Tax Assessment Overturned: NRI Denied Right to Hearing, Case Sent Back for Reconsideration to Ensure Natural Justice.

The HC set aside the assessment order against the petitioner, a Non-Resident Indian, citing a violation of natural justice principles due to the lack of a personal hearing. The matter was remanded to the 1st respondent for reconsideration. The petitioner must submit a reply with documents within three weeks, after which a 14-day notice for a personal hearing must be issued. The HC emphasized the necessity of allowing the petitioner to present their case on merits, ensuring adherence to natural justice in tax assessments. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.

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Issues:
Challenge to assessment order dated 21.05.2024 by the 1st respondent.

Analysis:
The petitioner, a Non-Resident Indian, challenged the assessment order dated 21.05.2024, claiming that the respondents classified him as a "Resident" and demanded tax for alleged unexplained investments and purchase securities. The petitioner argued that the deposits were made in the Non-Resident Ordinary (NRO) Account with TDS already deducted, making him not liable for tax. Additionally, shares transferred after his wife's demise were not taxable. The petitioner sought an opportunity to explain these aspects. The respondents contended that the petitioner failed to file returns, leading to the assessment order. The Court noted that the petitioner's wife's shares were transferred to his NRO account and the alleged deposits had TDS deducted. The Court found that the petitioner's reasons for not filing a reply were genuine. It held that the impugned order violated principles of natural justice by not providing a personal hearing. The Court set aside the order, remanding the matter for fresh consideration by the 1st respondent.

The Court directed the petitioner to file a reply with required documents within three weeks. Upon receipt, the 1st respondent was instructed to issue a clear 14-day notice for a personal hearing and pass appropriate orders expeditiously. The Court disposed of the writ petition without costs, closing connected miscellaneous petitions. The judgment emphasized the importance of providing an opportunity for the petitioner to establish their case on merits and ensuring compliance with principles of natural justice in tax assessment proceedings.

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