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TMI Blog2023 (7) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the fact that Petitioner has the necessary permission from the Reserve Bank of India and if the Reserve Bank of India had any doubts about Petitioner s genuineness or the source of funds, Reserve Bank of India would have red flagged Petitioner or the subsidiary. As stated in the Petition that at no stage Respondent No.1 even called upon Petitioner to explain the source of fund and has straight away passed the order impugned, saying that Petitioner has not submitted any documentary evidence to verify the source of investment. Respondent No.1 has failed to appreciate Petitioner is a company organized under the relevant laws of USA and is subject to tax in USA, with income running into billions of dollars. Petitioner has been filing it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) of the Act rejecting the objections of Petitioner and upholding that it is a fit case to issue notice under Section 148 of the Act for re-assessment of income tax for AY 2019-20, the impugned re-assessment notice dated 17th April 2023 (issued on 20th April 2023) under Section 148 of the Act reopening the Assessment for AY 2019-20. 3. During the AY 2019-20, Petitioner subscribed to equity shares issued by the subsidiary. Petitioner was allotted 69,35,716 equity shares of Rs. 10/- each at a premium of Rs. 5042/share aggregating to issue price of Rs. 5,052/share. Petitioner remitted an aggregate sum of Rs. 35,03,92,37,232/- from outside India to its subsidiary in two tranches. The premium of Rs. 5042/- was ascertained based on a valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 148 and section 148A of the Act. 2. In this regard, you are hereby informed that your case for A.Y. 2019-20 has been flagged by the Directorate of Income Tax (Systems) as High Risk non filer case under RMS (Risk Management System) in accordance with Risk Management Strategy formulated by the CBDT. 3. On verification of the information available with this office it is found that you have entered into the following financial transactions during the previous year relevant to the assessment year 2019-20. Information Description Source Count Amount Description Amount (Rs.) Purchase of shares (including share application money) issued by the company J P Morgan Services India Private Limited 1 Aggregate gross amount receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh your reply/ explanation along with supporting documents/ evidence on or before 10.04.2023, whichever is earlier. The explanation/ reply furnished by you in response to this Show Cause Notice, will be considered at the time of passing of order u/s. 148(d) of the Act in your case." 5. Petitioner replied vide a communication dated 6th April 2023 and showed cause as to why there was no escapement of income and why there was no need for Petitioner to file any return of income for AY 2019-20. Petitioner explained, inter alia, that in absence of any income chargeable to income tax, there was no question of income escaping assessment during the year under consideration. Petitioner gave detailed account of its background and that of the subsidia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues, details of comparable used for determining rate, WACC and Beta coefficient used for determining the value of share. In order to verify source of investment, the assessee has not submitted any documentary evidence and simply stated that the investment in equity shares has been made from the income earned from JPMCH's investment outside India." 6. It is quite evident that Respondent No.1 has not applied mind to the matter at hand. Respondent No.1 has not considered the fact that Petitioner has the necessary permission from the Reserve Bank of India and if the Reserve Bank of India had any doubts about Petitioner's genuineness or the source of funds, Reserve Bank of India would have red flagged Petitioner or the subsidiary. 7. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions within two weeks from the date of this order being uploaded.
11. The officer to whom the matter is assigned by Respondent No.2 may pass such order as deemed fit in accordance with law. But before passing any such order Petitioner shall be given a personal hearing notice whereof shall be communicated at least 7 working days in advance to Petitioner. After the personal hearing, should Petitioner wish to file any written submissions recording what transpired during the personal hearing, Petitioner may file the same within three working days thereof. The order to be passed under Section 148A(d) shall be a reasoned order dealing with every submission made by Petitioner.
12. Petition disposed. No order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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