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Facts
The assessee, a non-resident individual, did not file an income return. Information regarding foreign currency transactions led to the reopening of assessment under Section 148. The AO made an addition of ₹50,35,902 for unexplained money under Section 69A, which the DRP restricted to ₹1,50,000, bringing it to tax under Section 115BBE. The total assessed income of ₹1,56,040 resulted in a tax liability of ₹90,000, as the AO denied the benefit of the Basic Exemption Limit (BEL).
Held
The Tribunal held that an individual, regardless of residential status, is entitled to the Basic Exemption Limit (BEL) of ₹2.50 Lakhs for income not taxed under Chapter XII. However, BEL is not available for income taxed under Section 115BBE. Crucially, the Tribunal ruled that if an individual's total income, even after additions, does not exceed BEL, they are not obligated to file a return, and thus, reopening under Section 148/149 is invalid. Consequently, the impugned addition under Chapter XII was vacated, and the AO was directed to refund the excess appeal fees.
Key Issues
Whether a non-resident individual assessee is eligible for the Basic Exemption Limit (BEL) when computing tax liability, and if income up to BEL should be excluded for income taxable under Section 115BBE. Also, the validity of assessment reopening under Sections 148/149 when the total income does not exceed BEL.
Sections Cited
144, 144C(13), 6(6), 139(1), 148, 149, 69A, 115BBE, 4, 3, 14, 253(6), 252(6), 161(1A), 164, 164A, 167B, Finance Act section 2, ITAT-Rules 1963 rule 18, ITAT-Rules 1963 rule 34
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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI
Before: HON’BLE SHRI PAVAN KUMAR GADALE & SHRI G. D. PADMAHSHALI
ORDER PER G. D. PADMAHSHALI; The captioned appeal is filed by the assessee challenges DIN & Order No ITBA/AST/F/144/2024- 25/1072202908(1) dt. 15/01/2025 passed by the Income Tax Officer, International Taxation Ward, Panaji Goa [‘Ld. AO’] u/s 144 r.w.s. 144C(13) of the Income-tax Act, 1961 [‘the Act’] anent to assessment year 2019-20 [‘AY’]. ITAT-Panaji Page 1 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 The primary grievance in the present appeal 2. twirls around entitlement of basis exemption limit [‘BEL’] to a non-resident individual assessee and validity of reopening u/s 148 r.w.s. 149 of the Act.
The brief facts of the case are that; the assessee 3. is an individual and for the purpose of taxation under the Act, the assessee was ‘Non-Resident’ within the meaning of section 6(6) of the Act. The assessee did not file return of income as required u/s 139(1) of the Act. Upon receipt of information that, the assessee had certain foreign currency transactions, the assessee’s case after recording reasons and obtaining prior approval was reopened u/s 148 of the Act. Owning to assessee’s failure to explain nature & source of certain credits/entries appearing in his two bank accounts viz; State Bank of India Saving Bank Account [‘SBI-A/c’] and ICICI Bank Non-Resident- ITAT-Panaji Page 2 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 Ordinary Account [‘ICICI- A/c’], the Ld. AO vide draft order dt. 18/03/2024 u/s 144C(1) of the Act proposed to make addition of entire sums found credited into such bank accounts for ₹50,35,902/- as unexplained money u/s 69A of the Act.
The assessee vide application dt. 22/04/2024 4. challaged the said proposition & the draft order before the Dispute Resolution Panel-2, Bengaluru [‘Ld. DRP’]. The Ld. DRP vide its direction dt. 23/12/2024 accepted the assessee’s substantial explanation vis-à- vis submission and restricted the additions only to ₹1,50,000/- against which assessee tendered inconsistent explanation on two occasions.
Pursuant to such directions the Ld. AO vide order 5. dt. 15/01/2025 made a solitary addition ₹1,50,000/- u/s 69A as unexplained money and brought same to tax u/s 115BBE of the Act vide final assessment ITAT-Panaji Page 3 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 framed u/s 144 r.w.s. 144C(13) of the Act and assessed the total income of the assessee at ₹1,56,040/- including returned income of ₹6,040/.
The computation of income which is an integral 6. part of the assessment order determined a tax liability ₹90,000/- by application of special rate of taxation prescribed u/s 115BBE of the Act. By application of provisions of such special rate of taxation, while computing former tax liability the Ld. AO apparently denied the benefit of BEL entitlement to the assessee, which was otherwise available to an individual assessee for the year under consideration. Aggrieved by such computation the assessee is in appeal before us initially with twin payers/grounds; (i) for quashing erroneous computation of net taxable income & tax liability being bad in law and (ii) for refund of excess appeal fees paid u/c (c) as against fees payable u/c (b) of section 253(6) of the Act. ITAT-Panaji Page 4 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 We have heard rival party’s submission and 7. subject to rule 18 of ITAT-Rules 1963 perused material placed on record and considered facts in light of settled position of law, which are forewarned to the parties for their rebuttal.
Now to deal with first prayer of the appellant this 8. adjudication seeks to answer two questions; (a) As to whether for the year under consideration a non-resident individual assessee is eligible for BEL while computing his tax liability? And (b) As to whether income upto BEL be excluded while computing tax for the year under consideration on income which is taxable at special fixed rate u/s 115BBE of the Act?
In answering the first question, at the outset we 9. note that, section 4 of the Act creates charge on income of every person in respect of income of previous year as defined by section 3 which is the financial year in common parlance. Such tax is ITAT-Panaji Page 5 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 chargeable on income at the rate or rates prescribed by Annual Finance Act. The s/s (1) of section 2 of the Finance Act in turn prescribes that; for any assessment year tax shall be charged at the rates specified in Part-I of the First Schedule and computed/calculated in the manner provided therein. The Item(I) of Paragraph ‘A’ of Part-I of First Schedule prescribes ‘NIL’ rate taxation where total income (as computed under the provisions of Act) does not exceed ₹2,50,000/- (that is BEL) in case of every individual other than the individual referred to in items (II) and (III) of this Paragraph or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, not being a case to which any other Paragraph of Part-I applies. ITAT-Panaji Page 6 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 10. A bare reading of Item(I) of Paragraph ‘A’ of Part- I of First Schedule clearly suggest that, an individual irrespective of his residential status is eligible for ‘NIL’ rate of taxation for an income up-to ₹2.50Lakhs that is BEL. Whereas the resident individual is better placed for with accelerated BEL of ₹3Lakhs & ₹5Lakhs who is of the age 60years or 80years respectively.
Further inquiry into Annual Finance Act also reveals that, rate or rate of taxation prescribed by s/s (1) of section 2 are subject to provisions of s/s (2) & s/s (3) thereof. The s/s (3) in turn deals with cases to which the provisions of Chapter XII or Chapter XII-A or section 115JB or section 115JC or Chapter XII-FA or Chapter XII-FB or sub-section (1A)of section 161 or section 164 or section 164A or section 167B of the Act. The tax chargeable shall accordingly be determined as provided in that Chapter or that ITAT-Panaji Page 7 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 section, and with reference to rates prescribed by s/s (1) or rates as specified in that Chapter or section, as the case may be.
We are concerned with taxation u/s 115BBE of chapter XII of the Act, as such in the context of issue under adjudication, the combine reading of s/s (1) and s/s (3) of section 2 of the Finance Act perceptibly suggests that, an individual irrespective his residential status is entitled to BEL of ₹2.50Lakhs in respect of income other than the income brought to tax under chapter XII of the Act. Inversely, no BEL is available to an individual assessee in respect of any income which is brought to tax u/s 115BBE of u/c XII of the Act. The former findings & discussion thus rest the adjudication by answering the question framed hereinbefore viz; (a) positively/affirmatively and question (b) negatively.
ITAT-Panaji Page 8 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 13. Falling short of submission and contentions yielding no relief, the appellant implored the bench to allow to raise a legal ground orally on the strength of ground number 3 of appeal memo. The Revenue could hardly object the legal ground so raised challenging the very jurisdiction of invocation of section 148 r.w.s. 149 of the Act as even after addition the total income of the appellant assessee did not exceed the BEL.
Before setting clock for adjudication, we have to first satisfy as to ‘whether such legal ground raised
first time before the Tribunal can be admitted?’ more specifically when it was not raised in first appeal but arising out of impugned order assailed against. In this context, it shall suffice to state that, the legal ground raised is ascended out of the impugned order and goes to challenge validity thereof. Admittedly no new facts are required to be investigated or verified for its ITAT-Panaji Page 9 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 admission or for its adjudication, therefore such being a bald legal ground in our considered view deserves admission in light of ratio laid down by the Hon’ble Apex Court in ‘CIT Vs National Thermal Power Company Ltd.’ reported in 229 ITR 383 (SC), and Hon’ble Delhi High Court in ‘Gedore Tools Pvt Ltd. Vs CIT’ reported in 238 ITR 268. After due consideration of appellant’s plea and submission, we are satisfied that, omission to raise former legal ground while filing present appeal was neither wilful nor unreasonable, for the reason we deem it fit to admit in light of judicial precedents laid in ‘Jaora Sugar Mills Pvt. Ltd v CIT’ reported in 124 ITR 482 (MP), and ‘CIT v Western Rolling Mills Pvt. Ltd.’ reported at 156 ITR 54 (Bom) and ‘Jute Corporation of India Ltd. v CIT’ find placed in 187 ITR 688(SC) and ‘Ahmedabad Electricity Co. Ltd. v CIT’ reported in 199 ITR 351(Bom), ergo same stands admitted for adjudication. ITAT-Panaji Page 10 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20
15. In adjudicating the issues we note that, in terms of section 139(1)(b) of the Act, a person being other than a company or a firm is not under obligation to file return of income if total income of such person (including total income of any other persons in respect of which such person is assessable) from all five sources of income as subscribed u/s 14 of the Act (heads of income) does not exceed maximum amount not chargeable to tax that is ‘Basic Exemption Limit’ or ‘BEL’. Subject to exception, liability fastened u/s 139(1)(b) of the Act for filing return of income by any individual assessee thus arises only when total income of such individual from all five sources exceeds BEL and not otherwise.
On the other hand, for issuance of re-opening notice 148 of the Act, the time limit qua quantum of income chargeable to tax has escaped assessment are ITAT-Panaji Page 11 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 set u/s 149 of the Act. Without reproducing section in verbatim in the context of alleged amount of escapement of income it shall suffice to state that, conjoint reading of section 139(1)(b) and 149(1)(b) of the Act plainly suggests that, the limit of escaped income set in section 149 of the Act is excluding the amount of BEL embedded in section 139(1)(b) of the Act. By application of stricter interpretation of law laid by Hon’ble Apex Court in ‘CoC(I) Mumbai Vs Dilip kumar & Co’ [2018, 9 SCC 1 (SC)] we say so because if the limit of escaped income set in 149 of the Act is considered to be inclusive of BEL, then it would be granting of blanket license to the Revenue to issue notice u/s 148 of the Act invariably against all individual (for their failure to file return) in the grip of escapement who may not have earned even a ‘penny’ over & above BEL. This interpretation of law if applied would draconically defeat very purpose & intent of ITAT-Panaji Page 12 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 both section 139(1)(b) and 149(1) of the Act. This proposition also finds fortified in ‘Subhash Runwal Vs ITO’ [2024, 243 DTR 177 (Pune)].
We therefore are of considered view that; when total income of an individual assessee for any assessment year from all sources (even after additions made in assessment proceedings) do not exceed BEL, then such individual assessee neither under obligation to file any return u/s 139(1) of the Act nor could be mandated in pursuance of notice u/s 148 of the Act. By opting not to file return either originally u/s 139(1) or in pursuance u/s 148 notice, an individual assessee conveys to the Revenue that his/her total income for given year is below BEL. The revenue invoking provisions of section 148 of the Act therefore cannot in law saddle an individual assessee by making token addition u/c XII of the Act.
ITAT-Panaji Page 13 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 18. In light of aforestated discussion, we hold the impugned addition directed/sustained by Ld. DRP and assessed by Ld. AO u/c XII of the Act is bad in law, hence stands vacated. The legal ground raised in present proceedings thus stands allowed.
Now coming to refund of excess payment of appeal fees paid by the appellant; we note that as per s/s (6) of section 253 of the Act for filing of an appeal to the Tribunal requires payment of fees which shall be paid and accompanied along-with appeal memo for its admission. The fees to be paid is based on total income assessed to tax and as computed by assessing officer. In the context of present appeal, we note that as per clause (b) of s/s (6) of section 252 of the Act total income computed by assessing officer is more than one hundred thousand but not more than two hundred thousand, therefore the fees to be paid by ITAT-Panaji Page 14 of 15 Satish Narayan Tarale Vs ITO AY: 2019-20 the appellant was one thousand five hundred rupees. Per contra, in the present appeal the appellant vide challan no 17423 dt. 07/02/2025 inadvertently paid ten thousand rupees as appeal fees, thus in excess than required. Permitting the Revenue to enjoy such excess payment would since lead to unjust enrichment, therefore we direct the Ld. AO to refund the excess payment of appeal fees while giving effect to this Tribunal’s order by adhering to timelines prescribed in the statute.
The appeal in result is allowed in aforestated terms. In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned hereinbefore.
-S/d- -S/d- PAVAN KUMAR GADALE G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER Panaji/Dt: 24th July 2025. Copy of the Order forwarded to :
1. 1. The Appellant.
2. The Respondent.