NAYNA MUKESHKUMAR KOTECHA,DAR ES SALAAM, TANZANIA vs. ACIT, INTERNATIONAL TAXATION, RAJKOT, RAJKOT

Sr. Bank A/c. No. Type of Account 1. 310014110000236 NRO Account 2. 310014100061865 NRE Account

4. The details of the assessee’s visit of India, details of relevant instance of cash withdrawal from Bank and impugned Cash Deposit, during relevant period are as under: Stay in INDIA Arrival Departure 11-02-2014 08-09-2014 03-10-2014 15-12-2014 30-01-2015

Impugned Cash Entries Rs.63,49,316/- 24-01-2014 withdrawal Rs.63,49,000/- 28-01-2015 Deposited

5. The details regarding NRI status during the year under consideration, the copy of OCI card is attached herewith. The assessee has attached the copy of bank statement (foreign bank) from which the money has been remitted to the NRE account maintained in India. During the year the assessee received following amounts in my NRE account.

Sr Date Particulars Amounts 1. 12/06/2014. Ch. No.: TRTR/T14163002717/12-06-2014 FOF 2,94,900 2. 03/09/2014 Ch. No.: 3100IRT14001120 19,64,547 Amount transferred from NRO Account No.: 3. 28/01/2015 60,00,000 310014110000236

Sr. No. Date Particulars Amounts 3. 28/01/2015 Amount transferred from NRO Account No.: 60,00,000 310014110000236

7. During the year assessee has transferred fund from her NRO to NRE account during the year and form 15CA is already filed and copy of the said form is attached herewith along with supporting documentary evidence. That the assessment complete on 25.01.2024, and relevant para is reproduced below:

“6. Subject to the above discussions, the total income of the assessee is computed as follows; Total income disclosed in return of income : Rs. NIL/- Add: Unexplained cash deposits u/s. 69A : Rs. 63,49,000/- Assessed total income : Rs. 63,49,000/-

10. Assessed under section 143(3) r.w.s 147 r.w.s 144C(3) of the Income-tax Act, 1961. Demand notice is enclosed herewith. The computation of tax is as per computer generated sheet and the same forms part of this order. Issue notice u/s. 271(1)(c) r.w.s. 274 of the Act.”

8. That the assessee filed an appeal against the impugned order dated 23.01.2024 passed by the Ld. CIT(A) before this Tribunal.

“1. Jurisdictional Objection: The appellant has contended that Id. ITO, Ward 1(1)(1), Rajkot did not have jurisdiction to issue notice u/s. 148A/148 to non-resident. It is clarified that the objection is not concerning mere territorial jurisdiction, it is substantially about residential status of the appellant.

2. Department's Contention: The Department contends that the appellant failed to inform the AO about her non-resident status. This is both factually and legally flawed.

3. Department's Knowledge of Non-Resident Status: i. The show-cause notice u/s 148A refers to 'receipt of remittance by a non- resident'- i.e. the appellant. Words "Receipt of Remittance" forming basis reopening are noteworthy. It is the Reason ii. The Form-15CA is applicable, only in case of remittance to non-resident. It clearly mentions the APPELLANT as REMITTEE NON-RESIDENT. iii. Notices u/s 148A and 148 were sent to the appellant's Tanzania address. The Address is picked up from the Non-resident Remittee's Column of Form- 15CA. The said Form 15CA is available to AO since 26/01/2015. These facts demonstrate the AO was fully aware of the appellant's non- resident status.

4. Statutory Interpretation and Onus:

Nayna M. Kotecha i. Under Sec. 6(1), an individual is NOT by default 'RESIDENT', unlike sec. 6(2)/6(4) – where HUF/any other person is 'always resident, unless proved otherwise'. ii. The onus lies on Department to prove that assessee fulfils conditions of sec. 6(1)(a)-(c). – CIT V. B.K. Dhote [1967] 66 ITR 457 (SC).1 iii. The onus lies on the AO to determine residential status, each year. There is no concept in law, that residential status is "carried forward", from past periods.

6. Prayer: In view of the above, we humbly pray that assessment is liable to be quashed for lacking inherent jurisdiction with the ld. AO who issued notice u/s. 148A and sec. 148.” The Ld.AR further relied on the judgement in support of the aforesaid contention.

“2. During the course of hearing, Ld. AR has taken an argument that the notice u/s 148A has not been issued by the jurisdictional AO and therefore, the order is void ab initio.

3. In this regard, it is submitted that the notice u/s.148 A(b) dated 20/03/2022 was issued by the ITO, Wd-1(1)(1), Rajkot for the reason that the PAN of the assessee at that point of time was lying with that Assessing Officer. The assessee did not inform the Assessing Officer that she is a non-resident and her PAN needs to be migrated to the International Taxation charge. Therefore, the order u/s.148A(d) was also passed by the ITO, Wd- 1(1)(1), Rajkot after taking the approval of the competent authority. Thereafter, during the assessment proceedings, the assessee has submitted her passport as evidence to show that she is Non-resident Indian. Accordingly, the case was transferred to the International Taxation charge and the final assessment order was passed u/s.147 r.w.s 144C(13) of the Act by the DCIT(IT), Rajkot after giving due opportunity to the assessee. The assessee has not taken any such legal ground either at the assessment stage or at the DRP stage. Rather the assessee has taken recourse to the beneficial provisions for NRIs provided u/s.144C of the IT Act. Subsequently, on failure at the DRP stage she has taken above legal ground at the ITAT stage (that notice has not been issued by the correct AO) which is not tenable in view of the facts mentioned above.

5. In view of the above, the legal ground of the Assessee needs to be rejected.”

Date Date No. of Days In India

08/09/2014 Arrived in 03/10/2014 Left India 25 India (pg. 40 of paper Pg. 41of paper book book)

15/12/2014 Arrived in 30/01/2015 Left India 46 India (pg. 42 of paper (pg. 42 of paper book) book)

TOTAL stay in India during FY 14-15 71 In support of the stay in India the assessee submitted the copy of passport submitted the copy of passport upon perusal of passport we noted that the immigration department of India has put the seal of immigration on the passport. So, It is proved that the assessee is an NRI. The Ld. DR of the revenue also agreed to it.

That the assessee raised the jurisdiction issue of reopening of assessment by the department by stating. i. The show cause notice u/s 148A refers to ‘receipt of remittance by a non-resident’ – i.e. the appellant. Words “Receipt of Remittance” – are noteworthy. It is the Reason forming basis reopening. ii. The Form- 15CA is applicable, only in case of remittance to non-resident. It clearly mentions the APPELLANT as REMITTEE NON-RESIDENT.

Nayna M. Kotecha iii. Notices u/s 148A and 148 were sent to the appellant’s Tanzania address. The address is picked up from the Non- resident Remittee’s column of form-15CA. The said Form 15CA is available to AO since 26/01/2015.

We note that the notices were issued by the assessing officer u/s 148A(b), 148A(d) and 148. Notices were issued by AO Ward- 1(1)(1) Rajkot. We agree with the argument of Ld. DR of the revenue that the assessee did not inform the assessing officer that the assessee is non- resident. However, during the course of proceeding the AO came to know from the passport of the assessee that the assessee is a non- resident Indian. The case was therefore forwarded to international taxation charge. We further note on perusal of the pass book at (page 27 of paper book) where address of the assessee is address of Rajkot. And copy of the same is attached herewith:

Nayna M. Kotecha Without prejudice we are of the view that the assessee has to inform about residential status to the Revenue Department, here in this case no proper duty discharge by the assessee and during the course of proceeding the assessee brought into the notice of AO about the residential status of the assessee. We are of the view that the ground taken by the assessee for reopening of assessment by non-jurisdiction of officer is not acceptable. The other ground taken by the assessee about the addition of Rs 63,49,316/- The assessee has deposited cash on 27.01.2015 with the bank. However, the assessee claimed that this amount was withdrawn on from bank on 24.01.2014. The AO has made an addition in income because of there is a gap of 86 days. The AO was not satisfied with the explanation submitted by the assessee in respect of nature and source of cash deposit amounting to Rs 63,49,316/-. Hence 69A of IT Act attracts and this amount of Rs 63,49,316/- is deemed to be the income of assessee and same is considered as Income from undisclosed sources in the hand of assessee u/s 69A of the Act. We further note that the assessee applied to DRP (Dispute Resolution Panel) that assessee is a resident of Tanzania relevant assessment year 2015-16. The AO has made assessment of Rs 63,49,316/- u/s 69A of the IT Act considering to be an unexplained investment in form of cash deposit. Applicant, had a FD matured on 24.01.2014 and the entire amount was withdrawn in not been established that the FD has been made from explained sources. After withdrawing the cash via FD, the Assessee went back to Tanzania on 11.02.2014 Then the Assessee returned to India on 08.09.2014 marking the initiation of significant transactions. During this period, the Assessee booked a residential flat in Rajkot at Silver Heights, Rajkot. On 03.09.2014, the date of booking, cash was handed over to the builder, who subsequently arranged for Demand Drafts (DDs)

Nayna M. Kotecha Additionally, a cheque of 7,04,160/- was issued from the Assessee bank account on 10.09.2014. As per the Assessee, the total payment made to the builder in September 2014 amounted to 31,11,240/-, inclusive of DDs made out of cash. That the assessee cancelled the booking of residential flat and the builder return the money amounting to Rs. 63,49,316/- considering the fact that the issue of money revolves around transactions with Builder of Silver Heights.

The DR of the revenue is of the view that the Ld. AO. the explanation of the assessee is not satisfactory and the money held in form of cash deposited into bank deposits are held as unexplained money and are deemed income for the financial year in which the investments in form of money ownership are made. The unexplained investments are deemed income for the financial year in which the investments in form of money ownership are made. Considering the facts and circumstances of the case we are of the view as concluded by DRP “Based on the evidence submitted, Draft Assessment Order, report of enquiry by the Assessing Officer and the responses of the applicant to the queries. it is concluded that the nature and source of the investments made by the applicant assessee have not been adequately or satisfactorily explained” the assessee have not submitted adequate and satisfactory proof before the Ld. AO. We set aside the case back to the file of the Ld. AO for proper adjudication of the case uninfluenced by previous order and also direct assessee to comply with the notices issued by the Ld. AO properly and submit all the relevant document before AO.

Order is pronounced in the open court on 05/01/2026