Delhi High Court
First Solar Power India Private ... vs Assistant Commissioner Of Income ... on 26 May, 2022
$~A-5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 7436/2022 & CM APPLs.22677-22678/2022
FIRST SOLAR POWER INDIA PRIVATE LIMITED ..... Petitioner
Through: Mr.Ved Jain, Advocate with
Ms.Richa Mishra and Mr.Animesh
Tripathi, Advocates.
versus
ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 7-1
DELHI & ANR. ..... Respondents
Through: Ms.Zehra Khan, Jr.Standing Counsel
with Mr.Shray Nargotia, Advocate.
Mr. Kunal Sharma, Sr. Standing
Counsel.
% Date of Decision: 26th May, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
MANMOHAN, J (Oral):
1. Present Writ Petition has been filed challenging the Show Cause
Notice dated 17th March, 2022 issued under Section 148A(b) of the Income
Tax Act, 1961 ('the Act'), Order dated 31st March, 2022 passed under
Section 148A(d), Notice dated 31st March, 2022 under Section 148 of the
Act and the approval granted/taken by Respondent No.1 under Section 151
of the Act.
2. Learned Counsel for the Petitioner submits that impugned order dated
31st March, 2022 is arbitrary, cryptic and suffers from non-application of
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Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
mind. He states that the source for issuance of the show cause notice is
Petitioner's returns and records of transactions undertaken in normal course
of business, where no adverse remarks whatsoever have been mentioned
regarding the same.
3. He states that the impugned order under Section 148A(d) has
arbitrarily contemplated a huge sum of Rs 3,84,12,17,094/- as having
escaped assessment without any application of mind and without
considering the nature of business of the Petitioner. He refers to the
petitioner's detailed clarification regarding each information relied in his
reply dated 24th March, 2022 which in tabular form is reproduced
hereinbelow:-
Information relied upon in Order Remarks
under Section 148A(d)
Interest under Section 194A from The assessee has earned an interest
M/s Kodangal Solar Parks Private income on unsecured loans given to
Limited of INR97,083/- Kodangal Solar Parks Private
Limited which has been duly
recorded and reported under the head
"Other Income - Interest income on
unsecured loans" of INR
4,37,66,327/- (refer Note No:21 of
the financial statements).
Fee under Section 194J from During the relevant assessment year,
M/s.Winsol Solar Fields the assessee has provided business
(Polepally) Private Limited of INR support services to M/s. Winsol Solar
24,086/- Fields (Polepally) Private Limited
which has been duly recorded and
reported under the head "Revenue
from Operations - Business Support
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
Services" of INR 3,42,22,691/- (refer
Note No:20 of the financial
statements)
Interest under Section 194A from The assessee has earned an interest
M/s.Tandur Solar Power Private income on unsecured loans given to
Limited of INR 24,725/- Tandur Solar Power Private Limited
(presently known as "Suntree Solar
Energy Private Limited") which has
been duly recorded and reported
under the head "Other Income -
Interest income on unsecured loans"
of INR 4,37,66,327/- (refer Note No:
21 of the financial statements).
SFT-005: Time Deposit in Yest The assessee has made the term
Bank Limited of INR deposits (commonly known as
3,51,29,78,667/- TDR/FDR) withYes Bank from time-
to-time basis during the year in
question and amount of INR
3,51,29,78,667/- represents the
aggregate amount of TD's made
during the year under consideration.
The breakup of the TD's of INR
3,51,29,78,667/- (covering TD
number, principal amount, date of
issue, date of maturity) made during
the year are enclosed for your
reference as Annexure-5;
Fee under Section 194J from M/S. During the relevant assessment year,
Anantapur Solar Parks Private the assessee has provided business
Limited of INR 1,66,31,476/- support services to M/s. Anantapur
Solar Parks Private Limited which
has been duly recorded and reported
under the head "Revenue from
Operations - Business Support
Services" of INR 3,42,22,691/- (refer
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Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
Note No: 20 of the financial
statements).
Form 15CC (P)- Sending of During the year under consideration,
Foreign Remittance - CITI Bank the assessee has furnished Form-15
N.A. of INR 8,80,990/- CA/CB's in respect to the made
Form 15CA (R) - Preparation of foreign remittance made amounting
Form 15CA/CB's of INR to INR 1,45,63,215/-, details of
1,45,63,215/- which are enclosed for you ready
Form 15CC (P) - Sending of reference as Annexure 7-9;
Foreign Remittance - CITI Bank
N.A. of INR 79,98,487/-
Interest under Section 194A from The assessee has earned an interest
Yes Bank Limited of INR income on fixed deposits made with
1,27,44,738/- the Yes Bank Limited which has
been duly recorded and reported
under the head "Other Income -
Interest income on fixed deposits" of
INR 1,28,71,793/- (refer Note No: 21
of the financial statements).
Fee under Section 194J from During the relevant assessment year,
M/S.Marikal Solar Parks Private the assessee has provided business
Limited of INR 3,60,000/- support services to M/s.Marikal Solar
Parks Private Limited (presently
known as FS India Devco Private
Limited) which has been duly
recorded and reported under the head
"Revenue from Operations -
Business Support Services" of INR
3,42,22,691/- (refer Note No: 20 of
the financial statements).
Fee under Section 194J from During the relevant assessment year,
M/S.Solarfield Energy Two the assessee has provided technical
Private Limited of INR support services to M/s. Solarfield
2,07,72,650/- Energy Two Private Limited which
has been duly recorded and reported
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
under the head "Revenue from
Operations - Technical Services
Fees" of INR 2,07,72,650/- (refer
Note No: 20 of the financial
statements).
Interest under Section 194A from The assessee has earned an interest
M/S.Tungabhadra Solar Parks income on unsecured loans given to
Private Limited of INR 98,52,294/- Tungabhadra Solar Parks Private
Limited which has been duly
recorded and reported under the head
"Other Income - Interest income on
unsecured loans" of INR
4,37,66,327/- (refer Note No: 21 of
the financial statements).
EXC-002: Turnover from Services The assessee has taken the details of
Reported in Service Tax Return of INR 13,83,53,773/- reported by
INR 13,83,53,773/- assessee in the service tax return
submitted for the period Apr 01,
2017 - June 30, 2017. In this regard,
we would like to submit that the
amount of INR 13,83,53,773/-
reported in the service tax return
consists of:
a) Gross taxable turnover
(income) of the assessee: INR
11,05,15,766/-
b) Expense on which Service tax
paid / payable under reverse
charge mechanism: INR
2,78,38,007/-
Interest under Section 194A from The assessee has earned an interest
M/S. Anantapur Solar Parks income on unsecured loans given to
Private Limited for INR Anantapur Solar Parks Private
96,53,997/- Limited which has been duly
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Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
recorded and reported under the head
"Other Income - Interest income on
unsecured loans" of INR
4,37,66,327/- (refer Note No: 21 of
the financial statements).
Interest under Section 194A from The assessee has earned an interest
Axis Bank Limited of INR income on fixed deposits made with
1,27,054/- the Axis Bank Limited which has
been duly recorded and reported
under the head "Other Income -
Interest income on fixed deposits" of
INR 1,28,71,793/- (refer Note No: 21
of the financial statements).
Fee under Section 194J from During the relevant assessment year,
M/S.Tungabhadra Solar Parks the assessee has provided business
Private Limited of INR support services to M/s. Tungabhadra
1,72,07,132/- Solar Parks Private Limited which
has been duly recorded and reported
under the head "Revenue from
Operations - Business Support
Services" of INR 3,42,22,691/- (refer
Note No: 20 of the financial
statements).
Interest under Section 194A from The assessee has earned an interest
M/S. Poleplly Solar Parks Private income on unsecured loans given to
Limited for INR 4,97,162/- Polepally Solar Parks Private
Limited which has been duly
recorded and reported under the head
"Other Income - Interest income on
unsecured loans" of INR
4,37,66,327/- (refer Note No: 21 of
the financial statements).
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
Interest under Section 194A from The assessee has earned the
M/S. Winsol Solar Fields following interest income(s) from
(Polepally) Private Limited for Winsol Solar Fields (Polepally)
INR 2,82,83,272/- Private Limited during the relevant
assessment year:
Particulars Amount
Interest Income on compulsory- 46,42,189/-
convertible debentures
Interest Income on unsecured 2,36,41,083/-
loans
Total 2,82,83,272/-
Here, it is humbly submitted that the
aforementioned income has been
duly recorded and reported under the
heard "Other Income - (a) Interest
income on Compulsory Convertible
Debentures - INR 46,42,192/- and
(b) Interest income on unsecured
loans- INR 4,37,66,327/- (refer Note
No: 21 of the financial statements).
SFT-005: Time Deposit in Axis The assessee has earned an interest
Bank Limited of INR (-) 127054/- income of INR 1,27,054/- on fixed
deposits made with the Axis Bank
Limited which has been duly
recorded and reported under the head
"Other Income - Interest income on
fixed deposits" of INR 1,28,71,793/-
(refer Note No: 21 of the financial
statements).
ITR-SAL: Amount of Salary to Mr.Amit Kumar Mittal is working as
Amit Kumar Mittal a Technical Director Supply Chain
BD - India in the assessee company
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
during the relevant year in question.
He is a civil engineer and a qualified
business professional having an
experience of more than 34 years
with specific expertise in the power
Sector. During his tenure, he was
responsible for project development,
engineering, procurement, project
management, commissioning and
operations of Solar PV plants of the
company.
ITR-SAL: Amount of Salary to Mr.Amit Narendra Mehta has
Amit Narendra Mehta worked as a Director Business
Development in the assessee
company during the relevant year in
question. He is a post graduate
diploma holder for one of the top
premier MBA Institute of India i.e.
Indian Institute of Mangement
Ahmedabad. He is a qualified
business professinal having an
experience of more than 22 years in
leadership roles across P&L
management, team development,
business development, asset
management and operations. During
his tenure, he was responsible for
leading the business development
activities of the company.
ITR-SAL: Amount of Salary to Deepali Lalit Girdhar has worked as
Deepali Lalit Girdhar a Director - Corporate
Communications in the assessee
company during the relevant year in
question. She is post graduate
diploma holder from a company
premier MBA Institute of India. She
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
is a qualified business professinal
having an experience of more than 22
years in leadership roles across
corporate communications.
ITR-SAL: Amount of Salary to Kailash Chandra Pandey has worked
Kailash Chandra Pandey as project engineer in the assessee
company during the relevant year in
question. He is an engineer from a
premier Institute of India and
responsible for managing the
engineering operations of the
company.
ITR-02B: Payment of rent to The assessee company had taken an
Meera Johri of INR 15,71,992/- office on rent in Nehru Place from
Lalit Mohan Johri and Meera Johri.
The rent agreement in this regard was
executed on May 17, 2012. During
the FY 2016-17, the assessee
company had shifted its office from
Nehru Place to Barakhamba Road
and thus termited the rent agreement
executed for Nehru Place office on
May 30, 2016. Thereafter, no
transaction was entered by assessee
company with either Lalit Mohan
Johri or Meera Johri. The landlord
wise detailes of rent paid by assessee
during the financial yer 2016-17 and
2017-18 are enclosed for your
reference as Annexure-20.
ITR-SAL: Amount of Salary to Srinivasa Rao Dontam has worked as
Srinivasa Rao Dontam senior manager - asset operations in
the assessee company during the
relevant year in question. He is an
electronic engineer from a premier
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
Institute of India who is responsible
for managing the asset management
department of the company.
Remittance in the nature of Assessee explained that no TDS is
consultancy and FTS, Hence not required to be deducted in respect of
liable to deduct TDS - Verification nature of service involved.
Pending
4. Learned Counsel for the Petitioner further states that the order has
been passed without considering the reply dated 24th March, 2022 filed by
the Petitioner in response to the Show Cause Notice dated 17th March, 2022.
He states that the Respondent erred in observing that no supporting evidence
had been filed by the Petitioner despite the fact that supporting evidence had
been duly filed along with the reply dated 24th March, 2022. He also states
that no opportunity for personal hearing was provided to the Petitioner
despite specifically requesting for it vide reply dated 24th March, 2022.
5. Learned Counsel for the Petitioner states that approval under Section
151 of the Act has only been taken for passing the order under Section
148A(d) of the Act and not for issuance of notice under Section 148 of the
Act. He further states that the approval granted by the Respondent No.2 is
mechanical and without application of mind to the facts of the present case.
6. Issue notice. Ms. Zehra Khan, learned counsel for the respondents,
accepts notice. She admits that the present case is covered by the judgment
passed by this Court in Divya Capital One Private Limited (Earlier Known
as Divya Portfolio Private Limited) Vs. Assistant Commissioner of Income
Tax Circle 7(1) Delhi & Anr, W.P.(C) 7406/2022.
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
7. Having perused the paper book, this Court finds that the impugned
notice dated 17th March, 2022 as well as the order dated 4th April, 2022 are
cryptic, as is evident from the fact that information culled out from
Petitioner's own return and records (namely Form 15CA, SFT and Form
26AS) have been used to issue notice under Section 148A(b) of the Act
without mentioning as to what is wrong in these transactions, what are the
apprehensions of the Assessing Officer and what are the points on which
clarification is required. It is not understood as to how transactions carried
out in the ordinary course of business can amount to income having escaped
assessment without any observation or adverse remarks.
8. In fact, perusal of the impugned notice dated 17th March, 2022
suggests that reassessment in the present case was sought to be initiated
merely for verification. This Court is of the view that even if the re-
assessment was being done for verification in accordance with Explanation
1 to Section 148, nothing prevented the Assessing Officer from conducting
an enquiry with respect to the said information in accordance with Section
148A(a) of the Act. In any event, it was all the more necessary in the
present case for the Assessing Officer to thoroughly scrutinise the
contentions and submissions advanced by the petitioner-assessee before
passing an order under Section 148A(d) of the Act.
9. In any event, this Court is of the view that since the impugned order
under Section 148A(d) of the Act had been passed on 31st March, 2022 i.e.
after receipt of the detailed reply by the Petitioner dated 24th March, 2022,
the Assessing Officer should have considered the same as it was available
with him/her on record. By not considering the reply of the Petitioner dated
31st March, 2022, the mandate of Section 148A(c) of the Act has been
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
violated as it casts a duty on the Assessing Officer, by using the expression
'shall', to consider the reply of the petitioner/assessee in response to notice
under Section 148A(b) of the Act before making an order under Section
148A(d) of the Act.
10. This Court is also of the opinion that significance of issuance of a
show cause notice at a stage prior to issuance of a reassessment notice under
Section 148 of the Act has been lost on the Respondents. This Court takes
judicial notice that in a majority of reassessment cases post 1st April, 2021,
the orders under Section 148A(d) of the Act use a template / general reason
to reject the defence of the assessee on merits, namely, "found devoid of any
merit because the assessee failed to furnish the supportive evidences in
respect of transactions mentioned in show cause notice........it is established
that the assessee has no proper explanation......". Consequently, this Court
is of the opinion that a progressive as well as futuristic scheme of re-
assessment whose intent is laudatory has in its implementation not only been
rendered nugatory but has also had an unintended opposite result.
11. Consequently, the impugned order dated 31st March, 2022 issued
under Section 148A(d) of the Act and the notice dated 31st March, 2022
issued under Section 148 of the Act are quashed and the matter is remanded
back to the Assessing Officer for a fresh determination. The Assessing
Officer is directed to pass a fresh reasoned order under Section 148A(d) of
the Act after considering the Petitioner's detailed reply dated 24th March,
2022 in accordance with law within eight weeks. In the event the Assessing
Officer wants certain clarification or would like the petitioner's response to
any specific information received by the revenue, it shall be at liberty to give
a supplementary notice.
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
12. Accordingly, the present writ petition along with pending applications
stands disposed of. However, this Court clarifies that it has not commented
on the merits of the controversy. The rights and contentions of all the parties
are left open.
MANMOHAN, J
MANMEET PRITAM SINGH ARORA, J
MAY 26, 2022
TS
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:30.05.2022
