Clipped from: https://taxguru.in/income-tax/itat-mumbai-sends-nri-case-non-service-section-148-notice.html
Juzer Saifuddin Boriyawala Vs ITO (ITAT Mumbai)
NRI Never Served Notice – ITAT Mumbai Restores Case on Validity of Reopening; CIT(A) Erred in Treating Jurisdictional Grounds as General – Tribunal Remands Matter; ITAT Mumbai Restores NRI’s Case – Validity of Reopening Without Service of Notice u/s 148 to be Re-Examined
An NRI based in Sharjah (UAE), appealed against the order of CIT(A arising from reassessment made u/s 144 r.w.s. 147. AO reopened case u/s 148 alleging unexplained cash deposits of ₹35.34 lakh in Lunawada Peoples Co-op Bank & ₹27.85 lakh unexplained investment in BSE. Assessee argued he never received notice u/s 148 & had no representative in India. AO wrongly recorded one “Shri Sidram B Vasmate” as assessee’s representative. Assessment was completed ex parte, taxing income of ₹69.19 lakh.
CIT(A) dismissed legal grounds as “general” & upheld reopening
Assessee’s Arguments
- No notice u/s 148 was ever served; reopening is invalid ab initio.
- Being an NRI, he had no authorised representative in India, hence proceedings were void.
- CIT(A) erred in not adjudicating validity of reopening despite specific grounds.
Tribunal’s Findings
- Validity of service of notice u/s 148 goes to the root of jurisdiction.
- CIT(A) was not justified in dismissing grounds as “general” without adjudication.
- Matter remanded to CIT(A) with directions to:
- Examine afresh whether reopening u/s 147/148 was valid.
- Allow assessee to furnish evidence & submissions.
- Pass a speaking order on jurisdictional issue first.
- On merits of additions (cash deposits & stock investments), Tribunal kept issue open to be argued later
Outcome
- Order of CIT(A) set aside.
- Case restored to CIT(A) for de novo adjudication on validity of reopening & service of notice.
- Appeal allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in shot, ‘the Act’) for the Assessment Year 201213, date of order 03/01/2025. The impugned order emanated from the order of the Learned Income-tax Officer, Ward 24(2)(2), Mumbai (in short, ‘the Ld.AO’) passed u/s 144 r.w.s. 147 of the Act.
2. The brief facts of the case are that the assessee is a nonresident individual residing at Sharjah, UAE. The assessee has no representative in India within the meaning of section 163 or otherwise for any matters concerning Govt or other dealings. In absence of any income assessable under the provisions of Income-tax Act, 1961, no return of income u/s 139 was furnished. The Ld. AO claims to have issued notice u/s 148 on 30/03/2018 requiring assessee to furnish return u/s 148 of the Act. Ld. AO also claims to have issued and served notices 142(1) on the assessee. In absence of any compliance on the part of the assessee, the Ld. AO proceeded to frame assessment u/s 144 r.w.s. 147 of the Act by determining total income at Rs. 69,19,544/-. The Ld. AO has made two additions in the assessment order. Firstly, addition of Rs. 35,34,050/ on account of alleged unexplained cash deposited in the bank account maintained with Lunawada Peoples Co-op Bank Ltd and secondly, an amount of Rs. 27,85,494/ on account of alleged unexplained investment in Bombay Stock Exchange. The assessment order came to be served on the assessee on 15/01/2019 at Sharjah. On going through the assessment order, it is noticed that Ld. AO has named one Shri Sidram B Vasmate as representative of assessee in India. The assessee submitted that assessee has not appointed person named as his representative any time and therefore, fact stated in the assessment order is patently incorrect. Further, no notices u/s 148 or under any other provisions of the Act came to be served on the assessee and therefore, assessee had no occasion to comply with such notices any time. The appeal filed by the assessee did not find favour with the Ld.CIT(A). Hence, the assessee filed appeal before us.
3. The Ld.AR appeared for the assessee and filed a paper book containing pages 1 to 86, which is kept on record. The Ld.AR stated that the reopening was made u/s 148 of the Act for the impugned assessment year, but no notice was received by the assessee; so the assessment order made by the Ld.AO is non est. On the same issue, the legal ground was duly agitated before the Ld.CIT(A). The Ld.AR invited our attention to ground 1 of appeal, which was taken before the Ld.CIT(A). The same is extracted below: –
| Ground No. | Applicable Sec. | Grounds of appeal |
| 1. | 148 / 147 | The Ld.Assessing Officer erred on facts and in law in assuming jurisdiction to assess income of appellant u/s 147 in as much as without serving notice u/s 148 on the appellant any time before completion of assessment. |
4. The Ld. DR argued and relied on the order of revenue authorities.
5 .We have heard the rival submissions and perused the material available on record. The assessment in the present case was completed under section 147 of the Act. The grievance of the assessee is that he is a Non-Resident Indian (NRI) and had not received any notice under section 148 of the Act at the stage of initiation of the reopening proceedings. It is also the contention of the assessee that he had no authorised representative or holder of power of attorney in India to represent him before the Income-tax Department. It is seen that this issue was specifically raised before the Ld. CIT(A), but the Ld. CIT(A) treated grounds Nos. 1 to 4 as being general in nature and refrained from adjudicating upon them. In our considered view, the Ld. CIT(A) was not justified in declining to adjudicate these grounds, since they go to the very root of the validity of the assessment proceedings and have a direct bearing on the fate of the assessment order itself.
Accordingly, we deem it appropriate to restore the matter to the file of the Ld. CIT(A) with a direction to adjudicate grounds Nos. 1 to 4 afresh, after affording the assessee a reasonable opportunity of being heard. The Ld. CIT(A) shall also take into account the evidence or documents that the assessee may place on record and thereafter pass a speaking order in accordance with law.
We make it clear that we have not expressed any opinion on the merits of the case, so as not to cause prejudice to the proceedings before the appellate authority. Insofar as the merits of the additions are concerned, the issue is left open for the assessee to raise at the appropriate stage, if so advised.
6. In the result, the appeal of the assessee bearing ITA No.1543/Mum/2025 is allowed for statistical purpose.
Order pronounced in the open court on 05th day of September, 2025.
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