ITAT Hyderabad Sets Aside ₹1,45,43,306 Addition on Foreign Bank Credits, Grants Fresh Opportunity in Light of Criminal Proceedings
Background and Overview
The Income Tax Appellate Tribunal, Hyderabad ("ITAT" or "Tribunal") recently adjudicated an appeal filed by the assessee, Prasad Nimmagadda, directed against the order of the Commissioner of Income Tax (Appeals)-12, Hyderabad ("CIT(A)"), dated 23.07.2025, pertaining to Assessment Year 2016-17. The case involved several contested additions, most notably the addition of ₹1,45,43,306 treated as unexplained credits in the assessee's foreign bank account held with OCBC Bank in Singapore, as well as the addition of ₹1,17,96,000 representing foreign salary income and the denial of foreign tax credit under Section 90 of the Income-tax Act, 1961 read with the India-Singapore Double Taxation Avoidance Agreement ("DTAA").
The Tribunal, after carefully considering the facts and the extraordinary personal circumstances of the assessee — including prolonged incarceration and restrictions on international travel — decided to set aside the CIT(A)'s order and remand the matter for fresh adjudication, granting the assessee one final opportunity to substantiate his case with documentary evidence.
Grounds of Appeal Raised Before the Tribunal
The assessee raised the following grounds before ITAT Hyderabad:
- The order passed by CIT(A)-12, Hyderabad was held to be erroneous both on facts and in law.
- The CIT(A) erred in sustaining the addition of ₹1,17,96,000 representing foreign salary received from M/s Globex Holdings Pte Ltd, Singapore — income that was contended to be taxable exclusively in Singapore under Article 15 of the India-Singapore DTAA, given that the assessee's stay in Singapore was less than 183 days during the relevant period.
- In the alternative, the CIT(A) erred in rejecting the claim for foreign tax credit in respect of taxes paid in Singapore, since relief under
Section 90of the Act read with the applicable DTAA could not be refused where substantive evidence was already available on record. - The CIT(A) erred in upholding the addition of ₹1,45,43,306 as unexplained credits in the assessee's foreign bank account, effectively disregarding evidence that had been filed by the assessee.
- The assessee reserved the right to add, amend, modify, or supplement the grounds of appeal before or during the hearing.
Submissions Made Before the Tribunal
Assessee's Position
The Authorised Representative appearing on behalf of the assessee placed on record certain compelling circumstances that had effectively prevented the assessee from properly prosecuting his case at the appellate stage. It was submitted that:
- The assessee had been in judicial custody for more than two years in connection with financial transactions involving Singapore Dollar ("SGD") credits deposited in his bank account — the very credits forming the basis of the impugned addition.
- Parallel criminal proceedings arising from these financial transactions were still pending adjudication before the Hon'ble Supreme Court of India in Civil Appeal Nos. 12561 to 12566/2025.
- Even after his release from custody, the assessee was prevented from travelling abroad due to a look-out notice issued by the investigating agencies, which made it impossible for him to collect documents and evidence located overseas.
- As a direct consequence of these circumstances, the assessee was unable to file proper responses, furnish supporting documents, or effectively represent himself before the CIT(A).
- The Authorised Representative placed on record a copy of the Supreme Court's order passed in the interlocutory application filed in Civil Appeal Nos. 12561 to 12566/2025 to corroborate the pendency of criminal proceedings.
The assessee sought one further opportunity to file relevant documentary evidence and supporting explanations regarding the source of the SGD credits before the CIT(A).
Revenue's Objection
The Departmental Representative opposed the request for an additional opportunity on the following grounds: