ITAT Sets Aside Rs. 62 Lakh Addition; NRI Not Liable for Missing Tax Notices

The case had been filed by an NRI (non-resident of India) named Manoj Arjun Nasta before the ITAT Mumbai, challenging an order passed by the Income Tax Department on August 27, 2025, for the assessment year 2016-17. The present case involves three appeals. One appeal was about the income tax addition, and the other two were about penalties.

The tax department made an addition of Rs. 62,00,000 to the income of Manoj as an “unexplained investment” in a property purchase. Manoj claimed that he is a Non-Resident Indian residing abroad for many years and does not file income tax returns in India, and since he lives abroad, he has never received any tax notices from India from the Income Tax Department during assessment and appeal. He only got to know about the case when he travelled to India after the death of his father.

He also explained that the property investment was made from legal foreign income through banking channels, not from any unaccounted source. However, the tax department imposed penalties on him for not responding to notices under Section 271(1)(b) and for alleged concealment of income under Section 271(1)(c).

When the case was taken before the ITAT Mumbai, the tribunal noted that since Manoj has been a non-resident of India for a long time, it is not reasonable that he did not receive notices. It is not intentional that he did not appear in the hearings; it was due to genuine circumstances. In the interest of justice, he should get a proper chance to present his case.

In the final decision, the tribunal set aside the entire assessment of Rs. 62 lakh addition and remanded the case to the income tax department for fresh consideration. Directed the tax officer to give Major a proper chance of hearing. The tribunal deleted all the penalties imposed under Sections 271(1)(b) and 271(1)(c).