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2023 (11) TMI 649 - HC - Income TaxReopening of assessment - investment in time deposit and mutual funds out of foreign funds in the assessee s NRE Accounts - HELD THAT - Undisputedly, the 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. The impugned orders in all these petitions are, therefore, without jurisdiction. The orders in the respective petitions are therefore quashed and set aside. Petitions are allowed, accordingly.
Issues involved:
The issues involved in the judgment are related to challenging the order issued under section 148A(d) of the Income Tax Act, 1961 for the Assessment Year 2018-19, concerning investments made from NRE accounts and the alleged escapement of income. Details of the judgment: Issue 1: Challenge to the order under section 148A(d) The petitioners, residents and citizens of Uganda, sought to quash the order dated 29.03.2022 issued under section 148A(d) of the Income Tax Act, 1961 for the Assessment Year 2018-19. The respondent had issued a notice u/s. 148A(b) on 16.03.2022, questioning investments in time deposits and mutual funds totaling Rs. 1,92,00,000, alleging an escapement of income. The petitioner responded with details from NRE accounts, asserting that the investments were from foreign funds and thus not taxable under Section 10(d) of the Income Tax Act, 1961. Issue 2: Respondent's contentions The revenue argued that despite passport details, the petitioner's residency period in India was unclear, and the investments from the bank accounts remained unexplained. Issue 3: Court's findings and decision The Court found that all investments in time deposits and mutual funds were made from NRE accounts, with detailed explanations provided by the petitioner. The Court noted that the funds originated from NRE accounts, making them exempt from inclusion in the total income as per section 10(4) of the Income Tax Act, 1961. Consequently, the impugned orders dated 29.03.2022 were deemed without jurisdiction and were quashed and set aside in favor of the petitioners. The petitions were allowed, and the rule was made absolute with no orders as to costs.
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