J.P. Morgan Chase Holdings LLC v. ACIT (2023) 294 Taxman 245/(2024) 462 ITR 108 (Bom.)(HC)

S. 148A : Reassessment-Conducting inquiry, providing opportunity before issue of notice-Unexplained investments-Notice issued was without application of mind-Order and notice was quashed and set aside. The matter is remitted back to revenue to consider matter afresh. [S. 148A(b), 148A(d), Art. 226]

 

The assessee subscribed to equity shares issued by subsidiary. The assessee was allotted certain equity shares at a premium.  It remitted an aggregate amount from outside India to its subsidiary in two branches. Premium was ascertained based on a valuation report issued by accredited valuers.  Assessee also submitted necessary details to Reserve Bank of India (RBI).  RBI by an auto generated mail approved reporting form of assessee. Department issued notice  for reopening assessment on ground that assessee had not submitted any documentary evidence to verify source of investment. On writ the Court held that since the  assessee had necessary permission from RBI and if RBI had any doubts about assessee’s genuineness or source of funds, it would have red flagged assessee or subsidiary. Since the  Revenue had failed to appreciate that assessee was a company organized under relevant laws of USA and was subject to tax in USA and assessee had sufficient funds to make investments in subsidiary during year in consideration. Accordingly the  order passed under section 148A(d) was quashed and set aside.  Matter remanded  back to revenue to consider  afresh. (AY. 2019-20)