NRI's ₹3.41 crore FCNR deposits flagged as unexplained money after tax officer mistook yen for rupees, ITAT gives relief

The Jaipur tribunal deleted the addition after finding that bank records established the source of two foreign-currency deposits and the tax department had accepted the explanation in the woman's husband's case.

A Dubai-based non-resident Indian (NRI) has won relief from a ₹3.41 crore income tax addition after the Income Tax Appellate Tribunal (ITAT), Jaipur, found that the assessing officer had mistaken Japanese yen figures for Indian rupees while examining two foreign currency deposits.

In its order dated 22 September 2026 in Deputy Commissioner of Income Tax v. Kavita Khanwani (ITA No. 867/JPR/2025, assessment year 2018-19), the tribunal upheld the Commissioner of Income Tax (Appeals)' decision to delete the addition made under Section 69A of the Income-tax Act, 1961, which deals with unexplained money.

The tribunal 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. It also noted that the tax department had accepted the explanation for the same deposits in the woman's husband's assessment.

How a currency error led to a ₹3.41 crore tax addition

Khanwani, who lives in Dubai, held two Foreign Currency Non-Resident (FCNR) term deposits jointly with her husband, Kishan Chand. He was the first holder of both deposits, while she was the second holder.

The deposits were denominated in Japanese yen. The first, opened on 14 October 2017, had a principal of 1.726 crore yen, while the second, opened on 21 February 2018, had a principal of 1.658 crore yen.