Delhi High Court Sets Aside Assessment Order Due To Dysfunctional E-Filing Portal

Delhi High Court Sets Aside Assessment Order Due To Dysfunctional E-Filing Portal

The Court directs Mobikwik Systems to furnish But Directs Foreign Inward Remittance Certificates concerning GMO with tax authorities for fresh order

The Delhi High Court has set aside an assessment order on account of the dysfunctionality of the e-filing portal and a narrow time frame to file the reply.

A Division Bench of the High Court of Delhi, comprising Justices Rajiv Shakdher and Talwant Singh dealt with the matter titled One Mobikwik Systems Private Limited v Deputy Commissioner Of Income Tax.

The facts of the matter are that the Petitioner – Company had filed its return of income electronically by declaring a loss amounting to ₹102,86,70,817. The Petitioner's case was picked up for scrutiny and it was submitted by the Petitioner that whenever information was sought through notices, the same was furnished to the authorities.

The present issue, however, was with regards to the show cause notice dated 11 June 2021 against the Petitioner requiring to justify why the foreign remittances received from the investors named therein should not be treated as unexplained income and added to the Petitioner's returned income u/S 68 of Income Tax Act, 1961. However, the time frame provided to file a reply was till 14 June 2021. The Petitioner contended it was unable to respond to the said show-cause notice as the e-filing portal was not functional and that the assessment order was passed when the e-filing portal was dysfunctional. Therefore, the contention raised by the Petitioner was there had been an infraction of its legal rights on account of the short time frame to file a reply and the dysfunctionality of the e-filing portal.

The assessment order was passed which treated the investments made by the non-residential investors as, unexplained income u/S 68 of the Act and further levied tax at the rate of 78 per cent on the said amount u/S 115BBE of the Act, which raised the demand amounting to ₹58,30,02,160,

The Respondent – Revenue Authority contended that the Petitioner had kept back some bit of the information. The Respondent submitted that the Foreign Inward Remittance Certificates (FIRC) concerning GMO Global Payment Fund Investment Partnership (GMO) were not furnished by the Petitioner to the Assessing Officer.

The Court after going through the records and arguments found the Petitioner's reasons were good enough to set aside the assessment order, with liberty to the Assessing Order to continue the assessment proceedings from the stage of the show cause notice dated 11 June 2021.

The Petitioner was, however, directed by the bench to furnish the FIRC concerning GMO and liberty was granted to the Respondent to call for further information, if necessary in order to frame a fresh assessment order.

Thus, the assessment order was set aside by the Court due to the dysfunctionality in the e-filing portal and extremely narrow time frame to file a reply, with the above-stated directions.