The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that no taxability arose as there was no escapement of income on repatriating Rs.203.56 Cr. arising from redemption of non-convertible debentures ( NCDs ).
BCP V Singapore FVCI Pvt Ltd., the assessee is a company and has not filed a return of income for the AY 2017-18. It was observed that the assessee, during the financial year 2016-17 relevant to A.Y. 2017-18 has been involved in remittance to a non-resident or a foreign company. The assessee has chosen not to file a return of its income for the year under consideration despite having taxable income.
To verify the nature of these transactions and to allow the assessee to explain the same, the assessee was issued a letter through ITBA. The assessee was requested to make compliance by 20.03.2021. However, no reply has been received from the assessee to date.
Further, ITS details from ITBA, 360 Degree data, E-filing portal and 26A data from CPC TDS have been verified and found that no IT has been filed by the assesse whereas transactions amounting to Rs. 2,03,56,82,630/- have been carried out during the year under consideration.
The assessee has failed to file a return of income for the year under consideration as per the provisions of Section 139 while prime facie the assessee had taxable income during the year.
The full and true disclosure about the above transactions has not been made by the assessee company. In view of explanation 2 to clause an of proviso of section 647 of the Income Tax Act, 1961, where a return of income has not been furnished by the assessee and it is noticed that the total income of any other person in respect of which he is assessable under the IT Act, 1961 during the year exceeded the maximum amount which is not chargeable to income tax.
The undisputed facts revealed that NCDs amounting to Rs. 150,00,00,000/- were subscribed on 17.06.2014 by the assessee in a company named M/s Hindustan Power Projects P. Ltd. The assessee has also earned interest and that interest has been offered to tax in the assessment years 2015-16 and 201617 the NCDs were redeemed in September 2015 and October 2015 relevant to the assessment year 201718 and then transferred the funds from Deutesche Bank India, to J.P Morgan Bank in Singapore. The assessee has obtained form 15CB and filed form 15CA with regard to the said remittances to its J.P. Morgan Bank account in Singapore.
A two-member bench comprising Dr B R R Kumar, Accountant Member and Ms. Astha Chandra, Judicial Member observed that the assessee has only repatriated the amounts invested in the earlier years and hence, no taxability arises during the year. In the case of the assessee company, neither has any income accrued or arisen or is deemed to accrue or arise under that for the assessment year 2017-18 nor any claim has been under any DTAA. The Assessing Office has not examined the relevant records before them wherein the interest earned has been duly offered to tax.
It was concluded that there was no escapement of income during the year and hence, the notice issued under section 148 is considered to be void ab initio and consequently the assessment is treated as nullity. The Tribunal allowed the appeal of the assessee.
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