Taxpayer Must Be Afforded Hearing U/s. 148A Notice Even If Non-Filing Of Return Would Itself Conclude To Escaped Assessment: Delhi HC

The Delhi High Court sets aside the reassessment proceedings against Timex Group USA Inc. (Assessee) as an order under Section 148A(d) Income Tax Act order was passed without considering the Assessee’s request for a personal hearing.

The Division Bench comprising of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the Revenue ought to inquire whether the Assessee was required to file its return of income and whether non-filing of return would itself lead to a conclusion that the income has escaped assessment.

Advocate Rohit Garg appeared for the Assessee while the Revenue was represented by Advocate Aseem Chawla.

The brief facts of the case were that for the AY 2019-20, the Assessee received foreign remittances of Rs.9.13 Cr from Timex Group India Ltd, however, did not file its return of income. The Revenue construed the remittance in the nature of Fee for Technical Services for providing consultancy services taxable under Section 9(1)(vii) of the Act. Accordingly, notice under section 148A(b) was served on Assessee’s US address, which was responded and an adjournment was sought. Subsequently, more letters were filed by the Assessee, on the merits of the case, which were not responded to by the Revenue.

After considering the submission, the Bench found that the Assessee was unaware of the fact that an order under section 148A(d) was passed on May 1, 2023, which was communicated to it on Jun 23, 2023, along with the notice under section 148 dated May 1, 2023.

The Bench observed that the request for a personal hearing was made much prior to this order which was not considered by the AO which Revenue's Counsel admits to.

Thus, the High Court allowed the petition with liberty to the Revenue for passing a fresh speaking order after a hearing and an opportunity to file the written submission.

Cause Title: Timex Group USA INC v. Deputy CIT and Anr.

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