Wp/9783/2023 Of M/S Flipkart Private Limited v. The Income Tax Officer

Digitally signedby REKHAANKAIAHLocation: HighCourt ofKarnataka IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24 DAY OF MAY, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV -WRIT PETITION NO. 9783 OF 2023 (TIT) BETWEEN: M/S. FLIPKART PRIVATE LIMITED, THROUGH ITS AUTHORIZED SIGNATORY, MR. ANKIT BAJORIA, 80, ROBINSON ROAD, NO.02-00, SINGAPORE - 068 898. …PETITIONER (BY SRI. TARUN GULATI, SENIOR ADVOCATE FOR SRI. AJAY J N, ADVOCATE, *SRI KUMAR VISALAKSH, ADVOCATE, SRI ARIHANT TATER, ADVOCATE, SRI AJITESH DAYAL SINGH, ADVOCATE) AND: 1. THE INCOME TAX OFFICER, WARD INTERNATIONAL TAXATION 1(1), BENGALURU, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095. 2. THE COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, BENGALURU, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095. …RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR, EXAMINE, QUASH AND SET ASIDE THE IMPUGNED NOTICE BEARING NOTICE NO.ITBA/AST/S/148_1/2022-23/1051783558(1) (AT ANNX-B) DATED 31.03.2023 ISSUED BY THE R-1 UNDER SECTION 148 OF THE ACT AND ETC. * Inserted vide court order dated 15.06.2023. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has called in question the correctness of the order at Annexure-B dated 31.3.2023 passed by respondent No.1 under Section 148 of the Act along with the impugned order dated 31.3.2023 at Annexure-A passed under Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') and has also challenged the show cause notice at Annexure-C. 2. It is the contention of the petitioner that the order at Annexure-A does not reflect consideration of the replies made by the petitioner pursuant to the show cause notice issued at Annexure-C. It is submitted that, detailed replies have been enclosed at Annexure-G dated 14.3.2023 and Annexure-J dated 17.3.2023 filed on 20.3.2023. 3. Learned Senior counsel appearing for the petitioner submits that, the replies made out to the show cause notice are in detail and draws attention to the table in the reply at Annexure-G and points out that, as regards each of the transaction, necessary details have been furnished pointing out that the demat account balance at paragraph 32, Sl.No.1 in the table does not amount to income and has also submitted that the table further points out that the transactions at Sl.Nos.3,4, 5 and 7 of the table are pure reimbursement of the expenditure incurred and does not constitute income of the assessee while transaction at Sl.No.2 is refund of excess share application money and does not constitute income of the assessee. It is further pointed out that the transaction at Sl.No.6 is only acquisition of arrears which does not constitute income of the assessee. It is pointed that such explanation including other detailed explanation at Annexure-J has not been considered while passing the impugned order under Section 148A(d) of the Act. 4. It is further contended by the learned Senior Counsel appearing for the petitioner that the investment in share is a 'capital account transaction' and the decision of the Bombay High Court has been accepted by the department and the Board circular has been passed in that regard. Accordingly, it is submitted that the question of treating the investment in shares is no longer res integra and cannot form part of the proceedings under Section 148A of the Act, on the ground of 'escapement of income chargeable to tax'. 4. It is further contended by the learned Senior Counsel appearing for the petitioner that the investment in share is a 'capital account transaction' and the decision of the Bombay High Court has been accepted by the department and the Board circular has been passed in that regard. Accordingly, it is submitted that the question of treating the investment in shares is no longer res integra and cannot form part of the proceedings under Section 148A of the Act, on the ground of 'escapement of income chargeable to tax'. 5. Perused the impugned order passed under Section 148A(d) of the Act and the reasons at paragraph(7). Clearly there is no consideration of the replies at Annexures G and J. The impugned order is passed stating that there are no details furnished with regard to source of remittances and purchases. However, a bare perusal of the table which is a part of the reply at Annexure 'G' would indicate otherwise. There is a case made out for reconsideration of the order under Section 148A(d) of the Act at Annexure-A. Accordingly, the order at Annexure-A is set aside with a direction to the Authority to reconsider the replies at Annexures G and J and advert to the same while passing fresh orders under Section 148A(d) of the Act. 6. Accordingly, the petition is disposed off. The impugned order at Annexure-A is set aside subject to the directions as made out. Consequently, the notice at Annexure-B is set aside. All contentions are kept open. Sd/- JUDGE rs/List No.: 1 Sl No.: 8