The Madras High Court stayed the recovery proceedings against the Non-Resident Indian (NRI) since the notice under section 142(1) of the Income Tax Act, 1961 was issued in the Peak period of Covid 19 which prohibited the assessee to file a reply.
Thasirkhan Abdul Hameed, the petitioner challenged the demand order dated 21.12.2022 issued by the respondent. The Petitioner is a Non-Resident Indian having an NRE account in the Indian Bank and ICICI Bank. He has a savings bank account with ICICI Bank. The petitioner holds a Permanent Account No.AFRPA3435M is a Non-Resident Indian and he is running a hotel in Malaysia in India, he is the authorized dealer of Bharath Petroleum.
The petitioner would submit that he has been holding the NRE account from the assessment year 2011-2012 onwards and he has been regularly and diligently reporting the income in his returns under the following heads from the year 2011-2012 onwards.
The petitioner claimed exemption in respect of NRE receipts, interest from NRE accounts and LIC benefits. It was contended that being an NRI, he was always shuttling between Malaysia and India. In this process, when the returns were filed, the NRE receipts and NRE interest were omitted to be included.
These amounts though excluded from the taxable income and exempted under Section 10 of the Income Tax Act, 1961, ought to have been included while disclosing the capital account, however, by oversight, the said amounts were omitted. However, the revised return for the assessment years 2014-2015 to 2016-2017 could not be filed within time as stipulated under Section 139(5) of the Act. But the petitioner thereafter filed the revised return on 25.11.2018 which was accepted in the month of March 2019.
Notices under Section 142(1) of the Act were issued when the COVID-19 pandemic was at its peak. The petitioner was not able to reply to the said notices. Thereafter, he received a notice stating that there was an introduction of a huge capital amounting to Rs.7,73,84,755/- for the year under consideration.
The petitioner replied stating that he is a Non-Resident Indian and an authorized dealer of Bharat Petroleum having a total turnover of Rs.8,37,00,000/-. The petitioner had enclosed all the relevant documents for the scrutiny of the respondent.
Despite producing the details and proof as also the explanation, the respondent passed the assessment order on 31.05.2021 imposing tax liability of Rs.5,18,36,412/- and interest of Rs.2,26,97,456/-. The respondent had also issued a penalty order dated 24.07.2021 under Section 272A(1)(d) of the Act.
The petitioner had requested the respondent to stay the recovery of the disputed amount of Rs.7,42,62,087/- and not to treat the petitioner as an assessee in default, since he has already filed the statutory appeal before the Faceless First Appellate Authority, CIT as provided under Section 220(6) of the Act.
A Single judge comprising Justice P T Asha observed that the appeal challenging the assessment is still pending disposal and in the earlier writ petitions, the Court had quashed the demand and directed the respondent to reconsider and pass speaking orders.
It was evident that the entire amount demanded, namely 20% of the disputed tax, interest and penalty has been withdrawn by the respondent from the bank accounts of the petitioner.
The Court directed the respondent to dispose of the statutory appeal filed by the petitioner under Section 246(A) of the Act and further since 20% of the disputed tax, interest and penalty has been recovered by the respondent from the banks, in which the petitioner had accounts, a direction is issued to the appellate authority to dispose of the appeal within a period of 12 weeks.
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