Quickroutes International Private Limited v. Deputy Commissioner of Income Tax Circle Int 3 1 1 Delhi & Anr.

1. Allowed, subject to the petitioner filing legible copies of the annexures, at least three days before the next date of hearing. W.P.(C) 11141/2023 & CM No.43330/2023 [Application filed on behalf of the petitioner seeking interim relief]

2. Issue notice. 2.[1] Mr Puneet Rai, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.

3. Given the direction(s) that we propose to issue, Mr Rai says that he does not wish to file a counter-affidavit, and he will argue the matter based on the record presently available with the court. 3.[1] Therefore, with the consent of learned counsel for the parties, the matter is taken up for hearing and final disposal, at this stage itself.

4. This writ petition concerns Assessment Year (AY) 2019-20.

5. Via this writ petition, the petitioner has assailed the following notices and orders:

(i) Notice dated 27.03.2023 issued under Section 148A(b) of the Income

(ii) Order dated 01.05.2023 passed under Section 148A(d) of the Act.

(iii) Consequential notice dated 01.05.2023 issued under Section 148 of the Act.

6. The principal allegation leveled against the petitioner was that it had purchased foreign currency and made outward foreign remittance. The source of this information, according to the respondents/revenue, was the IDFC First Bank Ltd. [in short, “IDFC”]. The amount which was called into question by the respondents/revenue was pegged at Rs.9,10,36,693/-. 6.[1] Since, according to the respondents/revenue, this was a huge financial transaction and the petitioner had not filed a Return of Income (ROI), the issue got flagged with the Assessing officer (AO).

7. Concededly, the petitioner filed two responses to the aforementioned notice issued under Section 148A(b) of the Act. These responses are dated 17.04.2023 and 24.04.2023. 7.[1] In brief, the response of the petitioner was that it had chosen to purchase shares in an Indian entity going by the name F[1] Info Solutions and Services Pvt. Ltd. [in short, “F[1] Info”] in the Financial Year (FY) 2017-18.

8. In this regard, reference was made to a share purchase agreement [in short, “SPA”] dated 02.09.2017 entered between the petitioner and F[1] Info.

9. The petitioner’s stand was that a certain amount, i.e., Rs.4,51,06,614/-, which was initially retained, as the said amount was to be remitted to F[1] Info only upon fulfillment of a certain contingency connected with targeted net working capital and cash position.

10. According to the petitioner, since the conditions stipulated in the SPA were not fulfilled, this amount was remitted from the petitioner’s own account maintained with IDFC to its account maintained with Citi Bank, Singapore. 10.[1] In other words, the stand taken was, the petitioner was, both, the remitter and the beneficiary of Rs.4,51,06,614/-.

11. The AO, however, was not persuaded by the explanation given by the petitioner. The AO proceeded to pass the impugned order dated 01.05.2023. The rationale provided by the AO in holding that income amounting to Rs.9,10,36,673/-, which was otherwise chargeable to tax, had escaped assessment was that the petitioner had failed to provide the SPA executed between itself and F[1] Info. 11.[1] Furthermore, the AO held that, although, the petitioner had given some explanation with regard to the repatriation of Rs.4,51,06,614/-, independent verification had not been carried out by reaching out to IDFC Ltd. In this context, the AO also noted that the petitioner had not submitted any undertaking from IDFC to this effect.

12. In our view, before passing the impugned order dated 01.05.2023, the AO could have called upon the petitioner to submit not only the SPA, but also perhaps a letter of confirmation from IDFC.