No Reassessment for NRI Property Without Income Escapement | HC

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  • Last Updated on 4 June, 2025

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Section 148 NRI property purchase

Case Details: Namrata Jain vs. Income-tax Officer - [2025] 174 taxmann.com 746 (Rajasthan)

Judiciary and Counsel Details

  • Avneesh Jhingan & Maneesh Sharma, JJ.
  • Siddharth Ranka, Rohan Chatter for the Petitioner.
  • Shantanu Sharma, Aditya Doda, Parth Vashishtha for the Respondent.

Facts of the Case

The assessee was a Non-Resident Indian (NRI) who had resided in the USA for more than fifteen years. During the relevant assessment year, the assessee purchased an immovable property in India. The Assessing Officer (AO) was not satisfied with the source of income in the USA, and the assessee failed to establish that the investment was of foreign income. Accordingly, he issued a notice under section 148.

The matter reached the Rajasthan High Court.

High Court Held

The Court held that the AO must have a prima facie ground for taking action under Section 148 of the Act. A need for further inquiry cannot be equated with the reason for issuing a notice under Section 148. In the instant case, the assessee had given the details of two bank accounts in the USA and the NRE account of CITI Bank at Jaipur. It was shown that the money from the USA was transferred through the banking channel to India to purchase the property.

It was contended that in the absence of income in India, there was no requirement to file an income tax return. Apart from the information that the assessee purchased an immovable property in India during the relevant year, there was no information to suggest that the income earned by the assessee in India or liable to be taxed under the Act had escaped assessment. No such averment was there either in the show-cause notice or in the order. It was clear that AO could hold a preliminary inquiry prior to the issuance of the notice under Section 148.

AO wanted to verify the source of income in the USA. However, once the source of investment was duly explained and established that it originated in a foreign country, there was no basis for the AO to proceed under Section 148.

List of Cases Referred to

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One thought on “No Reassessment for NRI Property Without Income Escapement | HC”

  1. Insightful judgment by the Rajasthan High Court. The ruling emphasizes that the Assessing Officer must have prima facie reasons to initiate reassessment under Section 148. In this case, the NRI taxpayer demonstrated that the property purchase was funded through legitimate foreign income transferred via banking channels.

    Reply

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied