has been taken to ensure the accuracy of the information presented. However, readers are advised to verify the facts and details from the original ITAT order and consult a qualified tax professional before making tax related decisions.