Reopening assessment for foreign remittances alleged as consultancy fees denied procedural fairness; order set aside pending fresh hearing

Reopening of assessment based on an allegation that foreign remittances constituted taxable consultancy receipts was set aside because the assessing officer ignored a request for personal hearing. The AO must determine whether the non-resident recipient was obliged to file a return and whether non-filing alone establishes income escaping assessment; interpretation of return filing obligations and non resident tax provisions must be carried out on merits. Consequence: impugned reopening order and notice were set aside with liberty for the AO to pass a fresh order after giving the taxpayer a proper opportunity of hearing.

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Issues involved:
The writ petition concerns Assessment Year (AY) 2019-20. The petitioner seeks to challenge various orders and notices related to foreign remittances treated as taxable consultancy services under Section 9(1)(vii) of the Income Tax Act, 1961.

Details of the Judgment:

Foreign Remittances and Taxability:
The petitioner received foreign remittances from an Indian company for consultancy services, deemed taxable under Section 9(1)(vii) of the Act. The petitioner, a tax resident of the USA, was served notices at its USA address regarding the remittances.

Procedural Irregularities:
The petitioner sought accommodation and a hearing in response to the notices issued. Despite correspondence and requests for a personal hearing, the Assessing Officer (AO) passed an order under Section 148A(d) of the Act without granting the petitioner an opportunity to present its case.

Non-Filing of Return of Income:
The petitioner did not file a Return of Income (ROI) for the relevant AY. The AO needs to determine if the petitioner was obligated to file an ROI and whether the remittances constitute income chargeable to tax under the Act.

Judgment and Directions:
The Court set aside the impugned order and notice, directing the AO to pass a fresh order after providing the petitioner with a proper opportunity to be heard. The AO must issue a notice for a hearing, allow written submissions if requested, and provide a detailed speaking order addressing all contentions raised by the petitioner.

Conclusion:
The writ petition was disposed of with the aforementioned directions to ensure a fair opportunity for the petitioner to present its case. The parties were instructed to act based on the digitally signed copy of the order, and the pending interlocutory application was closed.

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