Indian Tribunal Orders Fresh Review of Tax Demand Tied to Joint NRI Fixed Deposit

A recent decision by Mumbai’s Income Tax Appellate Tribunal has sent a significant tax dispute back for a new review. The case involves a Rs 2.59 crore tax demand against Kaushik Narottam Soni, stemming from a Rs 1.5 crore Non-Resident Indian (NRI) fixed deposit that was held jointly with his father. Soni claims his father was the sole funder and owner of the deposit. The tribunal’s order, issued on October 29, 2026, directs the Assessing Officer to re-examine bank documents provided by Soni. This move aims to clarify the ownership and funding source of the deposit before any final tax assessment is made.

The Tribunal’s Decision to Remand the Case

The Financial Express reported that the tribunal’s order effectively remands the case back to the Assessing Officer. This means the officer must now look closely at the bank documents Soni submitted. The tribunal stated that these documents are central to understanding the dispute. The goal is for the officer to verify the evidence before the tax department makes a final decision. It is important to note that this order does not automatically cancel the tax demand or settle the ownership of the fixed deposit. The dispute covers the assessment year 2019-20, during which Soni was considered a non-resident Indian.

Verifying Bank Records and Ownership Claims

A key part of the tribunal’s instruction is for the Assessing Officer to examine two specific records. The first is a statement detailing the source of the funds used for the fixed deposit. The second is a bank certificate that identifies Narottam Odhavji Soni, Kaushik’s father, as the first holder of the account. The tribunal emphasized that these documents need to be verified, not just accepted at face value. Soni’s argument is that his father was the beneficial owner of the deposit. He states that his own name was added as a joint or third holder simply for administrative ease and to ensure a smooth transfer of assets later. The tribunal’s focus is on examining these records to understand the true nature of the deposit.

The Income Tax Department’s Initial Reassessment

The Income Tax Department initiated a reassessment of Soni’s tax situation after receiving information about financial transactions linked to him through its Insight Portal. His assessment was reopened under Section 147 of the Income-tax Act. Soni was asked to explain the funds invested in the fixed deposit that appeared in his name. During this reassessment process, Soni did not provide the necessary supporting bank records to the Assessing Officer. The officer also attempted to gather information from HDFC Bank by issuing notices under Section 133(6) of the Act, but the bank did not respond.

Treating the Deposit as Unexplained Investment

Without the necessary documents to prove the source of funds or ownership during the reassessment, the Assessing Officer treated the entire Rs 1.5 crore in the fixed deposit as Soni’s unexplained investment. This was done under Section 69 of the Income-tax Act, and the amount was added to his total income. The Dispute Resolution Panel agreed with this addition. Subsequently, a final assessment order was issued on December 10, 2025. This order resulted in a total demand of Rs 2.59 crore, which included the tax on the added income, along with interest and other applicable charges. The tribunal’s current order sends the case back for the officer to consider evidence that was not presented during the original reassessment proceedings.

Soni’s Argument Regarding Funding and Residency

Before the tribunal, Soni argued that simply being a joint account holder does not automatically mean he provided the investment money. He asserted that his father funded the fixed deposit using money from a Non-Resident External (NRE) account. His father, Narottam Odhavji Soni, was also a non-resident during the relevant period. Soni’s position is that the funds originated from foreign income and therefore should not be taxable in India, especially since both he and his father were non-residents at the time. These are the arguments presented by the taxpayer, and the tribunal has not yet made any final findings on these points. The tribunal’s directive requires the Assessing Officer to review the bank records before reaching any conclusion. The Rs 2.59 crore figure includes the tax on the addition, interest, and other levies. The tribunal’s order did not remove the addition or make a final ruling on who owned the deposit. The Assessing Officer is now tasked with verifying the source statement and the bank certificate that names Soni’s father as the first holder. This fresh review is the next step in the process as outlined by the tribunal’s order.

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