AL AMIN INVESTMENTS LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE INTERNATIONAL TAX 1(1)(1) DELHI & ANR.

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W.P.(C)/2150/2022HC DelhiDLHC01005649202215 March 2024Bench: HON'BLE MR. JUSTICE YASHWANT VARMA,HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV2 pages
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What did the High Court hold?

The Delhi High Court allowed the writ petition. The Court found that the legal position regarding investments in shares being capital account transactions and not constituting income, as established in M/s Angelantoni Test Technologies SRL vs Assistant Commissioner of Income Tax, was not disputed by the Revenue. Consequently, the Court held that the invocation of Section 148 of the Income Tax Act, 1961, for reopening the assessment on the basis of investment in shares was unsustainable. The impugned notice under Section 148 dated March 31, 2021, and the order dated January 30, 2022, were quashed. The ratio decidendi is that a capital account transaction cannot form the basis for reopening an assessment under Section 148 as it does not represent income that has escaped assessment.

What were the facts?

The petitioner, Al Amin Investments Limited, filed a writ petition challenging an order dated January 30, 2022, a notice dated March 31, 2021, and a sanction dated March 30, 2021, issued by the Assistant Commissioner of Income Tax. The core of the challenge was the reopening of assessment for Assessment Year 2015-2016 under Section 148 of the Income Tax Act, 1961, on the grounds that investment in shares had escaped assessment. The petitioner also challenged a draft assessment order dated May 25, 2023, issued under Section 144C(1) read with Section 147 of the Act for the same assessment year.

What were the issues?

1. Whether the reopening of assessment under Section 148 of the Income Tax Act, 1961, is sustainable when the alleged escaped income pertains to an investment in shares, which is a capital account transaction and not income? (Question of law) The Assessee contended that the investment in shares is a capital account transaction and therefore does not constitute income. Consequently, the invocation of Section 148 for reopening the assessment is unsustainable. The Assessee relied on the decision of the Delhi High Court in M/s Angelantoni Test Technologies SRL vs Assistant Commissioner of Income Tax, Circle Int Tax 1(1)(1) & Ors. [2023 SCC OnLine Del 8488]. The Revenue, through its learned counsel, did not dispute the legal position enunciated in the M/s Angelantoni Test Technologies case.

Which sections of the Income-tax Act were involved?

Section 148,Section 144C(1),Section 147

AI-generated summary — verify with the full judgment below

$~43 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 2150/2022 & CM APPL. 32472/2023

AL AMIN INVESTMENTS LIMITED ..... Petitioner Through: Mr.Fereshte D. Sethna, Mr.Mrunal Paresh and Mr.Mohit Tiwari, Advs.

versus

ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE INTERNATIONAL TAX 1(1)(1) DELHI & ANR. ..... Respondents

Through: Mr.Aseem Chawla, Sr.SC with

Ms.Pratishtha Chaudhary and

Mr.Naveen Rohila, Advs.

Mr.N.K.Aggarwal, Adv for

UOI.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

O R D E R %

15.03.2024

1.

This writ petition has been preferred seeking the following reliefs:- "a) that this Hon'ble Court be pleased to issue a writ of certiorari or writ of mandamus or any other appropriate writ, order or direction in the nature of certiorari/mandamus, under Article 226 of the Constitution of India, calling for all the papers and proceedings of Respondent No. I pertaining to the Impugned Order dated 30 January 2022, Impugned Notice dated 31 March 2021 and Impugned Sanction dated 30 March 2021 after examining the validity, legality and propriety thereof, to quash and set aside the Impugned Order, Impugned Notice and Impugned Sanction; b) A Writ, Order or Direction in the nature of Certiorari quashing the Impugned Draft Assessment Order dated 25 May 2023 issued under section l44C(l) read with section 147 of the Act for AY 2015- 16; c) Pending the hearing and final disposal of the writ petition, for an order restraining the Respondents, its officers, sub-ordinates, agents from relying upon and/or taking any steps in connection with This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/03/2024 at 14:32:29

escapement proceedings initiated against the Petitioner in pursuance of the Impugned Notice; d) For ad-interim/interim reliefs m terms of prayer clause (b) above; e) For the costs of this Petition; and f) For such further and other reliefs, as this Hon'ble Court may deem fit, proper and appropriate, in the nature and circumstances of this case."

2.

The challenge in essence is to the reopening of assessment by invocation of Section 148 of the Income Tax Act, 1961 ["Act"] with it being alleged that the investment made in shares in Assessment Year ["AY"] 2015-2016 had escaped assessment. 3. Learned counsel appearing in support of the writ petition draws our attention to the decision rendered by the Court in M/s Angelantoni Test Technologies SRL vs Assistant Commissioner of Income Tax, Circle Int Tax 1(1)(1) & Ors. [2023 SCC OnLine Del 8488] and contends that it has been categorically found by the Court that the investment in shares would be a capital account transaction and would thus not constitute income. It is in view of the aforesaid, submitted that invocation of Section 148 of the Act would not sustain. 4. The legal position which stands enunciated in M/s Angelantoni Test Technologies could not be disputed by learned counsel representing the respondents. 5. We consequently allow the instant writ petition and quash the impugned notice referrable to Section 148 dated 31 March 2021 and order dated 30 January 2022.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MARCH 15, 2024/MJ This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/03/2024 at 14:32:29

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