A Dubai-based non-resident Indian successfully challenged a reassessment notice issued against her by the Mumbai Income Tax Appellate Tribunal, citing procedural errors and approval issues, highlighting the importance of strict adherence to tax laws.
A Dubai-based non-resident Indian has won relief from the Income Tax Appellate Tribunal in Mumbai after the bench ruled that a reassessment notice issued against her was invalid because it had been cleared by the wrong authority. The case involved Vandana Vijay Kumar Chudamasa, who had moved to Dubai in August 2014 for work, while her spouse relocated there two months later, and who was later flagged by tax officials after buying a property valued at about Rs 2.31 crore in financial year 2017-18.
According to Business Today, the Income Tax Department issued a notice under Section 148 on April 2, 2022, and when Chudamasa did not file a return even after further notices in 2023, the assessing officer completed the case ex parte and treated the full amount of Rs 2.32 crore as unexplained investment under Section 69. Her appeal before the Commissioner of Income Tax (Appeals) failed for want of supporting evidence, prompting her to take the matter to the Mumbai tribunal, albeit with a delay of 148 days.
The ITAT condoned the late filing after accepting that Chudamasa and her husband were living and working in Dubai and that she had relied on a professional adviser who had allegedly assured her the matter was being handled. The tribunal said the delay was not excessive and that her explanation went beyond her overseas residence alone. Similar accounts in the Economic Times and other reports said the bench was prepared to take a liberal view on the delay because of those circumstances.
The decisive issue, however, was procedural. The notice dated April 2, 2022, had been approved by the Principal Commissioner of Income Tax, Bengaluru-3, but Chudamasa’s counsel argued that the relevant three-year period had already expired on March 31, 2022, meaning approval should have come from the Principal Chief Commissioner or Principal Director General under Section 151(ii). The tribunal accepted that argument, quashed the reassessment and set aside the tax demand. It did not rule on whether the property purchase was in fact unexplained, although her counsel said the payments included a housing loan of Rs 1.61 crore, her husband’s contribution of Rs 1 lakh and her own contribution of Rs 23.31 lakh. The case adds to a growing line of tribunal rulings stressing that reassessment notices can fail if tax authorities do not follow the statute exactly.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
