M/S CLIFFORD CHANCE PTE. LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE INTERNATIONAL TAX 1(2)(1) DELHI AND ORS.

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W.P.(C)/7403/2022HC DelhiDLHC01081225202217 May 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA4 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court held that the impugned order passed under Section 148A(d) of the Income Tax Act, 1961, was contrary to the admitted facts and therefore untenable in law. The Court noted that it was an admitted position that the assessee had filed its return of income for AY 2018-19, declaring an income of Rs. 4,04,59,030. The Revenue's submission that the order contained inadvertent errors, including the incorrect statement about the non-filing of the return, supported the assessee's claim of non-application of mind. Consequently, the Court quashed and set aside the impugned order under Section 148A(d) and the notice issued under Section 148, both dated April 12, 2022. The respondents were directed to decide the matter afresh by way of a reasoned order in accordance with law and with an open mind within six weeks. The Court clarified that it had not commented on the merits of the controversy and left the rights and contentions of all parties open.

What were the facts?

The assessee, M/s Clifford Chance Pte. Ltd., filed a writ petition challenging an order passed under Section 148A(d) and a notice issued under Section 148 of the Income Tax Act, 1961, both dated April 12, 2022, for Assessment Year 2018-19. The petitioner argued that the order rejecting its objections showed a complete non-application of mind, as it was based on the premise that the petitioner had failed to file its return of income. However, the petitioner had filed its return on November 30, 2018, declaring an income of Rs. 4,04,59,030, which was later assessed at Rs. 12,75,60,666. The Revenue, through the Assistant Commissioner of Income Tax, Circle International Tax 1(2)(1) Delhi, admitted that the impugned order contained inadvertent errors, including stating that the assessee had not filed its return and misstating the amount of escapement of income.

What were the issues?

1. Whether the order passed under Section 148A(d) of the Income Tax Act, 1961, rejecting the assessee's objections, suffers from a non-application of mind, thereby rendering it invalid? Assessee's Contention: The assessee argued that the impugned order was passed without proper application of mind because it erroneously stated that the assessee had failed to file its return of income for AY 2018-19, when in fact, a return had been filed and the case had undergone scrutiny assessment. The assessee relied on the fact that its return filed on November 30, 2018, declared an income of Rs. 4,04,59,030, which was subsequently assessed at Rs. 12,75,60,666. Revenue's Contention: The Revenue, through an email from the Assessing Officer, admitted that the order under Section 148A(d) contained inadvertent errors. Specifically, it was admitted that it was incorrectly mentioned that the assessee had not filed its return of income and that the amount of escapement of income was wrongly stated as Rs. 4,04,59,034 instead of Rs. 17,59,839. However, the Revenue also noted that the show cause notice and the 148A(d) order did acknowledge that a regular assessment had been completed.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 147,Section 143(3),Section 144C(3)

AI-generated summary — verify with the full judgment below

$~2 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 7403/2022 & C.M.No.22635/2022 M/S CLIFFORD CHANCE PTE. LTD. ..... Petitioner Through: Mr.Deepak Chopra with Mr.Rohan Khare, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE INTERNATIONAL TAX 1(2)(1) DELHI AND ORS...... Respondents Through: Mr.Sunil Agarwal, senior standing counsel for the Revenue with Mr.Tushar Gupta and Mr.Utkarsh Tiwari, Advocates. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE MANOJ KUMAR OHRI O R D E R % 17.05.2022 Present writ petition has been filed challenging the order passed under Section 148A(d) of the Income Tax Act, 1961 (‘the Act’) and the notice issued under Section 148 of the Act, both dated 12th April, 2022, for the Assessment Year 2018-19. Learned counsel for the petitioner states that the impugned order rejecting the objections of the petitioner reeks of complete non-application of mind by respondent no.1. He states that the rejection of the objections is on the premise that the petitioner had failed to file its return of income when it is a matter of record that the petitioner filed its return of income on 30th November, 2018 declaring an income of Rs.4,04,59,030/- which was subjected to scrutiny and assessed at Rs.12,75,60,666/-. 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 18/06/2026 at 13:44:50

Mr.Sunil Agarwal, learned standing counsel, who appears on advance notice for the Revenue states that he has received the following instructions by way of an email dated 16th May, 2022 from the Assessing Officer:- “Dear Mr. Sunil Ji, As discussed, in relation to the captioned writ petition, below is a summary of facts for your perusal: 1. The assessee filed its return of income for AY 2018-19 on 31.11.2018 declaring income of Rs.4,04,59,030/-. The case was picked for scrutiny and the assessment was completed under Section 143(3) r.w.s. 144C(3) of the Income-tax Act, 1961, vide order dated 15.09.2021 wherein the entire receipts as appearing in Form 26AS, i.e. Rs.12,75,60,666/- was treated as business income of the assessee in India after adding the differential amount (Rs.8,71,01,636/-) between the returned income (Rs.4,04,59,030/-) and the receipts as per Form 26AS (Rs.12,75, 60, 666/-) 2. Subsequently, information was received through the Insight portal from the office of the Income Tax Officer, Ward3(1)(2), International Tax, Delhi that M/s SBG Cleantech Projectco Pvt. Ltd. had made outward remittance amounting to Rs.17,59,839/- to the assessee during FY 2017-18 on account of Fee for Technical Services and no TDS was deducted on such payments. 3. Accordingly, after examination of the records, the assessee was issued a show cause notice under Section 148A(b) dated 29.03.2022 where the assessee was required to show cause as to why proceedings u/s 147 of the Act should not be initiated on account of income escaping assessment to the tune of Rs.17,59,839/- received from M/s SBG Cleantech Projectco Pvt. Ltd. (“SBG”). A copy of the show cause notice is attached herewith. 4. The assessee vide reply dated 06.04.2022 submitted that the remittance from SBG were made under an agreement between the 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 18/06/2026 at 13:44:50

assessee and Mizuho Bank Ltd. under which the payment was to be made by SBG. The assessee further submitted that the services were performed outside India and hence no part of such income is taxable in India. 5. The submission of the assessee was considered but not found tenable. Order under Section 148A was passed on 12.04.2022 wherein it was stated in para 5 that “The receipts regarding which information has been received have not been considered during the regular assessment proceedings for the subject year. Hence, the assessee has failed to furnish the details of transaction made during the FY 2017-18 relevant to AY 2018-19 amounting to Rs.4,04,59,034/- during the regular assessment.” As stated earlier, during the assessment proceedings, only the receipts appearing in the Form 26AS were considered and since no TDS was deducted by SBG, these receipts were not considered during the regular assessment proceedings. Therefore, further verification is required in the instant case and notice under Section 148 was issued on 12.04.2022. 6. However, it is submitted that in the order under Section 148A(d) dated 12.04.2022, it is inadvertently mentioned that the assessee had not filed its return of income for AY 2018-19. Also, the amount of escapement of income is inadvertently taken as Rs.4,04,59,034/- which is the returned income, instead of Rs.17,59,839/-. However, these facts were clearly mentioned in the show cause notice u/s148A(b) of the Act and even in Order u/s 148A(d), the fact that a regular assessment has been completed in this case has been taken note of, as evident in para 5 of the order quoted above. In case you require any further information, please let us know. Regards Sd/-” 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 18/06/2026 at 13:44:50

Since it is an admitted position that the assessee had filed its return of income declaring an income of Rs.4,04,59,030/-, this Court is of the view that the impugned order under Section 148A(d) of the Act is contrary to facts and untentable in law. Accordingly, the impugned order issued under Section 148A(d) of the Act and notice issued under Section 148 of the Act, both dated 12th April, 2022, for the Assessment Year 2018-19 are quashed and set aside. The respondents are directed to decide the matter afresh by way of a reasoned order in accordance with law and with an open mind within six weeks. In view of the above, present writ petition along with pending application stands disposed of. This Court clarifies that it has not commented on the merits of the controversy. The rights and contentions of all the parties are left open. MANMOHAN, J MANOJ KUMAR OHRI, J MAY 17, 2022 KA 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 18/06/2026 at 13:44:50

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