Salesforce.Com Singapore Pte. Ltd Vs DCIT (Delhi High Court)
Delhi High Court has nullified an assessment order and demand notice issued by the Deputy Commissioner of Income Tax (DCIT) against Salesforce.Com Singapore Pte. Ltd. for the Assessment Year (AY) 2018-19. The court found that the reassessment proceedings were initiated without jurisdiction while original assessment proceedings for the same year were still ongoing, a fundamental procedural error.
Salesforce.Com Singapore Pte. Ltd. had initially filed its income tax return for AY 2018-19 on November 30, 2018. The return was selected for scrutiny due to a “large value refund,” leading to a notice under Section 143(2) of the Income Tax Act, 1961, on September 22, 2019. Following a notice under Section 139(9), a rectified return was filed on November 22, 2019, declaring a total income of ₹2,69,11,690/-.
Parallel and Unwarranted Proceedings
While these original assessment proceedings were still pending, the Assessing Officer (AO) issued a notice under Section 148A(b) of the Act on March 30, 2022, proposing to initiate reassessment proceedings. An order under Section 148A(d) followed on April 11, 2022, confirming the decision to issue a Section 148 notice.
The Delhi High Court expressed bewilderment at this action. The court questioned the necessity of commencing reassessment proceedings when the initial assessment for the same period was still underway. Section 147 of the Act pertains to income that has “escaped assessment,” a concept that logically applies only after an assessment has been concluded. The Revenue’s counsel was unable to cite any provision in the Act that permits such parallel proceedings for reopening an assessment while the original assessment is still pending.
