To present you a fast rundown on Mr. Ostwal, he’s a non-resident Indian who has been dwelling and dealing in Dubai, United Arab Emirates (UAE) since 2001 and returned to India solely in 2021. Through the Evaluation 12 months 2016- 17, he paid Rs 2 crore for a residential property in India, with the the steadiness quantity settled in following years. The full value of the property was Rs 3.25 crore.
Since he hadn’t filed any revenue tax return (ITR) in India and there was details about his funding within the property, a discover beneath Part 148 was issued on March 13, 2023 after due process beneath Part 148A.
The tax and dispute decision panel (DRP) didn’t present him with any aid, main him to file a case in ITAT Mumbai, the place he finally gained in November 14, 2025. Learn on to seek out ut how and why he gained. Advocate Fenil Bhat represented Mr. Ostwal.
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Judgement abstract
Chartered Accountant (Dr.) Suresh Surana, stated to ET Wealth On-line: Within the given case (ITA No.1898/Mum/2025), the assessee, a non-resident particular person, had been dwelling and dealing in Dubai since 2001 and didn’t have any supply of revenue in India throughout the related evaluation yr 2016-17.
Through the yr, the assessee made an funding of Rs. 2 crores in direction of the acquisition of a residential property in India. Since no return of revenue was filed and the funding got here to the eye of the tax authorities via third-party info, reassessment proceedings have been initiated beneath Part 147 of the IT Act.
The Assessing Officer rejected the assessee’s clarification that the funding was constituted of amassed overseas wage and handled the quantity as unexplained funding beneath Part 69.
The assessee, nevertheless, furnished in depth documentary proof together with overseas financial institution statements, authorised seller certificates, employment agreements, wage information, United Arab Emirates (UAE) residency proof, fund-remittance information and NRE account statements to ascertain a transparent and credible path displaying that the funding was made totally from overseas wage financial savings remitted via authorised banking channels.
Based on Surana, the Mumbai ITAT accepted the assessee’s clarification and held that the addition beneath Part 69 was unjustified. The Tribunal famous that the assessee had satisfactorily discharged the burden of proof by producing a whole and verifiable path of funds, and the Income had didn’t rebut or contradict these evidences via verification or inquiry.
Based on Surana, the Tribunal additional noticed that because the assessee was a non-resident, revenue earned overseas, which neither accrued nor was acquired in India, was not taxable beneath Part 5(2) of the IT Act. Subsequently, the deeming fiction beneath Part 69 couldn’t be invoked within the absence of any materials displaying that the funding represented taxable revenue in India.
Surana says: “The rejection of proof primarily based on assumptions with out statutory verification was held to be unsustainable. Accordingly, the addition of Rs. 2 crores was deleted, and the enchantment was allowed in favour of the taxpayer.”
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Based on Amit Gupta, associate, Saraf and Companions, the Tribunal has made it clear that the provisions of Part 69 of the Revenue-tax Act, 1961 are subordinate to these in Part 5. This part defines what whole revenue is taxable for non-residents. Moreover, Part 69 relies on the presumption that the funding in query comes from revenue that is taxable in India in line with the provisions of the Revenue Tax Act, 1961.
So, Gupta says that if the NRI assessee has duly discharged his responsibility by submitting documentary proof to corroborate the supply of funds being abroad wage revenue together with RAK Financial institution statements, authorised seller certificates, proofs of withdrawal and remittance, wage information, residence visa documentation, and worker record downloaded from the official UAE Ministry of Labour portal, then the disputed additions beneath Part 69 must be eliminated since they don’t have any foundation with none Indian taxable revenue/funds.
Gupta says: “The ruling gives much-needed readability and aid to NRIs investing in India, making certain that real foreign-sourced investments will not be topic to tax beneath deeming provisions like Part 69 of the ITA and the identical additionally abundantly amplifies the necessity to preserve strong documentation to rebut such arbitrary tax additions.”
ITAT Mumbai evaluation of details and proof
ITAT Mumbai in its judgment (ITA No.1898/Mum/2025) on November 14, 2025, stated that after listening to either side and punctiliously inspecting the fabric positioned on document, it’s an undisputed incontrovertible fact that the assessee (Mr. Ostwal) is a Non-Resident Indian who had been dwelling and dealing in Dubai repeatedly since 2001 and returned to India solely in 2021.
ITAT Mumbai stated that it’s equally undisputed that he had no supply of revenue in India throughout the related interval and all his earnings have been solely from his long-term employment overseas.
ITAT Mumbai stated that the in depth evidences produced earlier than the Assessing Officer and the DRP, together with the RAK Financial institution statements, authorised seller certificates, proofs of withdrawal and remittance, wage information, residence visa documentation, and worker record downloaded from the official UAE Ministry of Labour portal, collectively type a whole, credible and coherent path displaying that the funds used for the funding within the residential property have been sourced totally from overseas wage revenue duly amassed through the years and remitted via correct banking channels into the assessee’s NRE account in India.
Evaluation of Dubai RAK Financial institution and Axis Financial institution fund path
ITAT Mumbai stated that the evidences clearly present that AED 12,00,000 was withdrawn from the assessee’s (Mr. Ostwal’s) RAK Checking account in Dubai, out of which AED 11,65,000 was remitted to India via authorised sellers, leading to INR credit of Rs 2,00,52,630 into the Axis Financial institution NRE account from which the funds have been made.
ITAT Mumbai stated: “This whole and contemporaneous path of funds has not been rebutted by the Division in any method. No discrepancy or inconsistency has been proven within the clarification.”
ITAT Mumbai stated the authorities have rejected the documentary evidences solely on common and unsubstantiated observations, equivalent to questioning the “credentials” of the overseas employer or the “authenticity” of the overseas financial institution statements, with out endeavor any impartial enquiry or verification regardless of having full statutory means obtainable to them, whether or not beneath Part 133(6) or via applicable channels.
ITAT Mumbai stated: “The DRP’s remarks that the assessee may procure paperwork “attributable to shut connection” with the employer stay purely speculative and unsupported by any materials and therefore can’t type the idea of rejection of in any other case dependable evidences.”
ITAT Mumbai stated that when Mr. Ostwal has established that the funds utilised for the funding in property have been remitted from wage earned overseas, and that such revenue was neither acquired nor accrued in India, there stays no foundation for invoking Part 69.
ITAT Mumbai stated: ”Beneath Part 5(2), a non-resident is taxable in India solely with respect to revenue that’s acquired or deemed to be acquired in India or accrues or arises or is deemed to accrue or come up in India. The Income (revenue tax dept) has not introduced any materials to indicate that the quantity invested represents revenue chargeable to tax in India.”
ITAT Mumbai stated that what will not be taxable beneath Part 5(2) can’t be dropped at tax not directly via a deeming fiction beneath part 69. Part 69 presupposes that the funding represents revenue liable to tax beneath the Act.
ITAT Mumbai stated: “Within the current case, the assessee has furnished a whole, passable and credible clarification supported by impartial proof; due to this fact the very basis for invoking Part 69 is absent.”
ITAT Mumbai judgement
ITAT Mumbai stated the proof on document absolutely substantiates the assessee’s (Mr. Ostwal’s) clarification; the path of funds is evident and full; there isn’t any allegation of any Indian-source of undisclosed revenue; and the authorities under haven’t carried out any verification to contradict the foreign-source clarification.
ITAT Mumbai judgement: “The rejection of proof by the DRP relies merely on conjectures and can’t override the tangible documentary materials positioned earlier than it. In such circumstances the addition made beneath part 69 is wholly unsustainable in regulation and on details. The assessee’s clarification is accepted and the addition of Rs 2,00,00,000 stands deleted. Within the end result, the enchantment of the assessee (Mr. Ostwal) is allowed. Order pronounced on 14th November, 2025.”
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