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Facts
The assessee, an aerospace engineer residing in USA since 2005, did not file an Indian tax return for AY 2016-17, claiming no taxable income in India. He purchased two properties using savings from his and his wife's US-earned income deposited in an NRE account.
Held
The Tribunal held that the assessee, being a non-resident and having used an old/defunct Indian email ID, did not receive notices, leading to ex-parte orders. An opportunity was granted to explain the facts before the AO.
Key Issues
Whether the ex-parte assessment and appeal orders were valid when the assessee, a non-resident, claims non-receipt of notices due to communication issues, and if an opportunity should be granted for a fresh assessment.
Sections Cited
250, 148, 144C(15)(b), 144C(1), 69, 69A, 115BBE, 115A(5), 234A, 234B, 271(1)(c), 271(1)(b), 271F, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 17/02/2025 in respect of the A.Y. 2016-17 and raised the following grounds: “
A. GENERAL GROUNDS:
1. The order dated 17 February 2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi ["CIT(A)"] under section 250 of the Income-tax Act, 1961 ("IT Act") in so far as it confirms the additions/adjustments made by the learned Assessing Officer ("Ld AO"), is contrary to law and facts of the case and is passed in contravention of principles of natural justice.
2. The CIT(A) and Ld AO erred in passing ex-parte orders which are devoid of merits and hence the CIT(A) and Ld AO have erred in acting mechanically and have erred in not objectively evaluating the merits of the case. B. LEGAL GROUNDS CHALLENGING THE VALIDITY OF ASSESSMENT ORDER AND PROCEEDINGS: 3. The CIT(A) and Ld AO erred in not appreciating that the Appellant was a non-resident and hence, the Ld AO did not have jurisdiction over the Appellant for initiating the proceedings under section 148 of the Act.
The CIT(A) and Ld AO erred in not appreciating that since the Appellant was non-resident, the Income Tax Officer (International Taxation) had jurisdiction over the Appellant.
5. The CIT(A) and Ld AO erred in not appreciating that the Appellant being a non-resident was 'eligible assessee' as per section 144C(15)(b) of the Act and hence, the Ld AO erred in not passing a draft order as per the provisions of section 144C(1) of the Act. C. GROUNDS IN RELATION TO ADDITION MADE UNDER SECTION 69A OF THE IT ACT: 6. The CIT(A) and Ld AO have erred in law and on facts in making addition of Rs.1,89,60,040/- as 'unexplained investment' under section 69 of the Act.
7. The CIT(A) and Ld AO erred in not appreciating that the Appellant was not required to maintain books of accounts and hence, addition could not have been made under section 69 of the Act.
The CIT(A) and Ld AO have erred in not appreciating that the Appellant had purchased the properties from out of his and his wife's income earned in USA which was deposited in SBI NRE account.
9. The CIT(A) and Ld AO erred in not appreciating that the consideration for purchase of the properties was made through banking channel through the SBI NRE account which stood in the Appellant and his wife's name.
10. The CIT(A) and Ld AO erred in law and on facts in not appreciating that the transaction of purchase of property in India did not result into taxable income for the Appellant and it was only investment out of the savings.
The CIT(A) and Ld AO erred in levying higher tax under section 115BBE on the addition of Rs. Rs.1,89,60,040/- made under section 69 of the Act. D. GROUND IN RELATION TO ADDITION MADE AS 'OTHER SOURCES': 12. The CIT(A) and the Ld AO erred in treating interest income of Rs.41,626/-as income from 'Other Sources' without appreciating that the income was below the taxable limit. 13. The CIT(A) and the Ld AO erred in not appreciating that tax at source was deducted on the interest income by the payer bank and as per section 115A(5) of the Act, the Appellant was not required to file a return of income in India. 14. The CIT(A) and Ld AO erred in levying higher tax under section 115BBE on the interest income of Rs.41,626/- when the same was not income referred to under section 68, 69, 69A, 69B, 69C or 69D of the Act. E. CONSEQUENTIAL GROUNDS: 15. The CIT(A) and Ld AO erred in charging interest under section 234A and 234B of the Act. 16. The CIT(A) and Ld AO erred in initiating penalty proceedings under section 271(1)(c), 271(1)(b) and 271F of the Act. Each of the above grounds is independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant reserves the right to further add, alter or amend each one of the above grounds of appeal”
2. The brief facts of the case are that the assessee is an aerospace engineer working in USA since 2005. He filed his returns in the USA treating him as a resident. Since he has no taxable income in India, he has not filed his return of income for the A.Y. 2016-17. During the year, he had earned interest income and also purchased two properties out of his and his wife’s NRE account in which the income earned in USA were deposited. The AO based on the information available with the department, had issued notices and sought for the details about the interest income as well as the immovable properties purchased. Unfortunately, all the notices were sent to the Indian email ID which was not used by the assessee and in fact the said email ID was defunct and therefore he was not able to offer his explanations. During the A.Y., the assessee had no income earned in India and the immovable properties were purchased by him through the salary income earned by him as well as his wife in USA and therefore the assessee had not filed his return of income. The AO treated the investments as unexplained investment u/s. 69 of the Act and also added the interest income earned by him since the source for both the items were not furnished by the assessee. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and explained the reasons for the non-submission of replies to the various notices issued. The Ld.CIT(A) had also dismissed the appeal on the ground that the assessee had not responded to any of the notices issued by him.
3. Aggrieved with the said order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.
4. At the time of hearing, Mr. Ajith .V, Advocate representing the AR submitted that the assessee being a green card holder in USA, had no taxable income received in India and all the incomes received in USA were properly reported to the USA authorities and therefore he has not filed any return in India. The Counsel further submitted that unfortunately the assessee is not using the email ID given in the portal of the department and therefore he has not received any notices issued by the AO as well as the Ld.CIT(A) in order to substantiate his case that no income has been accrued in India. Therefore the Counsel prayed that an opportunity may be granted to substantiate his case before the AO. Since the name of the counsel who has represented the AR, does not found place in the vakalat, we mentioned that none appeared for the assessee.
The Ld.DR relied on the orders of the authorities below and submitted that the assessee had not appeared before the AO as well as before the Ld.CIT(A) even though several opportunities were granted by the authorities and prayed that no more leniency can be shown on the assessee and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
There is no dispute that the assessee is a green card holder and residing in USA from the year 2005. It is the further case of the assessee that he has no income earned in India and therefore he has not filed his return of income for the A.Y. 2016-17. We have also considered the fact that the immovable properties were also purchased by the assessee from his and his wife’s savings from the salary income earned in USA.
8. From the appeal order, we came to know that the incomes were earned by the assessee and his wife in US Dollars which was later on converted into Indian rupee and the said amounts were deposited in their bank account and through which the properties were purchased. Even though, the assessee is having valid documents to show that he has not earned any income in India, but unfortunately, no details were produced before the authorities when the AO as well as the Ld.CIT(A) had issued notices. Since the assessee had not responded to any of the notices issued by the AO, the AO had passed a best judgment assessment order u/s. 144 of the Act. Similarly, the Ld.CIT(A) had also dismissed the appeal on the ground that the assessee had not responded to any of the notices issued by him. Therefore, the assessee had failed to utilise the opportunities granted by the AO as well as by the Ld.CIT(A).
Considering the fact that the assessee is a resident of USA and also holding a green card in USA and the fact that he has not used his Indian email ID, an another opportunity may be granted to him to explain the facts before the AO. We, therefore, set aside the order of the AO as well as the
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 25th June, 2025.