NRI (Non-Resident Indians) are receiving notices from the income tax department under section 148 of the Income Tax Act, and their assessments are being made under section 147 of the act. Lately, by March 31st, income tax officers have issued several orders under section 147 or draft orders under section 144C. These orders either reject the submissions made by NRIs or completely disregard them. The assessments for NRIs are being conducted very rigorously, and hefty tax demands are being raised under section 156, often in lakhs or crores. Additionally, penalty proceedings are being initiated. We’ve experienced many instances where notices and orders issued by assessing officers blatantly ignore the submissions provided by NRIs. Typically, these notices are sent for either not filing income tax returns or discrepancies found between the filed return and the records of the income tax department.”
Some individuals who traded cryptocurrencies like bitcoins and ethereum while they were residents in India are now facing income tax notices as NRIs (Non-Resident Indians) for not reporting their crypto income and paying taxes. Even though these NRIs didn’t actually earn any income from trading cryptocurrencies, incomplete information in the possession of tax authorities is causing trouble for them.
In certain instances, due to actions taken by the Reserve Bank of India (RBI), some crypto exchanges were shut down, and their server data, including trading records, was deleted. Now, the income tax department has collected incomplete data from these exchanges, focusing only on buy or sell transactions, and issued notices to NRIs demanding explanations for the source of their money and any profits earned.
Many NRIs have received numerous income tax notices and faced orders from the tax authorities. Frustrated by the lack of response from assessing officers, some NRIs are filing objections before dispute resolution panels. In several cases, orders have been passed without considering the submissions made by the NRIs. It’s also been observed that either the submissions were not presented accurately to the assessing officers, making it difficult for them to understand the situation, or the NRIs failed to submit relevant information.
When an assessing officer issues an order, NRIs have the option to appeal to higher authorities like the Commissioner of Income Tax Appeals or the Dispute Resolution Panel, depending on the section under which the order is passed. In both cases, the appeal period is typically 30 days. However, there’s a difference in the process.
For Commissioner Appeals, NRIs or their authorized representatives can file appeals online, which is convenient. But for DRP, there’s no online option available. So, NRIs or their representatives must prepare their submissions and manually submit them to the office of DRP and the assessing officer within the 30-day period.
If you’re an NRI and you’ve received income tax notices, it’s crucial to carefully assess the details of your case before submitting any information to the assessing officer (AO). Only provide relevant information related to the matter at hand. Some NRIs are handling these cases themselves without fully understanding the seriousness of the notice or the potential consequences. They might submit irrelevant details or hypothetical scenarios, leading to rejection by the AO and issuance of demand orders.
It’s advisable to seek professional advice in dealing with such notices, especially since NRIs cannot easily come to India to handle these matters in person. Handling scrutiny notices requires a deep understanding of income tax laws and other legal aspects, which professionals can provide.
When it comes to cryptocurrency trading, the technical details can be challenging to explain to the assessing officer (AO). It’s advisable to simplify the information for easier understanding because the AO primarily relies on submissions supported by sufficient evidence. If you submit information without any evidence, there’s a high likelihood of rejection, leading to potential tax demands.
The aim of this article is to emphasize to NRIs the importance of treating notices issued by income tax authorities seriously. It’s crucial to respond promptly, providing details in simple terms with supporting documentation. Additionally, seeking assistance from professional tax consultants is recommended. Once an order is passed by the AO, it cannot be rectified, and there won’t be another chance to submit information. The only option left would be to appeal to higher authorities.
