TMI Blog2023 (5) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the reason that the scope of section 154 of the Act is very limited and have not entertained the appeal of the assessee on merits considering the oral all fact and peculiarity of the case. Considering the specific facts on record that the assessee is non resident the amount which the ld. AO has taxed is earned and sourced outside India does not confer the income tax on the said income which does not accrue or arise in India and levy of income tax on such income is does not arise. It is the duty of the ld. AO to guide the assessee who are complying voluntarily based on the email addressed to him and it should not be intention the ld. AO to tax the income which is not chargeable to tax in India. Since, we have considered the arguments of the ld. DR that the issue on merits that whether the income shown on head salary is in fact received outside India is not decided under the order in dispute before us i.e. u/s 154 of the Act. We direct the ld. AO to call for the details of the salary from the assessee and determined the fact as to whether considering the facts and circumstances of the case and salary income is chargeable to tax into or not. At the same time assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the Ld. CIT (A) erred in fact as well as in law affirming the action of Ld. AO, passing an order under section 154 r.w.s 143(1) of the Income-tax act and raising a demand of Rs. 10,03,130 /-. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in affirming the action of Ld. AO, in not appreciating the fact that the entire income of the appellant accrued, earned and received outside India (i.e., Kenya), the appellant being a non-resident as per section 5 of the Act, is not liable to pay tax on income earned outside India. 2.1. That on the fact and in the circumstances of the case, The Ld. CIT (A) and Ld. AO erred in fact as well as in law that income tax can be levied upon the appellant only if the income is chargeable to tax and not otherwise. 3. That on the facts and in the circumstances of the case, the Ld. CIT (A) and the Ld. AO without appreciating the fact that the mistake captured in the intimation order passed u/s 154 r.w.s 143(1) of the Act is based on the mistake apparent from the record in Income-Tax Returns. 3.1. That on the facts and circumstances of the case and in law, the Ld. CIT (A) and Ld. AO has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a rectification application u/s 154 of the Act with the AO via e-mail dated 14.05.2021. The same was rejected by the AO on the ground that the application did not come under the purview of section 154 of the Act and the same was conveyed to the appellant vide e-mail dated 15.06.2021. The appellant again filed a detailed application for rectification on 09.08.2021. This application was rejected by the AO vide a speaking order dated 29.11.2021 on the ground that the case did not fall under the purview of section 154 of the Act as it is not a mistake that is apparent from record. 6. As the assessee is aggrieved with the order of the ld. AO passed u/s 154 of the Act, he has preferred an appeal before ld. CIT(A) and the same was dismissed. The relevant finding of the ld. CIT(A) apropos to the grounds so raised by the assessee, the relevant finding of the ld. CIT(A) is as under:- 9.1 It is an undisputed fact that the appellant had himself voluntarily offered salary income for taxation in India and had declared gross tax liability of Rs. 7,88,495/- in the said return. The appellant had also claimed tax relief of Rs. 7,88,495/- u/s 90/90A of the Act and had uploaded Form no. 67 ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be permitted to substitute the original return filed under s. 139(1). The Apex Court has laid down the law that filing a revised return under Section 139(5) of the Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. Applying the decision to the facts of the case show that once the appellant has himself offered certain income as taxable in the return, he cannot subsequently take a contrary stand and claim such income as exempt. 9.6 In view of the overall discussion made above, the action of the CPC in accepting the returned income and declining credit of FTC are found to be in order. All grounds of appeal are dismissed. 7. As the assessee did not find any favour from the order of the ld. CIT(A), the assessee has preferred the appeal before this Tribunal on the ground as reproduced hereinabove. To support various grounds so raised by the ld. AR of the assessee, he has filed the written submissions as reproduced herein below. Brief facts 1. The appellant, Mr Pappu Singh Rajpurohit, is a non-resident citizen of India for the purpose of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an incorrect tax demand of Rs. 10,03,130 for the AY 2018-19 has arisen. 7. That the appellant had filed a rectification application under section 154 of the Act via Email dated May 14, 2021, along with all the necessary documents which were later rejected by the Ld. AO over the Email. Further, the appellant again filed a detailed submission for rectification on August 09, 2021. 8.That the application was also rejected and passed the rectification order under section 154 of the Act ( impugned order ) on November 29, 2021, vide DIN ITBA/REC/S/154_1/2021-22/1037352954(1) and compute the tax demand of Rs. 10,81,232 along with interest. 8. That aggrieved by the rectification order the appellant filed an appeal before the Ld. CIT (A) which was also dismissed by the order Dated 25th November, 2022 vide DIN ITBA/APL/S/250/2022-23/1047657415(1). (Kindly refer Pg no. 7 35 of the paper book for CIT Order) 9. That aggrieved by the decision of the Ld. CIT (A) The appellant has filed the present appeal before the Hon ble Tribunal. That the respondent herein is filing in the present Memorandum of appeal on the following grounds, which are without prejudice to one another. The res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of filling an application under section 154 of the Act. 5. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in affirming the action of Ld. AO in considering the facts of the case as per their own convenience and disallow the Foreign Tax Credit (FTC) on the ground that the appellant is not being a resident is not liable to claim the Foreign Tax Credit (FTC) and at the same time by treating the Appellant s salary income as taxable in India even though the same was earned and received outside India and not liable to be taxed in India being non-resident. Grounds-wise submissions are as follows: - Ground No. 1 is reproduced herein under as follow 1. That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax Appeal (hereinafter referred to as Ld. CIT (A)) erred in fact as well as in law affirming the action of Ld. Assessing Officer (hereinafter referred to as Ld. AO), passing an order under section 154 r.w.s 143(1) of the Income-tax act and raising a demand of Rs. 10,03,130/-. Submission 1.1. That it is humbly submitted before the Hon ble tribunal that the appellant in the present app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o some archaic administrative procedures having no thoughtful purpose sought to be achieved, while denying Legitimate Relief to the Members of the Armed Forces. TANVI 17. Resultantly the respondent is directed to refund the entire amount of income tax they have recovered, which was an exempted amount and which the petitioner has paid in respect of his disability pension. 18. The exercise of refunding the amount be concluded within a period of 30 days from the date of receipt of certified copy of this order. Authorities shall be free to pass appropriate order in the matter of refund and the petitioner shall be entitled for interest @ 12% per annum from the date the amount was deposited with the income tax department till the amount is paid. 1.7. That in another case having the same sets of facts, the Hon ble High court of Madhya Pradesh further affirmed its earlier judgement and held as under in the case of Colonel Ashwani Kumar Ram Singh ... vs Principal Commissioner Of Income Tax Decided on 29 August 2019 Writ Petition No.8858/2019(Refer Pg no. 71-76 of the paper book for caselaw) This Court in the case of Colonel Madan Gopal Singh Negi v/s CIT (II) (W.P. No.29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interests of the general public. That as held by the Hon ble Supreme court of India a tax can only be imposed when the tax imposition is justified as a reasonable restriction. It is humbly submitted that the phrase 'reasonable restriction connotes that the limitation imposed upon a person in the enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interest of the public. It is humbly submitted before the Hon ble Tribunal that in the present case, the tax has been imposed without having any locus standi hence it cannot be termed as a reasonable restriction. 1.9. That the Hon ble Supreme court of India in the case of Commissioner of Income-tax v. Shelly Products [2003] 129 Taxman 271 (SC) (Refer Pg no. 92-103 of the paper book for caselaw) held as under: - 31. We cannot lose sight of the fact that the failure or inability of the revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment tax which is in exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Price Waterhouse Coopers (P.) Ltd. commissioner of Income-tax, Kolkata [2012] 25 taxmann.com 400 (SC) (Refer Pg no. 104-108 of the paper book for caselaw), the Hon ble Supreme court held that 19.The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. It appears to us that all that has happened in the present case is that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its total income. This can only be described as a human error which we are all prone to make. The calibre and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present does not mean that the assessed is guilty of either furnishing inaccurate particulars or attempting to conceal its income. 20. We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. 2.3. That further it is humbly submitted that the appellant had stayed only for 70 days in the previous year 2017-18 and, as the appellant left India for the purpose of taking up the employment and, thus, in accordance with Explanation 1(a) of Section 6(1) of the Act, the appellant is non-resident . 2.4.That it is humbly submitted that as the appellant is non-resident in terms of section 6 of the Act, thus, as per section 5 of the Act, the taxable income in India of a nonresident includes only the following incomes: a. Income received or is deemed to be received in India in such year by or on behalf of such person; or b. Accrues or arises or is deemed to accrue or arise to him in India during such year. That the relevant portion of Section 5 of the Income-tax Act is reproduced here as follows: - 5. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which (a) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Applying the said principles to the facts of the present case and number of days worked by the assessee outside India as extracted in assessment order when taken into consideration it would emerge that assessee was working outside India for a period of 225 days and the income in question earned by the assessee had not accrued in India and is not deemed to have accrued in India. As such the contention of the revenue cannot be accepted. That the Hon ble Court while deciding the scope of section 5 and section 9 of the Income Tax Act 1961 affirmed that if the income of the assessee had not accrued in India and is not deemed to have accrued in India the same cannot be liable to pay tax in India as in the present case also the income of the appellant has been accrued, arise, and received outside India. 2.6.That further the Hon ble Bangalore ITAT in case of Bholanath Pal v. ITO [ITA No.10/Bang/2011] has held as under: (Refer Pg no. 136-146 of paper book for caselaw) As per section 15, salary is not taxable on receipt basis except in case of advance salary or arrears salary. Regular salary under section 15(1)(a) is taxable on accrual basis. Salary is accrued where the employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected only as provided under the Act. If any assessee, under a mistake, misconceptions or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected (see S.R. Kosti v. CIT [2005] 276 ITR 165 (Guj.), CPA Yoosuf v. ITO [1970] 77 ITR 237 (Ker.), CIT v. Bharat General Reinsurance Co. Ltd. [1971] 81 ITR 303 (Delhi), CIT v. Archana R. Dhanwatey [1982] 136 ITR 355(Bom.). 32. If particular levy is not permitted under the Act, tax cannot be levied applying the doctrine of estoppel. (See Dy. CST v.reeni Printers [1987] 67 SCC 279. 33. This Court in the case of Nirmala L. Mehta v. A. Balasubramaniam, CIT [2004] 269 ITR 1 has held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. In the case on hand, it was obligatory on the part of the Assessing Officer to apply his mind to the facts disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , along with all the requisite documents and records. (Kindly refer to Pg no. 169-276 of the paper books for the detailed submission along with requisite documents). 3.3.That is further submitted before the Hon ble Court that the rectification application was ultimately accepted by the Ld. AO, however, on November 29, 2021, an adverse rectification order (Kindly refer to Pg no. 277-285 of the paper book for the order and along with the computation sheet) computing the tax demand of INR 10,81,232 (including interest) was passed in haste without applying the mind and totally disregarding the correct disclosures made by the appellant in return of income w.r.t. non-residential status and source of income as disclosed in Part A General and Schedule S: Details of Income from salary respectively in Form ITR-2 for the AY 2018- 19. (Kindly refer to Pg no.291=316 of the paper books for ITR). 3.4. It is humbly submitted before the Hon ble Tribunal that due to a lack of awareness regarding Income tax Act, the appellant furnished his return of income declaring his non-taxable salary income erroneously. However, this inadvertent error on the part of the appellant does not dissolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he returns, therefore, the income of the appellant is enhanced, which is otherwise not taxable, hence in the present case also ratification should be made. 3.7.That the Hon ble Rajkot ITAT in the case of ACIT vs Rupam Impex [[2016] 66 taxmann.com 181 (Rajkot Trib.)] has held as under (Refer Pg no. 356-360 of the paper books for caselaw) A lot of emphases is placed on the fact that the mistake was committed by the assessee himself which has resulted in the error creeping in the assessment order as well. Instead of being apologetic about the complete non-application of mind to the facts and making a mockery of the scrutiny assessment proceeding itself, the Assessing Officer has justified the mistake on record on the ground that it is attributed to the assessee. The income tax proceedings are not adversarial proceedings. As to who is responsible for the mistake is not material for the purpose of proceedings under section 154; what is material is that there is a mistake- a mistake which is clear, glaring and which is incapable of two views being taken.The fact that mistake has occurred is beyond doubt. The fact that it is attributed to the error of the assessee does not oblit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 154 of the Act, which was already pending before him on that date. 39. When the commissioner was called upon to examine the revision application under section 264 of the Act, all the relevant material was already available on the record of the assessing officer. The commissioner instead of merely examining whether the intimation was correct based on the material then available should have examined the material in the light of the Circular No. 14(XL-35) of 1955, dated 11.4.1955 and Article 265 of the Constitution of India. The commissioner has erred in not doing so and in failing to exercise the jurisdiction vested in him on mere technical grounds. 40. In view of the above, the impugned order dated 20.11.2012 is set aside. The revision application under section 264 of the Act is restored to the file of the Commissioner. The commissioner is directed to consider the same afresh on merits and dispose the same within a period of eight weeks from today. The Writ petition is disposed of, leaving the parties to bear their own costs. That in the present case also the assessing officer have taken the decision without examinations of the facts and ignoring article 265 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1955 has taken a view that the officers of the department must not take advantage of ignorance of the assessee about his rights and it is their duty to assist the tax payer in every reasonable way particularly in the matter of claiming and securing reliefs. In my view therefore the revenue authorities ought not to have rejected the application u/s 154 of the Act on the ground that the assessee has not filed the revised return of income. The CIT(A) has placed reliance on the decision of the Hon ble supreme Court in the case of Goetz (India) Ltd. (supra) for sustaining the order of the AO u/s 154 of the Act. The Hon ble Supreme Court in it s decision rendered in the case of Goetze (India) Ltd vs CIT has clarified that the appellate authorities under the Act have the power to consider the claim even if the business of the revised return of income. In my view, therefore, the claim of the assessee that Long Term Capital Gain is exempt u/s 10(38) of the Act has to be examined by the AO. It is seen from the order of AO u/s 154 of the Act that the AO wanted details of acquisition and proof of payment of STT. I therefore set aside the order of CIT(A) and remand the question of exemption of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, the total income of a resident Indian shall, inter alia, include even income which accrues to him outside India. On the other hand, Section 5(2) indicates the meaning of accrual of income. It states, inter alia, that the total income of any previous year of a non-resident shall include all income from whatever source derived which is received by him in India or which accrues to him in India. In other words, broadly, in the case of a resident Indian all income which accrue to him whether in or outside India is taxable whereas in the case of a non-resident only income which accrues to him in India or which is received by him in India is taxable. Therefore, consequently, in the case of a non-resident if income accrues outside India, the same is not taxable. Section 6 indicates the meaning of residence in India. 5.3.That in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 1979 taxmann.com 210 (SC) (Refer Pg no. 390-418 of the paper book for caselaw) it would avail of the concessional rates of sales tax granted under the letter dated 20th January, 1970. It is possible that the appellant might have thought that since no notification exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption, as in the present case also there is a no presumption as regard to the assessee to hold that the assessee has full knowledge of the exemptions and after that, he has filed the return hence in the case in hand also the relief should be granted to the assessee. 5.4.That it is further humbly submitted that the Hon ble ITAT Pune bench also affirmed that the authorities should assist the assessee and claim only legitimate taxes Income-tax Officer, Ward 1 (3), Jalna v. MSEB Employees Co-op. Credit Society Ltd. [2014] 50 taxmann.com 210 (Pune - Trib.) (Refer Pg no. 419-423 of the paper book for caselaw) 4.1 In view of above discussion, the CIT(A) was justified in holding that the assessee is entitled for deduction u/s 80P(2)(a)(i) of the Act though the same has not been claimed by the assessee in return of income. It is settled law that correct income of the assessee is to be assessed as per provisions of Income Tax Act, 1961 in spite of higher income incorrectly declared by the assessee in the return of income. This view was fortified by the decision of Hon'ble Bombay High Court in the case of CIT v. Smt. Archana R. Dhanwatey [1981] 136 ITR 355/[1981] 7 Taxman 121, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In light of the above submission advance, authorities and law cited in the interest of justice, equity and good consciences this hon ble tribunal may please to a. Set aside the Order of the Ld. CIT (A) passed under section 154 r.w.s 143(1) of the Income-tax act and raised a demand of Rs. 10,69,841 /-. b. Pass any other Order in the interest of justice, this Hon ble Tribunal Think fit. 8. In addition to the above written submission the ld. AR of the assessee vehemently argued before us that when the revenue has not disputed the fact that the assessee is a non resident, employed in kenya how the salary income that has been earned and received outside in India is chargeable to tax and the same is not under the authority of the law of the Income tax and thus, the income that has been charged to tax is illegal and the assessee should be given the relief in accordance with the law about the income that has not been subjected to tax in India. 9. Per contra, the ld. DR supported the order of the lower authorities. The ld. DR further stated that there is no mistake apparent on record and the assessee has not disputed adjustment made u/s 143(1) of the Act and therefore, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O to guide the assessee who are complying voluntarily based on the email addressed to him and it should not be intention the ld. AO to tax the income which is not chargeable to tax in India. Since, we have considered the arguments of the ld. DR that the issue on merits that whether the income shown on head salary is in fact received outside India is not decided under the order in dispute before us i.e. u/s 154 of the Act. Considering these set of facts we direct the ld. AO to call for the details of the salary from the assessee and determined the fact as to whether considering the facts and circumstances of the case and salary income is chargeable to tax into or not. At the same time assessee is directed to place all the relevant material to decide about the taxability or otherwise of the income that he has earned. In terms of these observations, the appeal of the assessee is allowed for statistical purpose. 11. The fact of the case in IT(IT) A No. 03-JP-2023 is similar to the case in IT(IT) A No. 02-JP-2022 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in this appeal No. 03/JP/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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