SAIF III MAURITIUS COMPANY LIMITED V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE INT TAX 3(1)(2) DELHI & ANR.

W.P.(C)/4669/2022

AI Insights

The case involves multiple writ petitions filed by SAIF II Mauritius Company Limited and SAIF III Mauritius Company Limited against the Assistant Commissioner of Income Tax, challenging the notices issued under Section 148 of the Income Tax Act for the Assessment Years 2016-17 & 2017-18. The petitions argued that the notices were illegal and without jurisdiction, based on the assertion that the petitioners had not filed returns for certain receipts which were claimed to be tax-free under the DTAA between India and the USA. The court, referencing the Supreme Court's decision in Raymond Woollen Mills Ltd., held that the 'reason to believe' standard for reopening assessments was met, thus allowing the reassessment to proceed.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 766391 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 23-03-2022
• Assessment Year: misc
• Other Referred Cases: Raymond Woollen Mills Ltd. vs. Income-tax Officer, Centre Circle XI, Range Bombay and Ors.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: RUCHIR BHATIA
• Assessee Lawyers: AJAY VOHRA; SHASHWAT BAJPAI; VIS H AL AGGARWAL
• Keywords: Dividend income; DTAA; Income Tax; Long Term Capital Gain; Non-Filers Monitoring System; Reassessment; TDS
• Section: 147; 148; 10(38); 10(34)

Judgement Text

"W.P.(C) No.4650/2022 & connected matters Page 1 of 4 $~52, 66, 68 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 4650/2022 & CM APPLs.13966-13967/2022 SAIF II MAURITIUS COMPANY LIMITED ..... Petitioner Through Mr. Ajay Vohra, Sr. Advocate with Dr. Shashwat Bajpai and Mr. Vishal Aggarwal, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE INT TAX 3(1)(2) DELHI & ANR. ..... Respondents Through Mr. Ruchir Bhatia, Advocate. 66 + W.P.(C) 4669/2022 & CM APPLs.13994-13995/2022 SAIF III MAURITIUS COMPANY LIMITED ..... Petitioner Through Mr. Ajay Vohra, Sr. Advocate with Dr. Shashwat Bajpai and Mr. Vishal Aggarwal, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE INT TAX 3(1)(2) DELHI & ANR. ..... Respondents Through Mr. Ruchir Bhatia, Advocate. 68 + W.P.(C) 4671/2022 & CM APPLs.13998-13999/2022 SAIF II MAURITIUS COMPANY LIMITED ..... Petitioner Through Mr. Ajay Vohra, Sr. Advocate with Dr. Shashwat Bajpai and Mr. Vishal Aggarwal, Advs. versus ASSISTANT COMMISSIONER OFINCOME TAX CIRCLE INT TAX 3(1)(2) DELHI & ANR. ..... Respondents Through Mr. Ruchir Bhatia, Advocate. % Date of Decision: 23rd March, 2022 This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/001112 W.P.(C) No.4650/2022 & connected matters Page 2 of 4 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA J U D G M E N T MANMOHAN, J (Oral) 1. Present writ petitions have been filed challenging the notices dated 30 : th March, 2021 issued under Section 148 of the Income Tax Act (hereinafter referred to as ‘the Act’) and the orders disposing of the objections dated 11th 2. As per the reasons recorded, notices dated 30 February, 2022 for the Assessment Years 2016-17 & 2017-18. th 3. In the impugned orders, it is stated that despite the aforesaid receipts the assessee had not filed any return of income for the Assessment Years 2016-17 & 2017-18 and the said receipts had not been offered to tax by the assessee. It is further stated in the impugned order that the plea of the petitioners’-assessee is covered under Para 1(B)(iii)(c) of the CBDT instruction regarding selection of potential cases for issue of notice under Section 148 of the Act issued vide F. No. 225/40/2021/ITA-II dated 15 March, 2021 were issued to the petitioner under Section 148 on the ground that the assessee’s transactions for the Financial Years 2015-16 & 2016-17 were flagged in the Non-Filers Monitoring System (NMS). As per Form 15CA, the assessee had made a remittance to its head office without deducting TDS thereof and claimed the same to be tax free as per DTAA between India and USA. th 4. Learned senior counsel for the Petitioners submits that the impugned notices and orders are patently illegal, bad in law and without jurisdiction, as March, 2021. This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/001112 W.P.(C) No.4650/2022 & connected matters Page 3 of 4 the same were issued based on bald assertions by the Assessing Officer which do not satisfy the requirement of law as per Section 147 of the Act. 5. In support of his contention, he has handed over a chart in Court today, wherein it is stated that the dividend income was exempt under Section 10(34) of the Act and long term capital loss was in any way not chargeable to tax. It is further stated that the assessee had remitted long term capital gain of Rs.14.54 crores on the sale of listed shares of Just Dial Limited which was exempt under Section 10(38) of the Act. 6. Learned counsel for the respondents on the other hand submits that income in the present case is chargeable to tax and the petitioner has claimed exemption and therefore, the issue will have to be examined during the re-assessment proceedings. 7. In the present cases, the issue of dividend income as well as long term capital gain on the sale of shares requires a detailed consideration. 8. Further, in the present cases, Section 148 notices have been issued within four years from the end of the relevant Assessment Years. Also no scrutiny assessment has been taken place in the present cases. Consequently, the test to be applied for re-assessment in the present cases is whether there is ‘reason to believe’ that income chargeable to tax has escaped assessment. In Raymond Woollen Mills Ltd. vs. Income-tax Officer, Centre Circle XI, Range Bombay and Ors., (2008) 14 SCC 218, the Supreme Court has held that the expression ‘reason to believe’ means that there is some prima facie material on the basis of which the Department can reopen the case. The sufficiency or correctness of the material is not a thing to be considered at the stage of issue of notice under Section 148 of the Act. This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/001112 W.P.(C) No.4650/2022 & connected matters Page 4 of 4 9. Consequently, this Court is of the view that the aforesaid test stipulated in Raymond Woollen Mills Ltd. (supra) is satisfied in the present case. However, the contentions and submissions raised by the petitioner are relevant and must be examined by the Assessing Officer while passing the reassessment order. It will also be open to the assessee to show in the re- assessment proceedings that the assumption of facts made in the notice is erroneous. 10. With the aforesaid direction, the present writ petitions along with pending applications stand disposed of. MANMOHAN, J DINESH KUMAR SHARMA, J MARCH 23, 2022 AS This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/001112 "