Davos International Fund Vs ACIT (ITAT Mumbai)
Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings initiated against Davos International Fund, a Mauritius-based Foreign Portfolio Investor (FPI), for AY 2018-19. The Tribunal held that the reassessment notice under section 148 of the Income Tax Act, 1961 was issued without obtaining sanction from the correct “specified authority” as mandated under section 151, thereby rendering the proceedings invalid in law.
Background
Davos International Fund, incorporated in Mauritius and registered with SEBI as an FPI, had filed its income-tax return for AY 2018-19 declaring total income of ₹47.42 lakh. The case was reopened after the Assessing Officer (AO) received information from search proceedings on the Kushal Group, Ahmedabad, alleging that the assessee had earned bogus long-term capital gains (LTCG) on shares of Kushal Ltd.
The AO issued notice under section 148A(b) on 22 March 2022, considered the assessee’s reply, and passed an order under section 148A(d) on 4 April 2022. On the same day, notice under section 148 was also issued, leading to reassessment under section 147. The AO treated LTCG of ₹43.30 lakh as bogus and made an addition under section 68.
The assessee challenged the reassessment not only on merits but also on the validity of the notice under section 148, arguing that the mandatory approval from the Principal Chief Commissioner of Income Tax (PCCIT) was not obtained.
Assessee’s Contentions
