Delhi HC Sets aside Income Tax Reassessment Notice against Michael and Susan Dell Foundation [Read Order]
The court found merit in the foundation's argument that the tax authorities had failed to consider their explanation regarding the source and nature of the foreign remittance.
Delhi HC Sets - Income Tax Reassessment Notice - Michael - Susan Dell Foundation - taxscan
Delhi HC Sets - Income Tax Reassessment Notice - Michael - Susan Dell Foundation - taxscan
The Delhi High Court has set aside an income tax reassessment notice issued against the Michael and Susan Dell Foundation, directing the tax authorities to reconsider the matter after hearing the foundation's explanation regarding a foreign remittance of approximately $90,000.
The petition was filed by the Michael and Susan Dell Foundation challenging a show-cause notice dated 31.03.2025 issued under Section 148A(1), an order dated 29.06.2025 under Section 148A(3), and a reassessment notice under Section 148 of the Income Tax Act, 1961 for assessment year 2019-20. The foundation contended that the notice pertained to an amount of Rs.1,87,84,530 (equivalent to USD2,93,070) that represented the balance in their Liaison Office's bank account when it was closed on 12.01.2018 and remitted to the United States.
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According to Mr. Ajay Vohra, Senior Counsel appearing for the foundation, they had previously filed a reply explaining the source of income, and the tax authorities had accepted their return through an assessment order dated 29.03.2024. He argued that the authorities had overlooked the foundation's stand while issuing the subsequent notices under Sections 148A(1), 148A(3), and 148 of the Act.
Per contra, Mr. Gaurav Gupta, appearing on behalf of the tax authorities, did not contest the foundation's contention that their explanation had not been considered by the Revenue department.
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A division bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar observed that the foundation's contentions had not been dealt with in the assessment order. The court found merit in the foundation's argument that the tax authorities had failed to consider their explanation regarding the source and nature of the foreign remittance.
Relying on the principle that authorities must consider the representations made by taxpayers before passing orders, the bench set aside the order dated 29.06.2025 passed under Section 148A(3) and the notice under Section 148 of the Act. The court remanded the matter back to the Assessing Officer(AO) with a direction to pass a fresh, reasoned order after hearing the foundation through its representative.
Finding that the tax authorities had failed to consider the foundation's explanation, the court disposed of the petition and directed that the entire process, including the hearing, be completed within six weeks from the date of the order, thereby upholding the foundation's right to be heard before any adverse tax action is taken.
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