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[ITAT Delhi] – Reopening Under s. 148 of the ITA Held Void Ab Initio as Mere Repatriation of Funds Did Not Lead to Escapement of Income


In the case of BCP V Singapore FVCI Pte. Ltd. v. The ACIT[i], the reassessment proceedings initiated under s. 148 Income-tax Act, 1961 (‘ITA’) by the Assessing Officer ('AO') were challenged on the ground that repatriation was not unexplained investments. The Hon’ble Income Tax Appellate Tribunal, Delhi (‘ITAT’) ruled in favour of BCP V Singapore FVCI Pte. Ltd. (‘Assessee’) and held reopening to be void ab initio as there was no escapement of income during the year under consideration.  

Brief Facts

  • The Assessee had appealed against the reassessment order passed under s. 148 of the ITA for A.Y. 2017-18, challenging the treatment of Rs. 203,56,82,630 as unexplained investments. The Assessee had contended that the AO erroneously treated the amount of Rs. 203,56,82,630 as unexplained investments. The Assessee argued that the AO had overlooked that no income was generated, nor investments were made by the Assessee in non-convertible debentures (‘NCDs’) during the relevant year. Thus, no tax liability existed. the Assessee contended that AO ignored that Rs 150,00,00,000 was invested in NCDs in AY 2014-15, not in A.Y. 2017-18, hence it cannot be considered unexplained during the relevant year.

  • Further, the Assessee contended that the AO erroneously levied interest earned on NCDs under ss. 234A and 234B of the ITA, which were already taxed in previous years, leading to impermissible double taxation. The AO mechanically initiated penalty proceedings under s. 270A r/w s. 274 of the ITA without recording any satisfaction for its initiation.

  • The AO alleged that the Assessee did not file the income tax return under s. 139 of the ITA on the transaction amounting to Rs. 203,56,82,630 which was carried out during the year. Thus, AO contended that the Assessee was subject to reassessment proceedings for failing to make full and true disclosure of the income and the Assessment was escaped under s. 147/148 of the ITA.


The Hon’ble ITAT observed in favour of the Assessee and observed as under:

  • The ITAT held that the Assessee had subscribed for NCDs against which the interest was received during the A.Y.s 2015-16 and 2016- 17. Consequently, the tax was offered in that particular year. Subsequently, in A.Y. 2017-18, funds were transferred from Deutsche Bank India to J.P Morgan Bank in Singapore.

  • Hence, it was observed that there was no escape of income during the relevant A.Y. 2017-18, the Assessee merely repatriated the funds invested in the earlier years. Thus, there was no tax liability during the year under consideration.

  • Further, the ITAT held that AO failed to examine the significant records. Hence, the notice issued under s. 148 of the ITA was considered to be void ab initio and consequently, the assessment was treated as nullity and no tax liability arose.


The ruling by the ITAT highlights the importance of accurately assessing income and ensuring procedural compliance by tax authorities. In this case, the AO failed to scrutinize the crucial records.

This decision clarifies that mere repatriation of funds does not create a tax liability when the tax has already been paid in the relevant year for the funds in question. Moreover, the Assessee's actions were deemed lawful, and the assessment was invalidated due to procedural deficiencies and the absence of any taxable income for the relevant A.Y.

End Note

[i] [2024] 159 63 (Delhi - Trib.).

Authored by Purvi Garg, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.


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