JUDGMENT :

MANMOHAN, J.

ISSUE

1. The core issue that arises for consideration in the present writ petition is whether the respondent-revenue can go behind the tax residency certificate issued by the other tax jurisdiction and issue re-assessment notice under Section 147 of the Income Tax Act, 1961 (for short ‘the Act’) to determine issues of residence status, treaty eligibility and legal ownership.

FACTS

2. The relevant facts of the present case are that during the Assessment Year 2014-15, the petitioner-Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd. acquired equity shares of Agile Electric Sub Assembly Private Limited, a Company incorporated in India (“Agile”) in two tranches, i.e. on 16th August, 2013 and 31st October, 2013.

3. During the year under consideration, i.e. Assessment Year 2016-17, the petitioner sold all the equity shares of Agile to Igarashi Electric Works Limited (“Igarashi”) and other parties on 30th July, 2015.

4. The petitioner electronically filed its return of income for the Assessment Year 2016-17 on 29th September, 2016. In terms of the said return of income, the petitioner claimed that the gains earned by it on sale of Agile shares were not taxable in India by virtue of Article 13(4) the Double Tax Avoidance Agreement entered into and subsisting between India and Singapore (“India-Singapore DTAA”) based on the Tax Residency Certificate (‘TRC’). In its return of income, the petitioner made all the requisite disclosures with regard to the investment and sale of shares like the petitioner is a non-resident in India and majority of its Directors were residents of Singapore.

5. The petitioner’s return of income was processed under Section 143(1) of the Act with no demand, on 8th October, 2016.

6. On 31st March, 2021 a notice was issued to the petitioner under Section 148 of the Act for the Assessment Year 2016-17. The petitioner filed a return of income on 28th April, 2021 and vide letter dated 28th April, 2021 requested for the reasons. After eight months the reasons were supplied to the petitioner vide letter dated 02nd December, 2021. The ‘Reasons’ are reproduced hereinbelow:-

“RECORDING OF REASONS FOR REOPENING THE CASE OF BLACKSTONE CAPITAL PARTNERS (SINGAPORE) VI FDI THREE PTE. LTD.,

A.Y. 2016-17 PAN: AAFCB5584L

1. Background:-

The assessee is a company and filed ITR for the AY 2016-17 at nil income. ITR was processed u/s 143(1) of the Act, however no scrutiny assessment was made in this case.

Subsequently vide letter F.No. ITO/Intl.Tax (2)(1)(1)/2020-21/88 dated 19.03.2021; following information was received from ITO, TDS, Ward 2(1)(1), lntl. Taxn., New Delhi related to the assessee.

2. Information received from the ITO, TDS, Ward 2(1)(1), Intl. Taxn., New Delhi

In the case of M/s Igarashi Electric Works Ltd., (PAN AABC16394M), verification u/s 133(6) of the act was made w.r.t. foreign remittances made during FY 2015-16. On perusal of the documents furnished by the assessee as well as the information available on ITBA portal, it is revealed that during the year under consideration M/s Igarashi Electric Works Ltd., (PAN AABC16394M) made total foreign remittance of Rs.4,01,31,77,340/-, to M/s Black Stone Capital Partners (Singapore) VI FDI Three PTE Ltd., stating nature of Payment as consideration paid for acquisition of Shares. Further, the reason for non-deduction of tax was explained that M/s Black Stone Capital Partners (Singapore) VI FDI Three PTE Ltd., is a resident of Singapore and as such not subject to tax in India on Sale of said shares as per the provisions of India-Singapore DTAA. As per submission of the assessee, M/s Black Stone Capital Partners (Singapore) VI FDI Three PTE Ltd., has sold the shares of M/s Agile Electric Sub Assembly Pvt Ltd., to M/s Igarashi Electric Works Ltd., for sale consi