STANDARD CHARTERED BANK UK vs. ASSISTANT COMMISSIONER OF INCOME TAX & ORS.

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W.P.(C)/9606/2023HC DelhiDLHC01027637202321 July 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA4 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court held that the Assessing Officer (AO) ought to have dealt with the petitioner's reply dated 26.04.2023. Since the AO had not addressed the reply, the Court was inclined to set aside the order dated 03.05.2023 passed under Section 148A(d) and the consequent notice dated 03.05.2023 issued under Section 148 of the Income Tax Act, 1961. The Court granted liberty to the AO to pass a fresh order, but stipulated that before doing so, the AO must furnish the information/material in his possession to the petitioner within two weeks of receiving the judgment. The petitioner would then be given time to file a response to this furnished material, and the AO would grant a suitable timeframe and accord a personal hearing to the petitioner's authorized representative. The AO was also directed to issue a notice fixing the date and time for the hearing and to pass a speaking order, a copy of which would be provided to the petitioner. The writ petition was disposed of in these terms.

What were the facts?

The petitioner, Standard Chartered Bank UK, filed a writ petition before the Delhi High Court challenging notices and an order issued by the Assistant Commissioner of Income Tax (ACIT) concerning Assessment Year 2019-20. The proceedings were initiated based on information that the petitioner received Rs. 156,15,43,994/- as other income and/or fees for technical services from Vodafone Mobile Services Limited. A notice under Section 148A(b) was issued on March 31, 2023. The petitioner responded on April 26, 2023, raising two main points: the issuing officer lacked jurisdiction as the original assessment under Section 143(3) was made by an officer in Mumbai, and the material forming the basis of the notice was not provided. The ACIT passed an order under Section 148A(d) and a consequential notice under Section 148 on May 3, 2023, without apparently considering the petitioner's reply.

What were the issues?

1. Whether the notice dated 31.03.2023 issued under Section 148A(b) of the Income Tax Act, 1961, and the subsequent order dated 03.05.2023 passed under Section 148A(d) of the Act, along with the consequential notice dated 03.05.2023 under Section 148 of the Act, are valid, considering the alleged lack of jurisdiction of the issuing officer and non-furnishing of material. Assessee's Contentions: The petitioner argued that the notice was issued by an officer without jurisdiction, as the original assessment for AY 2019-20 was completed by the ACIT, International Taxation, Circle 4(2)(2), Mumbai, while the notice originated from an officer in New Delhi. Furthermore, the petitioner contended that the information and material based on which the notice was issued were not furnished to it. The petitioner also argued that the order under Section 148A(d) was passed without considering its reply dated 26.04.2023. Revenue's Contentions: The revenue, through its senior standing counsel, accepted notice and indicated that it would argue the matter based on the existing record, without filing a counter-affidavit, given the court's proposed directions.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

W.P.(C)No.9606/2023 Page 1 of 4

$~35 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Decision delivered on: 21.07.2023 + W.P.(C) 9606/2023 & CM Nos.36805-06/2023

STANDARD CHARTERED BANK UK

..... Petitioner Through: Mr Percy Pardiwalla, Sr Adv. with Mr Madhur Agarwal, Mr Prabal Mehrotra, Mr Ashish Mehta and Mr Shubhankar, Advs.

versus

ASSISTANT COMMISSIONER OF INCOME TAX & ORS.

..... Respondents Through: Mr Sunil Agarwal, Sr Standing Counsel with Mr Shivansh B. Pandya, Standing Counsel and Mr Utkarsh Tiwari, Adv. for Revenue.

Mr Vivek Sharma, Adv. for R-3/UOI.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J. (ORAL): CM No.36806/2023 1. Allowed, subject to just exceptions. W.P.(C) 9606/2023 & CM No.36805/2023 [Application filed on behalf of the petitioner seeking interim relief] 2. Issue notice. 2.1 Mr Sunil Agarwal, learned senior standing counsel, accepts notice on behalf of the respondents/revenue. Digitally Signed By:ATUL JAIN Signing Date:26.07.2023 13:51:06 Signature Not Verified

W.P.(C)No.9606/2023 Page 2 of 4

3.

Given the directions that we propose to issue, Mr Agarwal says that he need not 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. The petitioner has, inter alia, assailed the following orders and notices: (i) Notice dated 31.03.2023 issued under Section 148A(b) of the Income Tax Act, 1961 [in short, “Act”]. (ii) Order dated 03.05.2023 passed under Section 148A(d) of the Act. (iii) Consequential notice dated 03.05.2023 issued under Section 148 of the Act. 6. The trigger for the initiation of the reassessment proceeding was the information/material received by the respondents/revenue that the petitioner, apparently, had received Rs.156,15,43,994/- in the form of other income and/or fees for technical services, from Vodafone Mobile Services Limited. 6.1 It is this information which led to the issuance of the notice dated 31.03.2023 under Section 148A(b) of the Act. 7. Pertinently, the petitioner was granted time till 28.04.2023 to file a response. 7.1 The record seems to disclose that a response was, indeed, filed by the petitioner on 26.04.2023. 8. Inter alia, the petitioner flagged two (2) significant aspects in its reply. 8.1 First, that the notice had been issued by an officer who had no Digitally Signed By:ATUL JAIN Signing Date:26.07.2023 13:51:06 Signature Not Verified

W.P.(C)No.9606/2023 Page 3 of 4

jurisdiction. It was pointed out that an assessment under Section 143(3) of the Act has been made via order dated 25.05.2022 by the ACIT, International Taxation, Circle 4(2)(2), Mumbai, whereas notice was issued by an officer located in New Delhi, i.e., respondent no.1. 8.2 Second, the information and material based on which the notice was issued had not been furnished to the petitioner. It appears that respondent no.1 passed an order dated 03.05.2023 under Section 148A(d) of the Act, without having regard to the reply dated 26.04.2023 filed by the petitioner. 9. Given this backdrop, what emerges is that the Assessing Officer (AO) ought to have dealt with the reply, for whatever it was worth. 10. The AO having not dealt with the reply, we are inclined to set aside the order dated 03.05.2023, and the consequent notice of even date, i.e., 03.05.2023, issued under Section 148 of the Act. 11. Liberty is, however, given to the AO to pass a fresh order. However, before the AO proceeds to pass a fresh order, he will furnish to the petitioner the information/material that he has in his possession. 11.1 This information would be supplied to the petitioner within two (2) weeks from the date of receipt of a copy of the judgment rendered today. 12. The petitioner would be given time to file a response in light of the material/information, if any, furnished to it. 12.1 For this purpose, the AO will grant a suitable timeframe to the petitioner. 13. The AO will also accord personal hearing to the authorized representative of the petitioner. 13.1 In this regard, a notice will be issued, fixing the date and time of hearing. Digitally Signed By:ATUL JAIN Signing Date:26.07.2023 13:51:06 Signature Not Verified

W.P.(C)No.9606/2023 Page 4 of 4

14.

Needless to add, the AO will pass a speaking order; a copy of which will be furnished to the petitioner. 15. The writ petition is disposed of, in the aforesaid terms. 15.1 Consequently, the pending interlocutory application shall stand closed. 16. Parties will act based on the digitally signed copy of the judgment.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

JULY 21, 2023

Digitally Signed By:ATUL JAIN Signing Date:26.07.2023 13:51:06 Signature Not Verified

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