Namrata Jain Vs ITO (Rajasthan High Court)
The Rajasthan High Court addressed a case where Namrata Jain, an NRI residing in the USA for over 15 years, challenged an income tax reassessment initiated under Section 148A(d) of the Income Tax Act, 1961. The dispute arose from her purchase of an immovable property in India for ₹95,00,000 during the assessment year 2016-17. The Income Tax Department, acting on information regarding the property purchase and the petitioner’s failure to file an income tax return, issued a notice under Section 148A(b). Jain responded, providing details of her US bank accounts and her NRE account in India, demonstrating that the property purchase was funded through legitimate transfers from her foreign income. She also asserted that she had not earned any income in India since 2004-05, thus negating the requirement to file a return. The case was transferred to the Assistant Commissioner (International Taxation) due to her NRI status, and subsequently, an order under Section 148A(d) and a notice under Section 148 were issued.
The petitioner argued that the department lacked concrete information regarding any income that had escaped taxation in India. She provided comprehensive documentation, including US bank statements, proof of TDS deduction, and her Overseas Citizen of India card, to substantiate that the property purchase was made using funds from her foreign income. The Income Tax Department, however, insisted on seeing the account books related to her US income, despite not disputing the authenticity of the documents provided. The court referenced the Supreme Court’s ruling in Chhugamal Rajpal Vs. S.P. Chaliha and Ors., emphasizing that an Assessing Officer (AO) must have prima facie grounds for initiating action under Section 148, and a mere need for further inquiry does not suffice. The Rajasthan High Court concluded that the department’s reliance on the petitioner’s property purchase and non-filing of returns, without any evidence of income earned in India, was insufficient. It highlighted that while preliminary inquiries are permissible, the AO’s demand for US income records, after the source of investment was clearly established as foreign, was unjustified. Consequently, the court quashed the impugned order and the subsequent proceedings, ruling in favor of the petitioner.
