Gujarat High Court

Anilkumar Ramabhai Patel vs Income Tax Officer Ward - 7(2)(1) on 15 September, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

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                            C/SCA/7816/2023                                        JUDGMENT DATED: 15/09/2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                       R/SPECIAL CIVIL APPLICATION NO. 7816 of 2023


                       FOR APPROVAL AND SIGNATURE:


                       HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                       and
                       HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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                                    Approved for Reporting                     Yes               No
                                                                                             
                       ==========================================================
                                               ANILKUMAR RAMABHAI PATEL
                                                          Versus
                                          INCOME TAX OFFICER WARD - 7(2)(1) & ANR.
                       ==========================================================
                       Appearance:
                       MR MANISH J SHAH(1320) for the Petitioner(s) No. 1
                       MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1
                       NOTICE SERVED BY DS for the Respondent(s) No. 2
                       ==========================================================

                          CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                                and
                                HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                                                          Date : 15/09/2025

                                             ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

1. Heard learned advocate Mr. Manish Shah for

the petitioner and learned Senior Standing

Counsel Ms. Maithili Mehta for the respondents.

2. Rule returnable forthwith. Learned Senior

Standing Counsel Ms. Maithili Mehta waives

service of notice of rule on behalf of the

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respondent.

3. Considering the issue involved and with

consent of learned advocates appearing for

respective parties, the petition is taken up

for final hearing today.

4. 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 under section 148 of

the Income Tax Act (for short "the Act") dated

20.03.2023 and order dated 18.3.2023

passed under S ection 148A(d) of the Act

primarily on the ground that initiation of

proceedings was on incorrect facts and a g a i n s t

the principles of natural justice.

5. Facts in brief are that the petitioner is a

Non-Resident Indian (For short "NRE") and

Managing Partner of Grant Thornton, Uganda. The

petitioner over the past years, has been

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remitting overseas savings NRE Accounts in India

and also investing in funds, time deposits and

other approved modes of investment.

5.1 It is the case of the petitioner that 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.

5.2 The petitioner received intimation under

Section 148A(a) of the Act dated 6.2.2023 for the

F.Y. 2018-19 relevant to A.Y. 2019-20 stating

that the respondent is in possession of the

information that despite carrying out the

transaction of Rs.20,93,65,261/-, the return of

income was not filed by the petitioner. In

response to the Notice under Section 148A(a), the

petitioner furnished his response on the online

portal on 13.2.2023.

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5.3 It was pointed out vide reply dated 13.2.2023

that in view of the provision of section 10(4)

(ii) of the Act, any income earned by way of

interest on moneys standing to credit in Non-

Resident external account, is exempt from tax. It

was also brought to the notice of Respondent No.1

that, the petitioner is a Non-Resident Indian

even in terms of provision of Foreign Exchange

Management Act (For short 'FEMA") as the

petitioner is satisfying the eligibility

criteria. Even the bankers of the petitioner have

classified the petitioner as a Person Resident

outside India under the FEMA Regulations.

5.4 It is the case of the petitioner that in

respect of the tabular information reproduced in

the notice issued u/s.148A(a), the petitioner had

provided his explanation against each piece of

information in the similar tabular format as of

the notice. On perusal of the said explanation,

it can be seen that barring the information of

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Rs.798/- in respect of TDS deducted by HDFC Bank,

all the information pertains to investments made

in earlier years. It was specifically stated

that, no fresh investments pertaining to most of

the information were made in the year under

consideration.

5.5 It is the case of the petitioner that income

earned/ accrued in India, which is taxable in

India in terms of provisions of section 9 of the

Act, has never exceeded the maximum amount, which

is not chargeable to tax under the Act and

therefore petitioner was not liable to file

Return of Income.

5.6 It is the case of the petitioner that despite

reply given, a notice under Section 148A(b) of

the Act dated 14.2.2023 was received by the

petitioner proposing the reassessment for F.Y.

2019-20. It is the specific case of the

petitioner that the respondent has not considered

the reply filed by the petitioner on 13.2.2023

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and made an incorrect factual statement that the

petitioner has not responded to the notice dated

6.2.2023. Therefore, the petitioner filed a

detailed objection against the proposal of

reassessment vide communication dated 14.2.2023

and submitted on the Portal on 15.2.2023. In

communication dated 15.2.2023, the petitioner

additionally furnished a tax residency

certificate issued by Uganda Revenue Authority to

substantiate that the petitioner was a tax

resident in Uganda. The respondent proceeded to

pass impugned order under Section 148A(d) of the

Act on 18.3.2023, stating that the case of the

petitioner is a fit case to issue Notice under

Section 148 of the Act. On the basis of such

observation, impugned notice under Section 148

was issued on 20.3.2023.

6. Being aggrieved petitioner has preferred the

present petition.

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7. It was submitted by learned advocate Mr.

Manish Shah for the petitioner that respondent in

its order passed under Section 148A(d) had

neither objectively considered the reply

furnished by the petitioner nor furnished any

reason of disagreement with the stand taken by

the petition. Inspite of the same, the respondent

passed the impugned order in a mechanical manner

without applying mind to the information

furnished, ignoring the factual contention by put

forward by the petitioner.

8. Per contra, learned Senior Standing Counsel

Ms. Maithili Mehta was not in a position to

counter the contention raised by the petitioner.

It was submitted that a notice under Section

148A(d)was issued on the basis of the information

that the assesse was identified as an 'non-filer'

on Insight Portal under Non Filer Monitoring

System. It was further submitted that the

petitioner has failed to prove that no income was

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taxable in India despite carrying out high value

transaction. The proceedings under Section 148A

and under Section 148 of the Act are carried out

in accordance with law.

9. Considering the submissions, it is noticed

that the status of assesse as Non-Resident Indian

and having settled in Uganda, is not in dispute.

In response to the notice under Section 148A(a)

of the Act, the assesse had filed its reply dated

13.2.2023 in which the source of income was

explained. The respondent has not considered the

response given by the petitioner. From the facts

of the case, it is evident that the remission was

from the overseas savings to NRE Accounts in

India. The petitioner has furnished the tax

residency certificate issued by the Uganda

Revenue Authority to substantiate that he is a

tax resident in Uganda.

10. This Court in case of Nitin Mavji Vekariya v.

Income-Tax Officer, reported in [2024] 461 ITR 18

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(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.

11. Moreover, in the case of Nitin Mavji Vekariya

(supra), this Court has held as under:

"5. Undisputedly, the funds came from non- resident (external) accounts and the source therefore was beyond the reach of the authorities. Even on reading the provisions of section 10(4), it is apparent that such incomes are exempt from being included in the total income."

12. Thus, on both the counts, the income earned

in NRE Account is exempt under section 10(4)(ii)

of the Act and the source of income is

explained by the assesse and the Certificate of

Tax Residency is also provided by the Uganda

Revenue Authority, we do not find any

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justification for issuance of Notice under

section 148, as also for passing of order under

section 148A(d) of the Act.