BCP V. Singapore FVCI Pte. Ltd Vs The ACIT [ITA No. 449/2023] (A.Y.2017-18) (ITAT Delhi)
The Assessing Officer issued a notice u/s 148 claiming that assessee did not file income tax returns for the A.Y 2017-18. The decision to reopen the case was based on an evaluation of remittances of INR 203,56,82,630 to a non-resident or foreign entity during F.Y 2016-17. Despite its involvement in these transactions, the assessee failed to file an income tax return for that relevant year.
A letter through ITBA was also issued to the assessee outlining the issue and reason for not filing the income tax return, but the assessee failed to respond. Therefore, facts showed that the assessee neglected to file income tax return u/s 139(1) for the year in question even though the assessee had taxable income.
The assessee challenged the legality of the reassessment process u/s 148 of the Income-tax act, 1961 and made an appeal to Hon’ble Tribunal. The reasons for appeal consist of arguments that the reopening exceeded jurisdiction, was unlawful, and did not follow proper legal protocols. The assessee requested for the proceedings u/s 148 to be invalidated.
A significant point of disagreement was the AO’s incorrect classification of Rs 203,56,82,630 as unexplained investments, even though it would have been treated as income for the year in question. According to the assessee, throughout the A.Y. 2017-18, it neither invested in non-convertible debentures (NCDs), nor received any income. There was an unreasonable addition of Rs 203,56,82,630 since the AO disregarded submissions that provided information about the source of NCD investments made in F.Y 2014-15.
The NCDs were redeemed and the funds were subsequently transferred from Indian bank to foreign bank, during AY 2017-18. Regarding the remittances to its foreign bank account, the assessee had obtained Form 15CB and filed Form 15CA. Assessee further contended that the disputed sum was only repatriated from its Indian bank account to its foreign bank during the A.Y 2017–18.
The Hon’ble Tribunal observed that the assessee, operating under the name XYZ project, subscribed NCDs of Rs.150,00,00,000 on 17-06-2014. The assessee had also earned interest, which had been offered for tax in the A.Y 2015–16 and 2016–17.
The Hon’ble Tribunal held that the assessee had only repatriated the amounts invested in the earlier years and hence, no taxability arose during the AY 2017-18. In the case of the assessee company, neither had any income accrued or arisen or is deemed to accrue or arise under that for the A.Y 2017-18 nor any claim had been made under any DTAA. It was apparent that the Assessing Office had not examined the relevant records before them, wherein the interest earned had been duly offered to tax.
The Hon’ble Tribunal ruled in favor of the assessee and concluded that there was no escapement of income during the A.Y 2017-18. Thus, it declared the reassessment proceedings u/s 148 as void-ab-initio. To download official order, click here.
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