No reassessment u/s. 148 as income earned in NRE account exempt u/s. 10(4)(ii)

Anilkumar Ramabhai Patel Vs ITO (Gujarat High Court)

Gujarat High Court held that reassessment under section 148 of the Income Tax Act is liable to be quashed since income earned in NRE Account is exempt under section 10(4)(ii) of the Act and hence there is no question of escapement of income.

Facts- The petitioner is a Non-Resident Indian and Managing Partner of Grant Thornton, Uganda. The petitioner over the past years, has been remitting overseas savings NRE Accounts in India and also investing in funds, time deposits and other approved modes of investment.

The petitioner being a non-resident, overseas income earned is not taxable in India in terms of Section 9 read with Section 5 of the Act. Therefore, the petitioner was not under obligation to file Income Tax Return in India.

This petition is filed under Article 226 of the Constitution of India challenging initiation of reassessment proceedings for Assessment Year 2019-20 by issuing Notice u/s. 148 of the Income Tax Act dated 20.03.2023 and order dated 18.3.2023 passed u/s. 148A(d) of the Act primarily on the ground that initiation of proceedings was on incorrect facts and against the principles of natural justice.

Conclusion- This Court in case of Nitin Mavji Vekariya v. Income-Tax Officer, reported in [2024] 461 ITR 18 (Guj), has held that, income earned by the assessee since was received from non-resident (external) accounts, the same was exempt under Section 10(4)(ii) of the Act and therefore there was no question of escapement of income.