Dismissal of Sapien Funds Ltd, Mauritius’s Appeal Against DCIT, International Taxation, New Delhi in ITA 1695/DEL/2022

Dismissal of Sapien Funds Ltd, Mauritius’s Appeal Against DCIT, International Taxation, New Delhi in ITA 1695/DEL/2022

On October 6, 2023, the Income Tax Appellate Tribunal, Delhi Bench ‘D’, delivered its final judgment in the case of Sapien Funds Ltd, Mauritius vs Deputy Commissioner of Income Tax, Circle-3(1)(2), International Taxation, New Delhi, bearing I.T.A. No. 1695/Del/2022, for the assessment year 2017-18. This case involves Sapien Funds Ltd, a foreign entity from Mauritius, challenging the order passed by the Deputy Commissioner of Income Tax, Circle 3(1)(2), International Taxation, New Delhi under Section 143(3) read with Section 263 of the Income Tax Act, 1961.

Background

The appeal was filed by Sapien Funds Ltd following an order passed by the Deputy Commissioner of Income Tax, which had its roots in the revisions under Section 263 of the Income Tax Act by the Commissioner of Income Tax (International Taxation). The appellant contended that the consequential assessment made by the Assessing Officer (AO) on June 23, 2022, had no legal basis, especially after the Tribunal had previously quashed the order under Section 263 in ITA No.976/Del/2022 dated June 8, 2023.

Legal Proceedings

During the proceedings, various legal arguments were presented by both parties. The appellant’s counsel argued that the appeal was rightfully filed against the incorrect application of law in the assessment order. However, upon examination of statutory provisions and orders in question, the Tribunal observed that the appeal filed by the assessee was not maintainable before it, as per the explicit provisions of Section 253(1) of the Income Tax Act, which outlines the orders appealable to the Tribunal.

Decision and Conclusion

The Tribunal, after careful consideration of the arguments and examination of the records, found that the appeal by Sapien Funds Ltd was not maintainable. It was noted that advice given in the notice of demand under Section 156 to present an appeal before the ITAT in Form No.36 was incorrect. The correct legal recourse should have been an appeal to the Commissioner of Income Tax (Appeals) as per Section 246A of the Act. Consequently, the Tribunal dismissed the appeal of Sapien Funds Ltd as non-maintainable.

In its conclusion, while dismissing the appeal for statistical purposes, the Tribunal directed the Assessing Officer to amend the notice of demand in line with statutory provisions. The directive aimed to clarify the proper legal procedure for appeals and prevent confusion for taxpayers.

Impact and Significance

This case highlights the importance of understanding the correct appellate procedure under the Income Tax Act, 1961. It serves as a reminder to taxpayers and their advisors to ensure that legal remedies are sought in accordance with the prescribed provisions of law to avoid dismissal on technical grounds.

The dismissal of Sapien Funds Ltd’s appeal underscores the tribunal’s strict adherence to legal precedents and procedures. It also emphasizes the tribunal’s role in interpreting tax laws and guiding taxpayers through complex legal frameworks.

Order pronounced in the open court on October 6, 2023, marking a significant decision in the realm of international taxation and the correct procedure for filing appeals.

Dismissal of Sapien Funds Ltd, Mauritius’s Appeal Against DCIT, International Taxation, New Delhi in ITA 1695/DEL/2022