No Prima Facie Evidence To Prove Escapement: Delhi ITAT Quashes Reassessment Of Mauritian Entity
Noting that the case has been reopened just because the assessee, i.e., a Mauritian investment company had made foreign remittance which arose from the sale of investments and there is no prima facie evidence to prove escapement of income, which is a pre-requisite for initiating reopening, the Delhi ITAT quashes reassessment proceedings initiated against the assessee.The Coram of ITAT...
Noting that the case has been reopened just because the assessee, i.e., a Mauritian investment company had made foreign remittance which arose from the sale of investments and there is no prima facie evidence to prove escapement of income, which is a pre-requisite for initiating reopening, the Delhi ITAT quashes reassessment proceedings initiated against the assessee.
The Coram of ITAT comprising Kul Bharat (Judicial Member) and Dr. B.R.R. Kumar (Accountant Member) observed that “The case has been reopened just because of assessee made remittances which is from the sale of investments made by the assessee. Though the merits of the matter is relevant at the time of reopening, the Assessing Officer at the stage of reopening is required to form only a prima facie believe are satisfaction that income chargeable to tax has escapement assessment. In this case we don't find any such prima facie satisfaction from the reasons recorded”. (Para 10)
As per the brief facts of the case, the Assessee as part of its investment holding activity, a key investment focus of the Assessee is environmental services. During FY 2016-17, the assessee had made investment for subscribing to equity shares and CCDs of Skeiron Renewable Energy Private Limited. Considering that Assessee is a tax resident of Mauritius and holds a valid TRC issued by the MRA and Form 10F for FY 2016-17, it is eligible to claim benefits under the India-Mauritius DTAA to the extent it is more beneficial than the provisions of the Act. Accordingly, the capital gains earned by Assessee on sale of equity shares in Skeiron, shall be taxable only in Mauritius. However, based on the information pertaining to foreign remittances, notice u/s 148 was issued by the Revenue Authorities. The Assessee did not file return claiming the benefit of Article 13(4) of the India-Mauritian DTAA.
The Coram observed that the assessee has remitted an amount Rs. 28.82 crores and also filed form 15CA from which the Revenue came to know the information pertaining to the remittances.
The Coram also found that from the reasons recorded, nothing could be deciphered has to how the Revenue came to conclusion of escapement of income.
Thus, the ITAT concluded that in absence of escapement of income, Section 148 notice is void ab initio and the assessment is a nullity.
Counsel for Appellant/ Taxpayer: Senior Advocate Ajay Vohra
Counsel for Respondent/ Department: Vizay B. Vasanta
Case Title: AEP Investments (Mauritius) Ltd verses ACIT
Case Number: ITA No. 2164/Del/2023