IT Dept. Shall Furnish All Material Information In Their Possession To Conclude That Income Had Escaped Assessment Before Initiating Reopening: Delhi HC

The Delhi High Court recently set aside the reassessment proceedings and directed the Revenue Department to pass fresh order disposing of objections after calling upon the Assessee to submit the requisite documents in support of its defence.

Further, the High Court directed the Revenue Department to furnish any material/information which is in its possession to support the conclusion that income of Rs.9.10 Crore had escaped assessment.

The Division Bench comprising of Justice Rajiv Shakder and Justice Girish Kathpalia observed that “before passing the impugned order dated 01.05.2023, the AO could have called upon the petitioner to submit not only the SPA, but also perhaps a letter of confirmation from IDFC. These were the simple steps that could have been taken before passing an order under Section 148A(d) of the Act”.

Advocate Kumar Visalaksh appeared for the Petitioner/ Assessee while the Respondent/ Revenue was represented by Advocate Ashvini Kumar.

The brief facts of the case was that during Assessment year 2018-19, the Assessee purchased foreign currency and made outward foreign remittance of Rs.9.10 Crore as per information flagged by IDFC Bank. The Assessee did not file its return of income and in the reassessment proceedings submitted that it purchased shares of an Indian company and retained Rs.4.51 Crore since the seller company did not fulfil a condition stipulated in the share purchase agreement (SPA), thus remitted the said sum from its IDFC account to its Citi Bank account in Singapore. The Assessee therefore, contended that it was both beneficiary and remitter of this amount. The AO however, held that income of Rs.9.51 Crore escaped assessment as Assessee failed to furnish the SPA as well as the letter from IDFC for confirmation of Rs.4.51Crore.

After considering the submission, the Bench remarked that before passing order under Section 148A(d) of the Income Tax Act, the Revenue could have called upon the Assessee to submit not only the SPA, but also a letter of confirmation from IDFC.

The Bench therefore observed that the AO will issue notice to the petitioner which would indicate the documents that he wishes the petitioner, to place before him.

The Bench also directed the AO to furnish to the petitioner any material/information which is in his possession and may not have been furnished to the petitioner up until now, in support of his conclusion arrived at in the order that income amounting to Rs.9,10,36,693/- had escaped assessment.

The High Court therefore directed the Revenue Department to issue notice indicating the documents that Assessee is supposed to place and grant an opportunity of personal hearing.

Cause Title: Quickroutes Internatioanl Private Limited v. DCIT and Anr. [Neutral Citation: 2023: DHC: 6560-DB]

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