DEEPAK KAKAR,FEROZPUR vs. INCOME TAX OFFICER, WARD 3(1), FEROZPUR
Facts
The assessee, a non-resident individual, disputes the initiation and completion of assessment proceedings under section 148 read with sections 147/144. The assessee claims the notice under section 148 was never served and that the Assessing Officer lacked jurisdiction. The Assessing Officer proceeded ex-parte without providing a reasonable opportunity to be heard.
Held
The Tribunal held that the reopening of assessment was bad in law because the Assessing Officer lacked the necessary jurisdiction to issue the notice to a non-resident assessee. The Tribunal noted that the Assessing Officer was aware of the assessee's NRI status but still issued the notice to a non-jurisdictional address. The Tribunal also referred to various judicial pronouncements supporting this view.
Key Issues
Whether the reassessment proceedings initiated under section 148 were legally valid and if the notice was properly served on the non-resident assessee.
Sections Cited
148, 147, 144, 250, 194A, 195, 133(6), 131(1A), 142(1), 195
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, AMRITSAR
Before: SHRI UDAYAN DAS GUPTA
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, AMRITSAR BEFORE SHRI UDAYAN DAS GUPTA, JUDICIAL MEMBER AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER xSftrtoT U/ITA No. 409/Asr/2024 / Assessment Year : 2014-15 Deepak Kakar, The ITO, <sHW Mohalla Dhanwala Wala, Ward-3(1), Closed Street, Ferozepur Ferozepur City, Punjab 152002 TT./PAN NO: CTZPK1764P H^l^ff/Respondent 3| 4] cl |'4f/Appellant ( HybridHearing ) <Ivjcj?! $/ Revenue by :Shri Davinder Pal Singh, Sr. DR 3{N Tf/Assessee by : Shri Parikshit Aggarwal, CA
4^ cn"fh<l/Date of Hearing vJ^Vf^UTl cUffe/Date of Pronouncement : 19.12.2024* 2025 \ '30^170 r de r Per Krinwant Sahay, AM: Appeal in this case has been filed by the Assessee against the order dated 20.05.2024passed by Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi on the following Grounds: Grounds of appeal are as under 2.
That on the facts, circumstances and legal 1. position of the case, Worthy CIT(A), NFAC in Appeal No. NFAC/2013-14/10190527 has erred in passing order did. 20.05.2024 in
409-Asr-2024 Deepak Kumar, Ferozepur 2 contravention of provisions of S. 250 of the Income Tax Act, 1961 (hereinafter referred to as "Act"). That on facts, circumstances and legal position 2. of the case, Worthy CIT(A) has erred in confirming the actions of Ld. AO in initiating, continuing and then concluding the impugned assessment u/s 148 r.w.s. 147/144 and hence the impugned assessment order deserves to be quashed. That on facts, circumstances and legal position 3. of the case, Worthy CIT(A) has erred in confirming addition of Rs. 31,99,224/ - made by Ld. AO by erroneously holding the payment received as interest income. That on facts, circumstances and legal position 4. of the case, Worthy CIT(A) has erred in confirming addition of Rs. 45,149/- made by Ld. AO by erroneously holding the interest income as undisclosed income of the appellant. That on facts, circumstances and legal position 5. of the case, Worthy CIT(A) has erred in confirming the action of Ld. AO in not allowing the credit of TDS of Rs. 3,33,872/- even when the credit of the same is appearing in 26AS and has been deducted by the payer on item which the Ld. AO himself held to be taxable. That on facts, circumstances and legal position 6. of the case, the impugned order passed by the Ld. AO and then by Worthy CIT(A) deserves to be quashed since the same have been passed without affording reasonable opportunity of being heard to the appellant. \
409-Asr-2024 Deepak Kumar, Ferozepur 3
That the appellant craves leave for any addition, 7. deletion or amendment in thegrounds of appeal on or before the disposal of the same. Brief facts of the case as per the written submissions filed by the 3. Counsel of the Assessee are as under;
The appellant is a non-resident individual. 1. The alleged statutory notice u/s 148 was issued 2. on 28.03.202.1. However, the same was never served on the appellant. Hence the appellant disputes the very initiation, its continuation and finally completion of assessment proceedings. Further, the other conditions to justify the assumption of valid jurisdiction by - the Ld. AO u/s 148 are also not getting satisfied in this case. The assessee could not file any reply in 3. proceedings since he is an NRI and was not in India when the proceedings were ongoing. He was not aware of the ongoing proceedings. Even the passing of assessment order never came to his knowledge in time. It is only on his recent visit to India that he came to know about the fact of passing of assessment order. He then engaged a counsel and filed this appeal. The Ld. AO completed the impugned assessment u/s 144 r.w.s. 147 of the Act on 14.03.2022. All the above facts and circumstances goes to show that the entire proceedings had been conducted at the back of the appellant. While framing the assessment, Ld. AO erred in 4. concluding assessment u/s 144 without providing reasonable opportunity of being heard to the assessee and making addition of Rs. 32,44,373/- (u/s 194A - 31,99,224 + u/s 195-45,179). \
409-Asr-2024 Deepak Kumar, Ferozepur 4 Being aggrieved against above, this appeal is 5. being preferred. During proceedings before us, the Id. counsel of the Assessee 4. has taken the legal ground first i.e - That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the actions of Ld. AO in initiating, continuing and then concluding the impugned assessment u/s 148 r.w.s. 147/144 and hence the impugned assessment order deserves to be quashed. Facts on issue and submissions filed by the Assessee are as 5. under:- t 'That on law, facts and circumstances of the case, the impugned assessment order deserves to be quashed and the proceedings deserves to be declared void-ab- initio since the jurisdiction u/s 148 was wrongly assumed, continued and illegally concluded u/s 147." The appellant was a non-resident Individual 1. during the year in question. He is residing in USA for last 25 years. He did not have any source of income above the taxable slab during the year in question; therefore, no return was filed by him. A notice u/s 148 was issued on 28.03.2021. for 2. re-opening the assessment of the assessee which was never served upon assessee. The Ld. AO reopened the case of the assessee merely on the basis of information that he received an interest of Rs. 32,44,373/- during the year in question. Before
409-Asr-2024 Deepak Kumar, Ferozepur 5 reopening of the case u/s .1.47, the Ld. AO did not make any enquiry. No Notice or Summon U/s 133(6) or 131(1A) was issued to the company to ascertain the nature of transaction entered, to check whether the said payment was in the nature of income or not. The reopening was made on mere suspicion arising from above said information. Subsequently, notices u/s 142(1) were issued by 3. the Ld. AO but no such notices were served upon assessee as notices were addressed at the Indian address of the assessee even when assessee is residing outside India for more than 25 years. It is an important fact that the Ld. AO also got the information about the interest received from the SBI bank. The bank already had information that assessee is a non-resident individual and they deducted TDS on interest credited u/s 195 @ 30% which is applicable to a non-resident assessee. Moreover, it is also evident from Form 26AS that assessee is a non-resident as the TDS was deducted by the leductors u/s 195 which is applicable on the payments made to NR asses see. Copy of Form 26AS is appended. Even though, agreement entered with the company contains the USA address of the assessee which can be easily available if proper enquiry was earned out before the initiation of assessment proceedings. The above-mentioned numerous documents and facts show that the Ld. AO was already having necessary information and documents which justify the status of the assessee as non-resident individual while initiating the assessment proceedings. 15. Even though, when Ld. ITO Ward-3(1), Ferozepur was aware of assessee’s residential status and his jurisdiction, he ignored the same and issued
409-Asr-2024 Deepak Kumar, Ferozepur 6 notice u/s 148. The Ld. ITO Ward-3(1), Ferozepur was having jurisdiction only over resident asscssce. Therefore, notice u/s 148 was issued by a non- jurisdictional assessing officer having jurisdiction on resident assessce. Subsequently, case of the assessec was 6. transferred to the Ld. AO, NFAC who also do not have jurisdiction over non-resident assessec. Assessee was not aware of any of such proceeding initiated against him; therefore, he did not file any response to the notices issued. Thereafter, assessment was completed by the Ld. AO on the back of assessee by passing cx- partc order u/s 144 on 14.03.2022. The above reopening is bad in law and it 7. deserves to be declared void-ab-initio
The Id. Counsel accordingly requested that the assessment 6. order dated 14.3.2022 passed bythe Assessing Officer should bequashed.
The Id. DR relied on the order of the order of the CIT(A). 7. The Id. CIT(A) on this issue has given his findings as under:- 8. 6.5 The appellant in his ground of appeal no. 1 assailed the AO in initiating the proceedings u/ 148 of the Act and stated that the assessment order may be quashed as the notice were not served. The submission of the appellant is examined. On the one hand the appellant is stating that he is an NR1 and could not filed the submission while on the other hand he is stating that the notice was not served. The assessment order is perused and accordingly the objection raised by the appellant with regard to the issuance and service of notice is discussed. The ground of appeal no. 1 is dismissed.
409-Asr-2024 Deepak Kumar, Ferozepur 7 We have considered the findings given by the Assessing Officer 9. in the assessment order and the findings given by the Id. CIT(A) in the appellate order on this issue. There is nodenying that theinformationregarding receiving of so called interest by the Assessee was received by the Assessee from thebank and it is also a matter of record that the bank authorities had deducted TDS u/s 195 which is applicable to Non Resident Indians (NRIs) only. The Counsel of the Assessee has also brought it on record that the present address of the Assessee in United States (U.S.) was also available with the bank.Even the same address was available on the copyof agreement enteredinto by the Assessee for purchase of shopNo. A-10, situated at village Bhattian,G.T.Road, Ludhiana ) withM/s Canvas Buildcon Pvt Ltd. Thus, the counsel of the Assessee has argued that the Assessing Officer was well aware that the Assessee is an NRI and accordingly Assessee’s present address in U.S. was also well within the reach of Assessing Officer. Despite this, the Assessing Officer issued the notice on Assessee’s previous address in India were the Assessee was not residingfor the last 25 years. The Counsel further argued that Form 26AS clearlyshows that the TDS was deducted u/s 195 of the Act so the A.O. cannot claim that he was notaware of the residential status of the Assessee. Therefore,,in spite of these factsin the knowledge of the Assessee, the Assessing Officer issued a notice
409-Asr-2024 Deepak Kumar, Ferozepur 8 u/s 147 of the Act to a non-resident Indian which is illegal in nature. Thus, the Counsel argued that the notice issued by jurisdictional Assessing Officer to an NRI as a invalid notice.
We have also considered the following case laws brought on record by the Counsel of the Assessee in the cases of - HarjeetSurajprakashGirotra vs. Union of India ( Writ Petition No. 513 of 2019) (High Court Bombay) Pr. CIT-1 vs. Altanta Capital Pvt Ltd on 21 September, 2015 ( Delhi High Court)
Suresh Kumar Sheetlani vs ITO (102 CCH 205) (2018) (All. High Court) ITO vs. M/s Ren Rega Media Provision tLtd (ITA No. 6311/Mum/2019). dated 9.5.5.2019 (Mumbai ITAT) Renu Gupta, Ghaziabad v ITO, Ward 2(2), Gzb on21December 2018 ( DelhiTrib) We have also considered the case laws -
CIT vs Smt. Paramjit Kaur (2009) (311 ITR 38) (P&H HC) "AO cannot lake recourse to reassessment proceedings mereiu on the basis o f reasons to suspect—In the instant case, AO had initialed reassessment proceedings simply on the basis o f information received from the surueg circle that the assessee had got prepaid, a demand draft for a sum. ofRs. 83,040 which was not accounted in her books of account—AO had not examined and corroborated the said information before recording his own satisfaction o f
409-Asr-2024 Deepak Kumar, Ferozepur 9 escaped, income and initiating rea.ssessm.enl proceedings— Thus, it cannot he said that the reassessment proceedings were based on belief that income chargeable to tax has escaped, assessment—Therefore, issuance of notice under s. 148 was not valid"
Ganga saran & Sons (P) Ltd, v. ITO, 130 ITR 1 (SC) • • Signature Hotels (P) Ltd, vs ITO&, ANR. (338 ITR 51) 12011) (Del. HC • Pr. CIT vs. G & G Pharma India Ltd (2016) 384 ITR 147 (DelHC) CIT vs. Indo Arab Air Services (2016) 130 DTR 78/ • 283 CTR 92 (Del. HC)
We find that there are various judicial pronouncements which clearly and categorically say that a notice issued by a non- , residentjurisdictional Assessing Officer and later on assessment made on that notice are invalid. Here, in this case, despite the fact that the Assessing Officer had access to the information that the Assessee was an NRI, still then instead of transferring the case to the International Taxation Division, the jurisdictional Assessing Officer i.e., ITO Ward-3(1), Ferozepur, issued the notice while he had no jurisdiction over the NRI Assessee’s for issuing of notice. Later on, the assessment was also completed by the Assessing Officer NFAC, Delhi during the assessee’s residential status as a Resident. It is clear from the assessment passed on 14.3.2022. Assessee is a non resident and noticeswereissued by a non-jurisdictional Assessing
409-Asr-2024 Deepak Kumar, Ferozepur
Officer, therefore, keeping in view the judicial pronouncements cited above, we are of this considered view that the Assessee had a case on legal point regarding reopening of the assessment. Accordingly, on this issue, the findings of the Id. CIT(A) cannot be sustained and thus Assessee’s appeal on this legal issue is allowed. The assessment is hereby quashed. Since we have quashed the assessment order on legal point/ issue, therefore, we are not inclined to pass an order on other grounds of appeal. 10. In the result, Assessee’s appeal is allowed. I I / Order pronounced on M P / 2025 *
( UDAYAN DAS GUPTA ) ( KRINWANT SA: Judicial Member Accountant M Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, AMRITSAR 5. Guard File By order, Assistant Registrar
