Gujarat High Court
Anand Kumar Dugar vs Income Tax Officer Ward 1 Vapi on 23 August, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 9058 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
==========================================================
1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
ANAND KUMAR DUGAR
Versus
INCOME TAX OFFICER WARD 1 VAPI & ANR.
==========================================================
Appearance:
NIDHI T VYAS(7772) with SAGAR J SHAH(9447) for the Petitioner(s) No. 1
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 1
MRS KALPANA K RAVAL(1046) for the Respondent(s) No. 2
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 23/08/2024
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Sagar Shah with Page 1 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined Ms. Nidhi Vyas for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for learned advocate Mrs. Kalpana K. Raval for the respondents.
2. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 27.03.2024 issued under section 148 of the Income Tax Act,1961 [for short 'the Act'].
3. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule for the respondents.
4. Having regard to the controversy involved which is in narrow compass, with the consent of the learned advocates for the Page 2 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined parties, the matter is taken up for hearing.
5. Brief facts of the case are that the petitioner is an individual and Non- Resident Indian employed in Saudi Arabia working with SABIC Agri Nutrients Company since 2013. A notice under section 148A(a) of the Act was issued by the respondent on 26.02.2024 for Assessment Year 2017-18 seeking explanation/information/documents regarding term deposit of Rs. 1,17,47,000/- along with details such as Form No. 26AS, bank statements etc. from the petitioner.
6. Thereafter, on 27.02.2024, another notice under section 148A(a) of the Act with the approval of Pri. CIT, Valsad, under Page 3 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined section 151(i) was issued to the petitioner so as to give details and reply on or before 04.03.2024.
7. The petitioner, by reply dated 02.03.2024, in response to both the notices raised preliminary objection of jurisdiction of the respondent and also furnished all the documents and explanation regarding source of term deposit in the bank account of the petitioner. It was explained that the fixed deposits were made out of remittances from Dubai and maturity of existing term deposits, interest on NRE account and inter se transfer of funds between various bank accounts of the petitioner which are not taxable and are exempted under the provisions of the Act. Page 4 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024
NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined
8. The respondent, thereafter issued a notice dated 06.03.2024 under section 148A(b) of the Act seeking explanation from the petitioner for deposits in the HDFC Bank amounting to Rs. 1,17,47,000/- and the petitioner was asked to submit details with supporting documents for such deposit.
9. The petitioner by reply dated 07.03.2024 again informed the respondent that the petitioner is non-resident Indian and term deposits are made from NRE Account and on maturity of such deposits, the interest accrued thereon is exempted from tax under section 10(4)(ii) of the Act.
10. The respondent, after considering the reply of the petitioner, passed the impugned order under section 148A(d) dated Page 5 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined 27.03.2024 holding that the reply of the petitioner is not reasonable and hence, unacceptable as in respect of the term deposit accounts, the petitioner did not submit statements or evidence to prove that such accounts are created under the category of Non-resident (External) Account.
11. The respondent thereafter, along with the aforesaid order, issued notice dated 27.03.2024 under section 148 of the Act for the Assessment Year 2017-18. Being aggrieved, the petitioner has filed this petition.
12. Learned advocate Mr. Sagar Shah with learned advocate Mr. Nidhi Vyas for the petitioner submitted that the impugned Page 6 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined order passed under section 148A(d) of the Act and the impugned notice under section 148 of the Act are without jurisdiction as the petitioner is a Non-resident Indian. It was pointed out that in the reply dated 07.03.2024, the petitioner has provided all the information with regard to term deposit placed with the HDFC Bank. It was also pointed out that there are total Term Deposits of Rs. 1,38,32,000/- and not Rs. 1,17,47,000/-, as stated by the respondent in the impugned order. It was further pointed out from the reply that the petitioner has explained in detail regarding the source of the term deposit by providing copies of the employment certificate and the details of Non- resident (External) Accounts with HDFC Bank together with summary of credits in Page 7 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined the bank accounts by explaining each of the credit. It was therefore, submitted that none of the credit made in the NRE account is taxable in view of the provision of section 10(4) of the Act.
13. It was further submitted that the impugned order is passed without considering the reply of the petitioner as the respondent- Assesssing Officer has already observed that the petitioner failed to submit statements or evidence to prove that the term deposits are under the category of Non-resident (External) Account. It was pointed out that the details submitted by the petitioner were ignored to come to the conclusion that it is a fit case to reopen the assessment.
Page 8 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024
NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined
14. Learned advocate for the petitioner also pointed out that there is no escapement of income as the petitioner has explained the source of NRE Account with the HDFC Bank and the interest income accrued thereon is an exempt income in the hands of the petitioner and therefore, the impugned notice is liable to be quashed and set aside. It was further submitted by learned advocate for the petitioner that the the petitioner has also received a communication from the office of the Income Tax Officer at Vijayanagaram, Andhra Pradesh, for the Assessment Year 2018-19 and therefore, the respondent- Assessing Officer at Vapi has no jurisdiction.
Page 9 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024
NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined
15. On the other hand, learned Senior Standing Counsel Mr. Karan Sanghani appearing for the respondent submitted that the petitioner did not provide any statement or evidence to prove that accounts with HDFC Bank are created under the category of Non-resident (External) Account and therefore, the Assessing Officer has rightly come to the conclusion that it is a fit case to reopen the assessment, more particularly, when the petitioner has not filed any return of income. It was submitted that the petitioner has also not provided any evidence of source of the deposit made in the account with the HDFC Bank as per the specific information appearing as per RMS Management Strategy formulated by CBDT through insight portal under the head "RMS non-filing of the Page 10 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined Return cases Cycle-3" for Financial Year 2016-17.
16. It was therefore submitted that no interference may be made in the impugned order and the petition being devoid of any merit, is required to be dismissed.
17. Having heard the learned advocates for the respective parties and considering the facts of the case, it is not in dispute that the petitioner is a Non-resident Indian residing at Saudi Arabia. Moreover, the address of the petitioner shown in the impugned order and notice is Vijayanagaram, Andhra Pradesh. Therefore, respondent-Assessing Officer at Vapi, has no jurisdiction to issue the notice under section 148A(A) or 148A(b) of the Act only Page 11 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined on the basis of the information available on the insight portal.
18. The petitioner has provided the details with regard to term deposits placed in two accounts with the HDFC Bank and has also provided bank statement with the reply. Without considering the reply of the petitioner, the respondent has passed the impugned order under section 148A(d) of the Act by observing as under:
"5.2 Further, in respect of the source of credits in his bank accounts, the assessee has not submitted any documentary evidence. A certificate of employment cannot be considered as explanation for large credits in his bank accounts.
5.3 Under the provisions of section 10(4)(ii) of the IT Act, the interest accrued on the money standing credit to an individual in Non-resident (External) Account by any bank within India does not form Page 12 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined part of total income. However, in respect of term deposit accounts, the assessee has not submitted statement or evidence to prove that these accounts are created under category of Non resident (External) Account. In view of the same, the interest accrued on the term deposits, which in absence of the statements, is not quantifiable at this point also has escaped the assessment during the year under consideration."
19. However, the petitioner has submitted the entire bank statement and the explanation that being NRE remittance in the account was made by the petitioner from Saudi Arabia out of salary credited and received outside India and out of maturity of the FDR. The petitioner has also provided the date wise details of all credit in the bank account with the HDFC bank during the year.
Page 13 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024
NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined
20. Moreover, notice of reopening under section 148A of the Act could be issued only by an Officer who has jurisdiction over the petitioner and only the Commissioner of Income Tax (International Taxation) and from the communication placed on record at Annexure J, ITO, Ward 1, Vijayanagaram, Andhra Pradesh, has the jurisdiction considering the local address of the petitioner. Therefore, in the facts of the case, notice issued by the respondent, who did not have jurisdiction over the assessee, would be invalid. Moreover, in view of the explanation tendered by the petitioner that he has no taxable income during the year, there was no question of filing any income tax return as the interest accrued on the term Page 14 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024 NEUTRAL CITATION C/SCA/9058/2024 JUDGMENT DATED: 23/08/2024 undefined deposit is exempted under section 10(4) of the Act.
21. In view of the above foregoing reasons, the notice dated 27.03.2024 under section 148 of the Act and the impugned order dated 14.06.2024 passed under section 148A(d) of the Act are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (NIRAL R. MEHTA,J) JYOTI V. JANI Page 15 of 15 Uploaded by JYOTI V. JANI(HC00213) on Fri Aug 30 2024 Downloaded on : Fri Aug 30 22:54:45 IST 2024