# ITAT Overturns ₹3.41 Crore Tax Addition Due to Currency Miscalculation Tribunal rules tax officer incorrectly treated Japanese yen deposits as Indian rupee amounts. - **Source:** [mint - money](https://www.livemint.com/rss/money) - **Published:** 2026-10-18 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/7564cbaf-777d-4a4a-a7d4-179e66405d63 ## Tribunal Corrects Currency Error The Income Tax Appellate Tribunal in Jaipur recently deleted a ₹3.41 crore addition to Kavita Khanwani’s income. The assessing officer had incorrectly treated Japanese yen figures as Indian rupees. This fundamental calculation error led to an unjustified claim of unexplained money under Section 69A of the Income-tax Act, 1961. ## Disputed FCNR Deposit Details Khanwani held two FCNR term deposits jointly with her husband, Kishan Chand. The deposits were denominated in Japanese yen, totaling approximately 3.38 crore yen. The actual rupee investment was roughly ₹2 crore, yet the tax department erroneously added ₹3.41 crore to her taxable income for the 2018-19 assessment year. ## Evidence from Banking Channels The tribunal examined statements for the joint NRE savings account used to fund these deposits. Records confirmed that each deposit was funded by a ₹1 crore debit, preceded by corresponding credits. IndusInd Bank verified these transactions under Section 133(6), confirming the funds originated from legitimate banking channels for the account holders. ## Consistency with Husband's Assessment The tax department had already accepted the explanation for these exact deposits during the husband's assessment proceedings. Because Kishan Chand was the first holder and had successfully established the source of funds, the tribunal ruled that the same money could not be classified as unexplained in the second holder's hands. ## Legal Basis for Relief Section 69A applies when a taxpayer fails to explain the nature and source of money found in their possession. In this case, the tribunal found the source was clearly identified through bank records. The department failed to dispute the authenticity of these documents or challenge the husband's previously accepted financial explanation. ## Non-Resident Tax Implications Khanwani, a Dubai-based NRI, maintained NRE and FCNR accounts consistent with her residency status. Under Section 5(2), non-resident income is taxable in India only if it accrues or is received within the country. The tribunal found no evidence of such income that would justify the disputed tax addition in this case. ## Procedural Oversight by Department The assessing officer’s failure to distinguish between foreign currency units and domestic currency led to a significant administrative error. By treating 3.38 crore yen as ₹3.41 crore, the department ignored the actual financial reality of the taxpayer. This oversight necessitated the intervention of the Commissioner of Income Tax and the ITAT. ## Significance of Tribunal Ruling The September 2026 order reinforces the necessity for accuracy in tax assessments involving foreign currency transactions. By upholding the deletion of the addition, the tribunal protected the taxpayer from arbitrary tax demands. This case highlights the importance of verifying financial data against original bank records before initiating Section 69A proceedings. ## Sources covering this story - https://www.livemint.com/money/personal-finance/nris-3-41-crore-fcnr-deposits-flagged-as-unexplained-money-after-tax-officer-mistook-yen-for-rupees-itat-gives-relief-11792336769819.html — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._