The Delhi High Court set aside the order passed under section 148 of the Income Tax Act, 1961 as the Assessing Officer failed to inquire about documents of foreign purchase which led to the foreign remittance of 9 Crores.
Quickroutes International Private Limited, the petitioner has challenged the notice dated 27.03.2023 issued under Section 148A(b) of the Income Tax Act, 1961 [“Act”] and order dated 01.05.2023 passed under Section 148A(d) of the Act.
It was alleged that the assessee had purchased foreign currency and made outward foreign remittances. The source of this information, according to the respondents/revenue, was the IDFC First Bank Ltd. [IDFC]. The amount which was called into question by the respondents/revenue was pegged at Rs.9,10,36,693/-.
The respondents/revenue argued that this was a huge financial transaction and the petitioner had not filed a Return of Income (ROI), the issue got flagged with the Assessing officer (AO). The petitioner stated that it had chosen to purchase shares in an Indian entity going by the name F1 Info Solutions and Services Pvt. Ltd. [“F1 Info”] in the Financial Year (FY) 2017-18.
A share purchase agreement [“SPA”] dated 02.09.2017 was entered between the petitioner and F1 Info. A certain amount, i.e., Rs.4,51,06,614/, was initially retained, as the said amount was to be remitted to F1 Info only upon fulfilment of a certain contingency connected with targeted net working capital and cash position.
It was contended that since the conditions stipulated in the SPA were not fulfilled, this amount was remitted from the petitioner’s account maintained with IDFC to its account maintained with Citi Bank, Singapore.
The AO proceeded to pass the impugned order dated 01.05.2023. The rationale provided by the AO in holding that income amounting to Rs.9,10,36,673/-, which was otherwise chargeable to tax, had escaped assessment was that the petitioner had failed to provide the SPA executed between itself and F1 Info.
The Division comprising Justice Rajiv Shakdher and Justice Girish Kathpalia bench comprising viewed 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.
The Court set aside the impugned order, with liberty to the AO to pass a fresh order after he has called upon the petitioner to submit the requisite documents in support of its defence about the commencement of reassessment proceedings.
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