Court sets aside AO's order in writ petition challenging Income Tax Act notices, orders, directs fresh assessment

The court set aside the order of the Assessing Officer (AO) in a writ petition challenging notices and orders under the Income Tax Act, directing a fresh assessment. The petitioner's explanation regarding foreign currency transactions was deemed insufficient, with the court emphasizing the need for proper verification before assessment. The AO was instructed to obtain necessary documents, provide relevant material, and grant a personal hearing to the petitioner's representative for a fair assessment process. The notice issued under Section 148 of the Act was declared void, allowing for a new assessment to be conducted.

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Issues involved:
The judgment concerns a writ petition related to Assessment Year 2019-20 challenging notices and orders issued under the Income Tax Act, 1961.

Details of the judgment:

1. Allegations and Financial Transaction:
The petitioner was accused of purchasing foreign currency and making outward foreign remittance based on information from IDFC First Bank Ltd. The disputed amount was Rs. 9,10,36,693, leading to the issue being flagged with the Assessing Officer (AO).

2. Petitioner's Responses:
The petitioner responded to the notices by explaining that it had purchased shares in an Indian entity named F1 Info Solutions and Services Pvt. Ltd. as per a share purchase agreement dated 02.09.2017. An amount of Rs. 4,51,06,614 was retained pending fulfillment of certain conditions.

3. AO's Decision:
The AO was not convinced by the petitioner's explanation and passed an order on 01.05.2023, holding that income of Rs. 9,10,36,673 had escaped assessment due to the petitioner's failure to provide the SPA and independent verification from IDFC.

4. Court's Observations:
The court noted that the AO could have requested the SPA and confirmation from IDFC before passing the order under Section 148A(d) of the Act. It was suggested that these steps should have been taken for a fair assessment process.

5. Court's Decision:
The court set aside the impugned order dated 01.05.2023 and directed the AO to conduct a fresh assessment after obtaining the necessary documents and information from the petitioner. The notice issued under Section 148 of the Act was also deemed void.

6. Further Directions:
The AO was instructed to request specific documents from the petitioner, provide any relevant material in his possession, and grant a personal hearing to the petitioner's authorized representative. The court emphasized that its decision did not impact the AO's authority to proceed with a fresh assessment.

7. Conclusion:
The writ petition was disposed of with the parties instructed to follow the digitally signed copy of the order for further actions.

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