The case ITA 574/DEL/2021 involves an appeal by Oxbow Energy Solutions LLC, USA, against the final assessment order passed by the Deputy Commissioner of Income Tax (DCIT), International Taxation – 2(2)(2), New Delhi. The appeal pertains to the assessment year 2012-13 and revolves around the addition of Rs. 26,56,35,337 under section 69A of the Income-tax Act, 1961.
Oxbow Energy Solutions LLC, a non-resident corporate entity incorporated in the United States of America, did not file a return of income for the assessment year 2012-13. Information from the Annual Information Report (AIR) and the department’s I-Taxnet system revealed substantial financial transactions, including sales and purchases on the National/Multi-commodity exchange and significant foreign remittances. These findings led the Assessing Officer (AO) to believe that income chargeable to tax had escaped assessment, prompting the issuance of a notice under section 148 of the Income-tax Act.
The AO discovered through inquiries that Oxbow Energy Solutions LLC had remitted Rs. 79,70,54,971 in three tranches and sold shares of Rain Commodities and Rain Industries Ltd. for Rs. 26,57,84,295 on 14.11.2011. The AO treated the remaining amount of Rs. 53,14,19,634 as unexplained money under section 69A due to non-furnishing of details by the assessee. The draft assessment order was framed based on these findings.
Oxbow Energy Solutions LLC raised objections before the DRP, explaining the non-compliance with statutory notices was due to the lack of a login ID on the Income Tax e-filing portal. On merits, the assessee argued that the only transaction during the year was the sale of 92,50,000 equity shares of certain Indian companies for a net consideration of Rs. 26,57,84,297, which was STT-paid and exempt under section 10(38) of the Income-tax Act. The assessee contended that the other transactions alleged by the AO were duplications of this single transaction.
The DRP admitted additional evidence provided by the assessee and forwarded it to the AO for verification. The AO, however, did not offer substantial comments on the evidence and reiterated the stand taken in the draft assessment order. The DRP, after verifying the materials, concluded that the alleged transactions aggregating to Rs. 53,14,19,634 were duplicates and directed the AO to delete the addition.
The Tribunal examined the case details, evidence, and submissions. It was evident that the only transaction was the sale of shares for Rs. 26,57,84,297, which was reflected consistently across various documents. The Tribunal noted that the AO had exceeded his jurisdiction by adding the amount of Rs. 26,56,35,337 in the final assessment order, despite the DRP’s clear direction to delete the addition of Rs. 53,14,19,634.
The Tribunal quashed the final assessment order and underscored the importance of adherence to statutory procedures and the binding nature of DRP directions. This decision reinforces the necessity for assessing officers to act within their jurisdiction and uphold the integrity of the tax administration process.
The Tribunal expressed concern over the trend of non-compliance with DRP directions by assessing officers, highlighting the need for corrective measures to maintain taxpayer confidence and ensure adherence to legal mandates.
The appeal by Oxbow Energy Solutions LLC was allowed, and the assessment order was quashed. The Tribunal’s order was pronounced in the open court on 31st January, 2023.
Order pronounced in the open court on 31st January, 2023.
G.S. PANNU
PRESIDENT
SAKTIJIT DEY
JUDICIAL MEMBER
Date: 31st January, 2023
RK/-
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi
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