NRI OCI Tax Litigation India – Enquiries, E-campaign, Notices Section 131, 148, 148A

Background – Non-Residents (NRIs, OCIs, Returning NRIs, Seafarers etc) receiving e-campaign and scrutiny notices from Income Tax Department

In recent years, Income Tax Department in India has improvised a lot in relation to its information technology enabled intelligence and data capturing. Now, Income tax deptt is capturing lots of information from various sources (Banks, Mutual Fund Companies, Registrar of Property, Airport Entry/Exit data, TDS Returns etc). Their Information Technology Enabled System reconciles this information with various reports (Income Tax Return, Past assessments, Online Response to E-campaign etc) and generate respective enquiry notices. Hence, Non-residents as well Residents, who are doing financial transactions in India or holding asset in India but not filing an Income Tax Return, attract this kind of enquiries, notices, summons from Tax Department of India.

Various Kind Of Notices To NRIs, OCIs, Returning NRIs

Income tax department issues various kind of notice for various type of enquiries as per the provisions and procedures of Income Tax Law. These notices/enquiries (sent via sma, email, upload on tax portal) can be of various kind as under

Notices	Purpose	Issued By/At	Action
E-campaign Enquiry Notices	To verify high value transactions.	Income Tax Compliance Portal on www.incometax.gov.in	Response To be submitted promptly on Compliance Portal
Pre-assessment Verification Notice U/s 133(6)	To investigate & require information and supporting document in relation to suspected transactions.	Investigating /Assessing Officer via email, post and/or income tax portal.	According to requirement of notice (email/ physically/ portal)
Pre-assessment Enquiry Notice U/s 148A	An opportunity of hearing notice issued before assessment proceedings in relation to significant financial transaction captured by Inc Tax Deptt.	Jurisdictional Assessing Officer (ITO/DCIT/DDIT) via email and tax portal.	Detailed Submission with supporting documents on tax portal.
Assessment Proceeding U/s 147	Verification Procedure for Income Escaped from Taxation.	It is income escape investigation procedure taken care via other notices i.e. 148, 142(1) etc.	Each notice to be taken care properly and timely.
Pre-assessment Proceeding Inc Tax Return Filing Notice U/s 148	Initial Notice (Wrt Initiating Assessment Proceeding u/s 147) Requiring filing of ITR.	Jurisdictional Assessing Officer (ITO/DCIT/DDIT) via email and tax portal.	Online filing of ITR analysing financial transactions and income of respective year.
Assessment Proceeding Notice Initiate U/s 143(2)	Issued After ITR filing u/s 148, Requiring Tax Payer to Submit Evidences and Info wrt ITR.	Jurisdictional Assessing Officer (ITO/DCIT/DDIT) via email and tax portal.	Detailed Submission Or Small responses & Wait for 142(1) Notice (on Portal)
Assessment Proceedings Questionnaire U/s 142(1)	Detailed Questionnaire Wrt Assessment Proceeding Sec 147.	Jurisdictional Assessing Officer (ITO/DCIT/DDIT) via email and tax portal.	Comprehensive Submission (on portal) with all enclosures. Personal hearing may also required
Summon U/s 131(1A)	Investigation Enquiry summon In Relation to Foreign Assets etc (Can be to Non Residents, but generally applicable to Returned NRIs)	Investigating Officer (DDIT) from FAIU Deptt via email and post generally.	Detailed response according to notice. Personal hearing may also required.

Why Non Residents (NRIs, OCIs, Seafarers, Foreign Citizens, Returned NRIs) Are More Prone To Get Income Tax Notices

Non Residents, because of their roots/emotional interest/inheritance/and various other reasons, used to hold or incur various financial transactions in India. However, the do not generate any major income in India, or if they generate some income there is TDS deduction and it is understood by them that tax liability has been duly discharged. However, all their financial transactions, income, TDS, remittances, other transactions, get captured in the Income Tax Department Information System. Inc Tax Deptt does not find any ITR filed by them. In most of the cases, this non-filing of ITR triggers an automated enquiry on NRIs, OCIs, Seafarers, Returned NRIs, Others. Hence, filing of ITR remains an important tool to plug department litigation.

What Are The Financial Transactions Which Is Generally Captured by the Income Tax Department

Nowadays, many transactions get reported to Income Tax Department by Companies, Registrar, Financial Institutions, Banks etc. Following are some common transactions which gets reported and captured in the Inc Tax system, which attracts enquiry on non-reconciliation of same with the ITR (in absence of ITR generally):

Immovable property transaction in India (Sale/Purchase)
Making of NRE/NRO/FCNR Term Deposits with Indian Bank
Interest Income from NRE/NRO Deposits
Mutual funds Buying/Selling in India
Shares Sale/Purchase in India
Major Cash deposit in Bank Account in India
Dividend income from shares/mutual funds
Foreign Remittances/Repatriation of funds from NRO Account
Major Amount Credit Card Payments
Major Amount Forex Card Transactions

Importance of Address, Registered Email Address, Mobile Number

Any enquiry from Income Tax System gets communicated to tax payers via various modes such as

On Tax portal (in most of the cases)
Email
SMS in some cases
In hard copy via post

Hence, it is important to maintain a valid email account, an Indian address and active India mobile number (if possible). These must be reported to Inc Tax Deptt via update in profile section of Inc Tax Portal (www.incometax.gov.in), PAN records, ITR etc. Also, periodically, tax payer may check his account on Tax Portal (under ‘Pending Actions’) category.

If a tax payer (generally happens in case of many Non Residents because of their unawareness about this) details are not updated in Tax Deptt System then there is a clear possibility that NRI may miss receiving enquiry communications in time. Sometimes, they donot get any information about the enquiry communications as well procedural notices and it result in passing of one sided order by the department according to their best judgement, which leads to creation of tax & penalty demand (which can be challenged via a timely Appeal procedure only).

What Should NRIs, OCIs, Seafarers Do To Safeguard Them From Tax Deptt Litigation

Reference to tax litigation explained in above paras, Non Residents may follow following strategies to safeguard themselves

Periodical screening of their account on tax portal
Consultation with Tax Experts, Chartered Accountants dealing with Non Resident Taxation
Regular Filing of ITR in India
Keeping their address, email, contact number updated in Income Tax Records
Prompt consultation / discussion with Tax Expert if any litigation is initiated by Tax Department

What Should NRI Do If An Assessment Order or Any Other Tax Demand Raised In Absence of Response To Tax Enquiry Notice

Sometimes, it may happen that NRI, OCI is completely unaware of communications from Tax Department (due to their email, other contact details not updated). In such cases, later on, when the NRI come to know about such notices, tax demand, he/she should take following actions

Immediately contact some Tax Litigation Expert
Under the guidance of Tax Expert update his/her communication details on tax portal etc
Filing appeal (with condonation application for delay if any)
Filing application with Assessing Officer for stay of demand
Filing application with Assessing Officer for stay of penalty proceedings
Regular Filing of ITR in India
Regular consultation / discussion with Tax Expert for needful action/guidance

At NRI Tax Service, we have offices PAN India including Delhi NCR, Mumbai, Kolkata, Chennai, Bangalore, Chandigarh, Hyderabad, Ahmedabad, Kochi, Dehradun etc.

NRI Tax Service with its multiple years of services to Non-residents, is well equipped in provide all type of Tax Litigation & Advisory Services to Non Residents in relation to Notices/Enquiries vis e-Campaign, U/s 133(6), U/s 148A, U/s 148, Scrutiny Proceedings U/s 147/143(2)/144/142(1), Summons U/Sec 131, Penalty Proceedings (Sec 271 and other sections), Appeals with Dispute Resolution Panel (DRP), CIT (Appeal), ITAT, Tax Recovery Officer, Rectification Application, Other Grievances etc

We, NRI Tax Service, are a team of Tax Lawyers, Chartered Accountants, Other Tax Experts. We can help NRIs, OCIs, Seafarers, Returned NRIs, Others in relation to Income Tax Notices/Appeal Procedures in following ways

Promptly guiding needful action and submission with the tax assessing officer or tax portal.
Guiding tax payer in arranging needful information and documents for preparation of replies/submissions with tax department
Analysing, accounting, summarising of all information and documents shared by tax payer.
Filing comprehensive and timely responses and submissions with the Tax Department or Appellate Authorities
Analysing Tax Department Notices/Assessment orders to find out technical weaknesses and counter them in respective responses/submissions
Adopting RTI Application to seek some relevant information which can be helpful in dropping of proceedings or preparation of appeal submissions
Inspection of assessment file and make note of all relevant information for creating extra grounds as well othersie preparation of appeal (if assessment order is passed).
Personal hearing and Liaison with Tax Authorities if/whereever required to resolve the tax matters.
Time to time communications/discussions with NRI client to discuss and explain the status of tax litigation and other related things

Also read:

Non-Disclosure of Foreign Assets in ITR – Black Money Act & Tax Implications –NRIs, Returning NRIs, Resident Indians

Overseas Citizenship of India Card (OCI)- FAQs

FAQs – NRI Income Tax Notices E-campaign, 133(6), 148, 148A, 142(1), Other Notices

Being an NRI OCI, Why have I received a notice from Income Tax Department if I donot have any tax liability payable in India?

Though there is no tax payable in India or taxes have been paid in the form of TDS. However, in the absence of ITR, neither the Inc tax department system know that being NRI your source of funds are outside India which is not taxable in India nor their system know that your income tax liability in India is discharges by wah of TDS. Hence, filing ITR reports the income as well Non-resident status and almost completely plug the prima facie litigation possibility of Tax System.

I am a seafarer? Should I file ITR to avoid Inc Tax Notices?

Yes. Though you may sailing and maintaining a Non Resident status in India. Being Non-resident your ship income may not be taxable in India. However, you must be incurring many financial transactions in India (out of the Ship Salary Income). These financial transactions, on being captured in tax system, in the absence of an ITR, will attract notices from Tax Information System. To avoid it, ITR must be submitted regularly. An ITR is also a handy document for various other purposes such as loan, VISA, a govt document etc.

I am a Non-resident? Why I have received e-campaign or other notices even if I have filed my recent ITR?

If any ITR for latest/recent year(s) is filed by Non-residents, sometimes even then an e-campaign or other enquiry pops up in Compliance Portal. In this regard, it needs to be understood that though the ITR is filed for recent year, however, enquiry may be cropping up via e-campaign or other notices for earlier years for which ITR has not been submitted. Income tax system works on year to year basis. Hence, if for a specific year ITR is not filed but financial transaction has taken place for that year, then there are chances that enquiry will be initiated by the the Tax Information System for respective year. However, since you are now regular in your tax filing so you will be able to take immediate note of enquiries and respond them timely.

Being a Non-resident, what should I do for my financial transactions undertaken in India in recent years as the time for regular ITR filing has passed?

Under the latest tax provisions (via recent amendments) and Updated ITR (ITR U) u/s 139(8A) of the Income Tax Act can be submitted. This updated ITR can now be filed (effective April 2025) for 4 years from the end of respective assessment year for which ITR is to be filed. Hence, all previous 4 years financial transactions can be plugged by filing an Updated ITR. Also, if there is any e-campaign enquiry is pending for response, that should be promptly responded.