The High Court of Delhi has dismissed a writ petition filed by an individual challenging the initiation of reassessment proceedings for the Assessment Year (AY) 2018-19. The Division Bench, comprising Justice V. Kameswar Rao and Justice Vinod Kumar, observed that the Assessing Officer (AO) is the appropriate authority to verify claims regarding tax exemptions, NRI status, and the existence of mandatory Reserve Bank of India (RBI) permissions for maintaining Non-Resident External (NRE) accounts.
Legal Issue
The primary issue before the court was the validity of an order passed under Section 148A(d) of the Income Tax Act, 1961, and a subsequent notice under Section 148, initiating reassessment proceedings against the petitioner, Abhinav Jain. The petitioner challenged the proceedings on grounds of limitation, jurisdiction, and the non-taxability of the amounts in question.
Background of the Case
The petitioner, Abhinav Jain, is a non-resident who stayed in India for less than 60 days during the financial year 2017-18. For AY 2018-19, the Income Tax Department flagged information on the Insight Portal suggesting that Jain had entered into significant transactions involving foreign remittances, interest income, and time deposits totaling ₹9,28,66,191.
Key transactions included:
- ₹3,75,000 and ₹4,90,000: Alleged inter-bank transfers between the petitioner’s own accounts.
- ₹9,11,07,929: A sum comprising a ₹8.5 crore deposit (claimed to be a gift from his father, Brijesh Jain), a ₹4.25 lakh FD, and accrued interest of approximately ₹56.82 lakh.
Despite these transactions, the petitioner did not file an Income Tax Return (ITR), believing his total income was below the taxable threshold of ₹2,50,000. Following a show-cause notice under Section 148A(b), the Revenue passed an order under Section 148A(d) on April 7, 2022, concluding that income had escaped assessment.
Arguments of the Parties
For the Petitioner: Counsel Rohit Jain argued that the reassessment was a “fishing and roving enquiry.” He contended that:
- Limitation: The notice under Section 148 was issued on April 7, 2022, beyond the three-year limit ending March 31, 2022. He argued that the Revenue’s corrigendum extending the reply time was an “afterthought to usurp jurisdiction.”
- Exemptions: As an NRI, interest on NRE accounts is exempt under Section 10(4)(ii).
- Gift Claim: The ₹8.5 crore was a gift from his father. Similar proceedings against his father and mother (who received a similar amount) were dropped by their respective AOs.
- Jurisdiction: The notice should have been issued by a Faceless Assessing Officer (FAO) rather than the Jurisdictional Assessing Officer (JAO).
For the Respondents (Revenue): Mr. Vipul Agrawal, Senior Standing Counsel, argued that the petitioner failed to provide sufficient documentary evidence during the inquiry. He highlighted that:
- Lack of Proof: Jain did not produce RBI permission for maintaining the NRE account, which is a prerequisite for tax exemption under Section 10(4)(ii).
- Discrepancies: Bank statements did not clearly reflect certain interest entries, and the petitioner’s passport showed travel to India, necessitating a deeper inquiry into his residential status under FEMA.
- Limitation Guardrail: The third proviso to Section 149(1) excludes the time allowed to the assessee to reply. Since a corrigendum extended the deadline to April 2, 2022, the notice issued on April 7 was within time.
Court’s Analysis
The court first addressed the limitation issue. It held that the AO had the power to correct an initial arithmetical error regarding the “minimum seven days” notice period by issuing a corrigendum. By extending the reply date to April 2, 2022, the time was excluded under the third proviso to Section 149(1), making the April 7 notice timely.
Regarding jurisdiction, the court referred to its previous ruling in TKS Builders Pvt. Ltd. v. ITO, holding that both JAO and FAO are competent to issue notices.
On the merits of the income, the court noted that while the petitioner claimed the ₹8.5 crore was an exempt gift deposited in an NRE account, he had not produced the mandatory RBI permission before the court. The Bench observed:
“The issue whether the necessary permissions were obtained from the RBI for the petitioner to open an NRE account in BOI would decide the aspect of reassessment of the income… The petitioner has not produced before us any such permission granted by the RBI. Such permission becomes relevant as if the amount has been deposited without such permission by the RBI, consequences must follow.”
The court emphasized that it would not step into the shoes of the AO to conduct a factual audit. Citing AGR Investment Limited v. ACIT, the court noted:
“It is open to the assessee to participate in the reassessment proceedings and put forth its stand and stance in detail to satisfy the assessing officer that there was no escapement of taxable income.”
Decision
The High Court dismissed the petition, refusing to quash the reassessment proceedings. It ruled that the challenge to the order and notice dated April 7, 2022, failed as they were within the limitation period. The court granted the petitioner liberty to present all documents and arguments—including his NRI status, gift claims, and RBI permissions—directly before the Assessing Officer during the reassessment process.
Case Details:
Case Title: Abhinav Jain v. Income Tax Officer & Ors.
Case No.: W.P.(C) 2638/2023
Bench: Justice V. Kameswar Rao and Justice Vinod Kumar
Date: April 13, 2026
