2023 (8) TMI 294 - HC - Income Tax

Reopening of assessment u/s 147 - allegation against the petitioner is that it has received foreign remittances from an Indian company as petitioner is a tax resident of USA - Revenue s case that the remittance is in the nature of consultancy services, and hence, is taxable u/s 9(1)(vii) - In an e-mail request for accommodation was reiterated and an opportunity was sought for being granted hearing in the matter - HELD THAT - Revenue cannot accept that a request for personal hearing was made much prior to the date when the impugned order was passed. The AO, clearly, did not pay any heed to it. There is no dispute about the fact that the petitioner has not filed a Return of Income (ROI) for the AY in issue. As to whether such an obligation is cast on the petitioner, in the facts and circumstances obtaining in the instant case, is a matter which also needs to be inquired into by the AO. The provisions of Section 139 and Section 115A would have to be interpreted by the AO. That said, what the AO may also have to rule on is that even if ROI was not filed, will that, by itself, lead to a conclusion that remittances received by the petitioner were income chargeable to tax which had escaped assessment under the Act. For the foregoing reasons, we are of the view that the best way forward would be to set aside the impugned order passed u/s 148A(d) and consequent notice issued under Section 148 of the Act, with liberty to the AO to pass a fresh order after giving due opportunity to the petitioner.

Summary

Issues involved:
The writ petition concerns Assessment Year (AY) 2019-20. The petitioner seeks to challenge various orders and notices related to foreign remittances treated as taxable consultancy services under Section 9(1)(vii) of the Income Tax Act, 1961.

Details of the Judgment:

Foreign Remittances and Taxability:
The petitioner received foreign remittances from an Indian company for consultancy services, deemed taxable under Section 9(1)(vii) of the Act. The petitioner, a tax resident of the USA, was served notices at its USA address regarding the remittances.

Procedural Irregularities:
The petitioner sought accommodation and a hearing in response to the notices issued. Despite correspondence and requests for a personal hearing, the Assessing Officer (AO) passed an order under Section 148A(d) of the Act without granting the petitioner an opportunity to present its case.

Non-Filing of Return of Income:
The petitioner did not file a Return of Income (ROI) for the relevant AY. The AO needs to determine if the petitioner was obligated to file an ROI and whether the remittances constitute income chargeable to tax under the Act.

Judgment and Directions:
The Court set aside the impugned order and notice, directing the AO to pass a fresh order after providing the petitioner with a proper opportunity to be heard. The AO must issue a notice for a hearing, allow written submissions if requested, and provide a detailed speaking order addressing all contentions raised by the petitioner.

Conclusion:
The writ petition was disposed of with the aforementioned directions to ensure a fair opportunity for the petitioner to present its case. The parties were instructed to act based on the digitally signed copy of the order, and the pending interlocutory application was closed.