Facts of the Case

The petitioner, Michael and Susan Dell Foundation, challenged the show cause notice dated 31.03.2025 issued under Section 148A(1) of the Income-tax Act, 1961, the order dated 29.06.2025 passed under Section 148A(3), and the consequent reassessment notice issued under Section 148 for Assessment Year 2019–20. The reassessment proceedings were initiated in respect of an amount of ₹1,87,84,530, equivalent to USD 2,93,070. The petitioner operated a Liaison Office in India during Financial Year 2017–18, which had a balance of USD 2,93,070 in its bank account as on 12.01.2018. Upon closure of the Liaison Office, the said amount was remitted to the petitioner’s bank account in the United States of America.

Issues Involved

Whether reassessment proceedings could be sustained where the Assessing Officer failed to consider the assessee’s explanation that the foreign remittance represented transfer of closing balance of a Liaison Office already examined and accepted earlier, whether non-consideration of the assessee’s reply vitiated the order passed under Section 148A(3), and whether the matter deserved remand for fresh consideration.

Petitioner’s Arguments

The petitioner submitted that the very same foreign remittance was examined by the Department in earlier proceedings and was accepted vide assessment order dated 29.03.2024. It was argued that the reassessment notice was issued on the same amount without dealing with the petitioner’s detailed explanation regarding the nature and source of funds. The petitioner contended that the impugned order under Section 148A(3) suffered from non-application of mind and violation of principles of natural justice.

Respondent’s Arguments

The Revenue, through its counsel, fairly did not dispute the petitioner’s contention that the explanation furnished by the petitioner had not been considered while passing the impugned order under Section 148A(3). It was submitted that the matter could be remanded to the Assessing Officer for fresh consideration.

Court Order / Findings

The Delhi High Court noted that the petitioner’s stand regarding the foreign remittance and its prior acceptance by the Department was not dealt with in the impugned order. The Court observed that failure to consider the assessee’s explanation vitiates the reassessment proceedings at the threshold. In view of the admitted position that the petitioner’s reply had not been considered, the Court held that the order dated 29.06.2025 passed under Section 148A(3) and the consequent notice under Section 148 could not be sustained and were liable to be set aside. The matter was accordingly remanded to the Assessing Officer for fresh adjudication.

Important Clarification

The Court clarified that upon remand, the Assessing Officer shall grant the petitioner an opportunity of hearing through its authorised representative and pass a fresh, reasoned, and speaking order. The entire process, including the hearing, was directed to be completed within six weeks from the date of the order.

Final Outcome

The writ petition was disposed of. The order dated 29.06.2025 passed under Section 148A(3) of the Income-tax Act and the reassessment notice issued under Section 148 for Assessment Year 2019–20 were set aside. The matter was remanded to the Assessing Officer for fresh consideration after granting opportunity of hearing to the petitioner, to be completed within the stipulated time.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769505544_MICHAELANDSUSANDELLFOUNDATIONVsASSISTANTDEPUTYCOMMISSIONEROFINCOMETAXCIRCLEINTERNATIONALTAXATION221NEWANR..pdf

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