Mumbai: In an interim relief to PayPal Payments Private Limited, an online payment processing company, the Bombay High Court has stayed the Rs 32.39 crore tax demand and all related proceedings against it till January 31, 2024.
“That pending the hearing and final disposal of this petition, stay the operation of the Impugned Order, the Impugned Demand Notice, the Impugned Notice, the Impugned Penalty Notice, the Impugned Draft Order and the Impugned TPO Order passed by the Respondents No 2 (Assessment Unit ITD) and 4 (Assistant Commissioner of Income Tax),” a division bench of Justices KR Shriram and Neela Gokhale said.
Plea filed by PayPal through Luthra and Luthra Law Offices
The HC was hearing a plea filed by PayPal through Luthra and Luthra Law Offices challenging the action of the Assessing Officers (AO), National Assessment Faceless Centre, Delhi.
It challenged the assessment order dated October 17 passed under various sections of the Income-Tax Act; demand notice issued on the same day; penalty notice dated July 30 and another penalty notice dated October 17.
Jehangir Mistri appearing for PayPal
Senior adviser Jehangir Mistri, appearing for PayPal, submitted that they filed income tax returns electronically on February 14, 2021, for 2020-21 declaring a total income of Rs12,97,96,680. The case was selected for complete scrutiny on the grounds of international transactions, refund claims, foreign outward remittance, loss from currency fluctuations etc.
Assessed income computed at Rs 1,04,30,60,110.
Notices were issued and the I-T calculated PayPal’s income as Rs 91,32,63,430. Accordingly, the assessed income was computed at Rs 1,04,30,60,110.
The I-T raised a demand notice of Rs 32,39,48,100. Another penalty notice alleged under-reporting of income.
PayPal's arguments
PayPal, in its plea, contended that according to Section 153(1) of the Act, no order of assessment “shall” be made under Section 143 of the Act at any time after the expiry of 18 months (extendable up to 12 months) from the end of the annual year in which the income was first assessable.
"Therefore, it is humbly submitted that the statutory limitation period for passing an order of assessment, ie, the Impugned Order in the present case, expired on 30.09.2023," the plea contended. It further said, "Therefore, the order passed by the Assessment Unit of ITD on October 17 was 'unambiguously beyond the statutory period of limitation' by a month and the order was without jurisdiction, liable to be quashed."
PayPal to file its rejoinder in two weeks
It hence sought quashing of the I-T order for the AY 2020-21. Advocates Akhileshwar Sharma and Shilpa Goel appearing for the respondents sought three weeks to file the reply. The HC then asked PayPal to file its rejoinder in two weeks thereafter and kept the matter for hearing on January 8, 2024.
