Paisabazaar Gets INR 9 Cr Tax Demand Notice

SUMMARY

The matter pertains to an order passed in November last year, wherein the assessment officer had disallowed expenses to the tune of INR 85.60 Cr under Section 37 of the IT Act during the assessment year 2023-24

PB Fintech claimed that while the income tax authorities had deemed the demand payable to be Nil following its earlier assessment, they are now inadvertently raising a demand of INR 9.32 Cr

In light of this, PB Fintech said that it will file the necessary appeal against the assessment order and is evaluating the same

PB Fintech lending tech arm Paisabazaar has been slapped with a demand notice of INR 9.32 Cr by Income Tax (I-T) authorities in Delhi.

In an exchange filing on Tuesday, PB Fintech said that the Assistant Commissioner of Income Tax in Delhi has sent an assessment order to its subsidiary Paisabazaar under u/s 143(3) of the Income Tax Act, 1961.

“During the assessment proceedings, the company had duly provided all the necessary documents/information against these expenses, however AO has taken a contrary view and disallowed the same,” PB Fintech stated.

It further claimed that while the income tax authorities had deemed the demand payable to be “Nil” following its earlier assessment, they are now inadvertently raising a demand of INR 9.32 Cr.

“…AO has also issued a demand notice under section 156 of the Income-Tax Act, 1961 inadvertently raising a demand of INR 9.32 crores which is inconsistent with the assessment order passed by AO since the demand payable as per AO’s assessment order is NIL,” the company said.

In light of this, PB Fintech said that it will file the necessary appeal against the assessment order and is evaluating the same.

This is not the first time that the company has been slapped with a tax demand. Last year in November, Paisabazaar received notices from the I-T Department. In the same year, its parent entity, PB Fintech came under IT Lens For Regulatory Laxes, KYC Non-Compliance for regulatory lapses and non-compliance with KYC requirements.

The company is surrounded by allegations about its financial practices. A Trudence Capital report titled “Premium Promises and Discounted Truths” raises significant concerns about PB Fintech’s financial practices, particularly regarding revenue recognition and the operations of its subsidiaries.

The report suggests that Policybazaar’s revenue might have been recorded under Paisabazaar, which further raises questions about compliance with regulations since Paisabazaar is not registered with IRDAI.

The company has also undergone a top-level management reshuffle, with Paisabazaar cofounder Naveen Kukreja stepping down as CEO.

Meanwhile, Policybazaar’s CFO, Ashutosh Mishra, resigned from his role, along with another subsidiary position.

Besides, the company also faced a tax raid in January on PB Fintech’s offices in Gurugram. Alongside this, the company is also investing INR 696 Cr (around $80 Mn) in its wholly owned subsidiary PB Healthcare Services Pvt Ltd.

The Market Performance:

PB Fintech debuted on Dalal Street on November 15, 2021, at a listing price of INR 1150.

The stock has fallen 25.35% on a year-to-date basis against the Sensex’s fall of 2.4% during the same period.

While the stock has surged 8.97% in the last month, led by the broader market recovery in recent weeks.

Despite fluctuations in share price, PB Fintech has reported a 92% jump in its consolidated profit after tax (PAT) to INR 71.54 Cr in the third quarter of the fiscal year 2024-25 (Q3 FY25) from INR 37.23 Cr in the year-ago quarter, buoyed by healthy insurance premium collection.

On a quarter-on-quarter basis, net profit climbed over 40% from INR 50.98 Cr. Notably, this was the fifth consecutive profitable quarter for PB Fintech.