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2024 (6) TMI 1396 - HC - Income TaxValidity of reopening of assessment against income generated in the NRE account - income generated in NRE account stated to be escapement from income in view of Section 147 or not? - HELD THAT - The aforesaid question is no more res-integra. The Coordinate Bench of this Court in case of Nitin Mavji Vekariya 2023 (11) TMI 649 - GUJARAT HIGH COURT held that funds came from NRE 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. Considering the ratio laid down by the Coordinate Bench and keeping in mind the facts of the present case, we are unable to take any different view - WP allowed.
Issues:
Challenge to impugned order u/s.148A(d) for A.Y. 2017-18 and notice u/s.148 for the same year. Analysis: The petitioner, an individual residing in the USA, was issued a notice under Section 148A(a) of the Income-Tax Act, 1961, regarding a high-value transaction with ICICI Bank Ltd. The petitioner responded with relevant documents and explanations. Subsequently, a notice under Section 148A(b) was issued, and the petitioner provided a detailed reply with the source of funds. An order under Section 148A(d) was passed on 8.4.2024, alleging income escapement of Rs.1,59,00,000. The petitioner challenged these actions, contending that income generated in the NRE account cannot be considered as escapement under Section 147 of the Act. The High Court considered the question of whether income from the NRE account could be deemed as escapement under Section 147. Referring to a previous judgment, the Court noted that funds from NRE accounts are beyond the authorities' reach and are exempt from inclusion in total income under Section 10(4). Citing the precedent set by the Coordinate Bench in a specific case, the Court concluded that the income from the NRE account cannot be treated as escapement. Consequently, the petition was allowed, and the order dated 8.4.2024 was quashed and set aside.
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