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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the assessee was a non-resident within section 4A(a)(ii) of the Income-tax Act, 1922 by reason of maintaining or having maintained for him a dwelling place in the taxable territories, and whether the penalty levied under section 28(1)(a) could stand.
Analysis: The statutory test under section 4A(a)(ii) requires more than a mere fractional interest in family property or occasional stay in a joint family house. A dwelling place must be maintained by the assessee or for his benefit in a real and substantial sense, indicating continuity, permanence, and a home available as of right. On the evidence, the assessee lived principally in Ceylon, visited India only sporadically, stayed in the family house as a guest, and there was no acceptable proof that he maintained the house or had it maintained for him. The finding that the family house was not maintained for the assessee was supported by the record, and the factual basis for treating him as resident was absent.
Conclusion: The assessee was rightly held to be non-resident, and the penalty order under section 28(1)(a) also could not survive.
Final Conclusion: The reference was answered in favour of the assessee, with the assessment orders and penalty orders being unsustainable on the facts found.
Ratio Decidendi: For section 4A(a)(ii), residence depends on proof that the assessee maintained, or had maintained for him, a dwelling place in the taxable territories as a real home and not merely as a place of occasional or guest occupation.
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