Non -Resident assessee not required to Disclose any Asset held Outside India in Return of Income filed in India: ITAT quashes Re-assessment Order [Read Order]

The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that non resident assessees should not be required to disclose any asset held outside India in return of income file in India therefore the bench quashed the reassessment order.

Madhur Agrawal appeared for the assessee and Kunal Haver appeared for the revenue.

Assessee Amrita Jhaveri is an individual who is married to a British citizen and is settled in London hence the status of the assessee was non resident. As a non-resident, the assessee has been maintaining NRE & NRO accounts in India.

The assessee was filing the return of income in India in the status of nonresident in respect of income chargeable to tax in India in accordance with the provisions of Income Tax Act, which generally comprises capital gains and income from other sources like dividend, interest, etc.

In A.Y. 2006-07 and  A.Y.2007-08 assessee had filed return of income in India in the status of non-resident.

Before issuance of notice under Section 148 Income Tax Act and recording of the "reasons", ADIT (Investigation), Mumbai had issued summons under Section.131 of Income Tax Act on the basis of certain information received from Government of India in the form of “Base Note” from French Government from which it was gathered that, assessee was the beneficial owner of HSBC bank account in Geneva in the name of Amaya Ltd.

Before the ACIT, assessee furnished all the details regarding his status and transactions etc. After all this information was filed, ACIT further issued notice under Section 131 of Income Tax Act.

Before ACIT, assesee explained that the assessee is Non Resident Indian since the last several years have settled abroad.  Income accruing or arising to assessee  outside India are not subject to Indian Income Tax and as such he  holding an account outside India should generally be of no consequence as far as Indian Income Tax Act is concerned.

Thereafter, the AO  issued notice under section 148 Income Tax Act  and observed that the assessee did not furnish the details called for nor she has produced any evidence to prove that money deposited in the foreign bank account did not have any source from India. Hence the AO made an addition in the hand of the assessee

Aggrieved assessee filed an appeal before the tribunal as the CIT(A) rejected the validity of reopening under Section 148 of Income Tax Act and held that assessee being a non-resident, therefore, in terms of fourth proviso to Section 139(1), she is not required to disclose foreign asset .

It was observed by the  tribunal that “Fourth proviso to Section 139(1) of the Income Tax Act requires that a person who is resident of India to disclose the details of foreign assets in the return of income and is not applicable to the assessees who are not ordinarily resident or non-resident”

Thus, the assessee being a non-resident was not required to disclose any asset held outside India in the return of income to be filed in India.

Further, For a non-resident there is no obligation to disclose any foreign asset / account in its return of income in India as per Section 139 of the Income Tax Act itself.

Thereafter, the two member bench of the tribunal comprising Amit Shukla, (Judicial Member) and S Rifaur Rahman, (Accountant Member)  held that reasons recorded by the AO are not only vague and general but without any application of mind on the records and the material which was filed by the assessee before the Income Tax department right from the year 2011 to 2014, till the issuance of notice under Section 148 of Income Tax Act.

Hence the bench allowed the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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