In a major relief for Non-Resident Indians (NRIs) facing penalties for missing Indian income tax notices, the Income Tax Appellate Tribunal (ITAT Delhi) has ruled that a penalty under Section 272A(1)(d) cannot be imposed if the notice under Section 142(1) was not properly served on the NRI at their foreign address.

This decision is extremely important for NRIs who frequently receive:

• Income tax notices at old Indian addresses
• Reassessment notices issued without communication
• Ex-parte assessment orders
• Penalties for “non-compliance” despite living outside India

This judgment directly addresses a common problem faced by NRIs worldwide.

Case Details (Highly Searched NRI Keywords Included)

Case Name: Mahesh Ratilal Ganatra vs. DCIT (International Taxation)
Court: ITAT Delhi “D” Bench
Order Date: 28 October 2025
Assessment Year: 2018-19
Issue: Penalty u/s 272A(1)(d) for non-compliance of notice u/s 142(1)
Status of Assessee: NRI residing in the United Kingdom

Why Did the Penalty Happen? (NRI Tax Notice Context)

The Assessing Officer:

• Issued a notice under Section 142(1)
• Completed reassessment ex-parte under Section 147 r.w.s 144/144C
• Imposed ₹10,000 penalty u/s 272A(1)(d) for “non-compliance”

The NRI argued:

• He had no income in India
• He never received any notice
• He permanently lived in the UK, not India
• The department failed to serve the notice at the correct foreign address

This is a textbook example of notices being issued but not delivered to NRIs.

ITAT Delhi’s Key Findings (SEO-Targeted Bullet Points)

1. Service of Notice Is Mandatory for Penalty

The Tribunal reaffirmed that:

“The law requires service of notice, not merely issuance of notice.”

This is the strongest legal protection for NRIs.

2. No Evidence That the Notice Was Served

The department could not produce proof of service of the 142(1) notice.

This makes the penalty legally invalid.

3. NRI Lived in the UK — Notice Should Have Gone to Foreign Address

ITAT noted that the assessee was clearly:

• A Non-Resident
• Living in the United Kingdom
• With the UK address recorded in the assessment order

Failure to send notices to the correct foreign address invalidates the penalty.

4. Ex-Parte Assessment Shows the NRI Never Knew About Proceedings

The entire assessment was done ex-parte, proving:

• The NRI never received the notice
• There was no intention of non-compliance

Penalty cannot be sustained

5. Penalty u/s 272A(1)(d) Requires Willful Non-Compliance

Since no notice was served, there was:

• No opportunity to comply
• No intentional failure
• No legal basis for penalty

Final ITAT Ruling: Penalty Deleted in Full

The ITAT Delhi completely deleted the penalty u/s 272A(1)(d), offering a major precedent for NRIs.

Why This Case Is a Major Win for NRIs Facing Indian Tax Notices

• You cannot be penalised if you never received the income tax notice
• Notices must be sent to your current foreign residential address
• Penalties for non-compliance require actual service
• Ex-parte assessments against NRIs are legally challengeable
• Reassessment u/s 147 for NRIs must follow strict service procedures

This ruling can help thousands of NRIs who receive unexpected penalties because notices were sent to outdated Indian addresses.

Frequently Asked Questions

1. Can the Income Tax Department impose a penalty on an NRI if notice is not received?

No. If notice is not properly served, penalty u/s 272A(1)(d) cannot be imposed.

2. What should NRIs do if they receive an ex-parte assessment order?

They should:

• Challenge the order
• Demand proof of notice service
• Seek cancellation of penalty and reopening

3. Can an NRI challenge reassessment u/s 147 due to incorrect notice service?

Yes. Reassessment is invalid if notice was never served abroad.

4. How can NRIs avoid such tax issues?

NRIs should update:

• Foreign residential address on income tax portal
• Email ID and mobile number
• Communication address in PAN records

How Dinesh Aarjav & Associates Helps NRIs Avoid Wrongful Penalties

We specialise in NRI tax litigation and compliance, and handle:

• Incorrect penalties for non-compliance
• Reassessment notices for NRIs
• Ex-parte assessment challenges
• DTAA claims and NRI tax planning
• Representation before AO/CIT(A)/ITAT

With 25+ years of experience and clients across the USA, UK, Canada, UAE, Singapore & Australia, we are one of India’s leading NRI-focused tax advisory firms.

Conclusion: A Landmark Victory for NRIs

The ITAT Delhi ruling confirms:

If an NRI is not served an income tax notice, the Indian tax department cannot levy a penalty for non-compliance.

This strengthens NRI rights and provides solid grounds to challenge wrongful penalties and assessments.