Income Tax Appellate Tribunal - Amritsar
Hardeep Singh Ahluwalia,, Jalandhar vs Income-Tax Officer, Jalandhar on 21 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND
SH. T.S. KAPOOR, ACCOUNTANT MEMBER
(CAMP AT JALANDHAR)
I.T.A Nos.257(Asr)/2012
Assessment Year: 2007-08
Income Tax Officer, Vs. Shri Hardeep Singh
Ward III (1), Ahluwalia,
Jalandhar. 30A, Parkash Nagar,
Jalandhar.
PAN:AEKPA-8292E
(Appellant) (Respondent)
I.T.A No.267(Asr)/2012
Assessment Years: 2007-08
Shri Hardeep Singh Vs. Income Tax Officer,
Ahluwalia, Ward III (1),
30A, Parkash Nagar, Jalandhar.
Jalandhar.
PAN:AEKPA-8292E
(Appellant) (Respondent)
Appellant by: Sh. Bhawani Shankar (DR.)
Respondent by: Sh. P.N.Arora (Adv.) &
Sh. Ashwani Mittal (Adv.)
Date of hearing: 19.01.2017
Date of pronouncement: 21.02.2017
ORDER
PER T. S. KAPOOR (AM):
These are cross objections filed by Revenue as well as by assessee against the order of Ld. CIT(A), Jalandhar, dated 30.03.2012 for Asst. Year 2007-08.2 I TA Nos.257 & 267 (Asr)/2012
Asst. Year: 2007-08
2. The grounds of appeal taken by Revenue as well as by assessee are reproduce herein below.
The following grounds has been taken by Revenue.
1. That on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in allowing relief of Rs.18,33,185/- out of an addition of Rs.47,95,739/- claimed by the assessee in respect of foreign remittance.
l.a While allowing relief of Rs.18,33,185/- Ld. CIT(A) has failed to appreciate that the addition on this account was made by the AO on the basis of declaration made by the assessee in his return of income.
l.b That on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has allowed the relief of Rs.18,33,185/- on the basis of assumptions only and not on the basis of any evidence.
3. It is prayed that the order of the learned Commissioner of Income Tax (Appeals) be set-aside and that of the Assessing Officer restored." Whereas the following grounds has been taken by the assessee.
1. That on facts and in the circumstances of the case and in law, Ld. CIT(A)is not justified in holding that the directions u/s 144A given by the Ld. Addl. CIT are not prejudicial to the interests of the assessee.
2. That Ld. CIT(A) has failed to appreciate that grant of opportunity by Assessing Officer after passing of directions u/s 144A could not said to be a real opportunity. Reliance is placed on the judgment reported in the case of Ramlal Kewal Chand Vs. ITO 46 ITD 291 (JP).
3. That on facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have held that directions given by the Ld. Addl. CIT at the back of the assessee have vitiated the assessment and consequently, the assessment is bad in law and is, therefore, liable to be quashed.
4. That on facts and in the circumstances of the case and in law, Ld. CIT(A) is not Justified in holding that Ld. Addl. CIT had full authority to assign the cases falling within his jurisdictional Range from one Assessing Officer to another Assessing Officer.
5. That on facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have held that assumption of jurisdiction by ITO lll(3) based on order passed by Ld. Addl.CIT is illegal and consequently, the assessment order passed by Ld. ITO lll(3) is liable to declared a nullity in the eyes of law. 3 I TA Nos.257 & 267 (Asr)/2012
Asst. Year: 2007-08
6. That the lower authorities have failed to appreciate that the foreign inward remittances made by the assessee himself from his bank accounts in England is merely transfer of funds from one bank account to another bank account and therefore, could not be treated as income at all.
7. That the lower authorities have failed to appreciate that money brought into India by non-residents through banking channel is not liable to Indian Income tax as explained by CBDT itself in Circular No. 5 dated 20.02.1969.
8. That the Ld. CIT(A) has failed to appreciate that the additional evidence could not produced during assessment proceedings due to reasonable cause and therefore, Ld. CIT(A) ought to have admitted the additional evidence relevant to the grounds of appeal urged before the Ld. CIT(A).
9. At any rate, on facts and in the circumstances of the case and in law, Ld. CIT(A) is not justified in confirming the addition of Rs.29,62,382/- out of addition of Rs.47,95,567/- made by the Ld. ITO towards foreign inward remittances.
10. That the Ld. CIT(A) is not justified in holding that CIT(A) has jurisdiction to bring to tax items of income which have not been considered by Assessing Officer. The case laws relied upon by Ld. CIT(A) while holding so are not analogous on all four in law and on the facts of the case. Consequently, the direction given by the Ld. CIT(A) by illegally and unjustifiably rejecting the contentions of the appellant to include salary income brRs7^EL9bD7;TTT^otanrTc6rfie' of the assessee is bad in law.
11. That without prejudice to ground No.10 above and on facts and in the circumstances of the case and in law, Ld. CIT(A) was not justified in making addition of Rs.9,99,960/- separately and at the most, Ld. CIT(A) ought to have reduced relief of Rs.18~337T86/- granted by him by Rs.9,99,960/-.
12. That Ld. CIT(A) is not justified in rejecting Ground of Appeal No. 2 urged before him by relying upon judgment of Hon'ble ITAT in the case of Broadway Overseas Ltd. which is distinguishable and is not analogous on all four on the facts of the case.
13. That the appellant craves leave to amend, alter or add to the above grounds of appeal, before the appeal is heard or disposed off.
3. The brief facts of the case as noted in the assessment order are that the assessee declared its income at Rs.98,172/- and also declared foreign inward remittance of Rs.47,95,567/-. The assessee had declared this foreign remittance as exempt under the Income Tax Act. The Assessing Officer during the assessment proceedings observed that assessee had claimed the status as 4 I TA Nos.257 & 267 (Asr)/2012 Asst. Year: 2007-08 resident in the Income Tax Returns filed for the relevant year and therefore, on a query the assessee submitted as under:
"In the year 200.1, he went abroad for 3 years and returned in October 2006. During that period also his shop was working under his salaried employee whose returns of business income were regularly filed in Income tax Department, Jalandhar. After his return from abroad, he is regularly filing Income-tax returns at Income tax Department, Jalandhar.
The clerk who was filing his return has unintentionally ticked the resident column in return form No. ITR-4. this is a unintentionally mistake which does not result in any loss to revenue.
On all his incomes in England during the year 2003 to 2006 TDS was deducted and balance amount after tax has been remitted by him in his bank accounts in Jalandhar which amounts to Rs.47,95,567/- as per following details:-
Sr. No. Date Amount Name of Bank
1 15.09.2006 513720 ICICI Bank
2. 29.09.2006 514620 --
3. 26.10.2006 844000 --
4. 31.10.2006 465316 --
5. 24.11.2006 227889 --
6. 13.12.2006 224883 --
7. 04.01.2007 97692 --
8. 19.04.2006 1265239 SBI Civil Lines, Jalandhar
9. 23.08.2006 431832 --
27.06.2006 210375 SBOP, Jalandhar in the
10.
name of Sh. Narinder Walia
Total 4795567
The Assessing Officer observed that the contention of assessee was not correct as the assessee remained in England during the period 2003-2006 and had returned to India on 16.10.2006 and therefore, he remained in India for about 151 days and his residential status for the Asst. Year: 2007-08 was Indian Resident.5 I TA Nos.257 & 267 (Asr)/2012
Asst. Year: 2007-08 Moreover, he observed that status of the assessee as mentioned in the Income Tax Return was Indian Resident, therefore, the counsel of the assessee was asked to explain the following about these facts.
"As per the photocopy of passport submitted the assessee had left 14.05.2006 and returned on 16.10.2006 which means in Financial Year 2006-07, his stay in India is 214 days and abroad is 151 days. In view of the above details explain the resident status of the Assessee"
To the above question asked by your goodself on 30.12.2009, the reply is as under:-
1. It is submitted that Assessee has not earned income of Rs.7.00 Lacs in Financial! year 2006-07 but has remitted this amount from abroad to his in ICICI and SB1 and to his mother's A'c in SBOP Jalandhar. This fact is very clear from the copies of bank statement submitted.
2. That the assessee has proved with documentary evidence that above amounts were earned by the Assessee in Financial years 2003-04, 2004-05,2005- 06 and 2006-07 in England The bank statements of LLOYD'S bank England and TDS certificate pertaining to financial years 2003-04, 2004-05, 2005- 06 and 2006-07 also show the same. TDS have been deducted whose details have already been given. In view of the above facts, the contention of A.O. that entire amount is taxable as Income for the financial year 2006-07 is incorrect.
3. That there is double taxation avoidance treaty with England which means on Incomes if Taxes are deducted in England, there can't be any lax in Indio. On this court itself, the above remittance can't be taxable in the financial year 2006-01 i.e. assessment year 2007-08, irresponsible of Residence Status of the Assessee.
4. That on 30.12.2009, the Ld A.O. has confronted the photostate entries of passport. It is submitted that Assessee in not in Jalandhar and will return on 03.01.2009. Within she rt time, his original passport could nut be produced before your goodself. Reasonable time should have been given to the Assessee to reply about entries in passport. We hereby contend that the photocopy of passport could be incomplete and can't be explained in such a short lime.
5. it is further submitted that evidence of Receipts of Income in England to the tune of Rs.58.00 Lacs have been given to your goodself which is on the file itself Please consider this Income of Rs.58.00 lacs earned in England on which T.D.S. has been deducted in England before deciding this case. "
The Assessing Officer held that the amount of income declared in the Income Tax Return for the present year cannot be treated as income for F.Ys:2003-04 to 2006-07 and therefore, the said amounts were added in the income of the assessee.6 I TA Nos.257 & 267 (Asr)/2012
Asst. Year: 2007-08
4. Aggrieved with the order, the assessee filed appeal before Ld. CIT(A). The Ld. CIT(A) allowed relief to the assessee to the tune of Rs.18,33,185/-. However, he also directed the Assessing Officer to recomputed the total income by including an amount of Rs.9,99,960/- which the Ld. CIT(A) held to be salary income of the assessee earned in England.
5. At the outset, the Ld. AR invited our attention to application placed on record vide letter dated 13.01.2014 wherein the assessee had raised additional ground of appeal which read as under:
"That on the facts and circumstances of the case and in law, the Ld. CIT(A) is not justified in holding that salary earned by the appellant in UK is taxable in India and therefore, addition of Rs.9,99,960/- made by the Ld. CIT(A) on account of salary earned by the appellant in UK is liable to be deleted."
6. The ld. DR had no objection to raising of additional ground as the ground raised by assessee as additional ground was a legal ground and was coming out of the facts and material placed on record. Therefore, we admitted the additional ground of appeal and the Ld. AR was directed to proceed with his argument on his additional ground. The Ld. AR submitted that the assessee had earned salary in UK which was exempted as per the treaty between India and England vide Article 16(2) of the DTAA between UK & India. He submitted that the Ld. CIT(A) wrongly interpreted the said article and in this respect our attention was invited to the Ld. CIT(A)'s orders as contained from para 17.6 onward. Reading from 7 I TA Nos.257 & 267 (Asr)/2012 Asst. Year: 2007-08 para noted by Ld. CIT(A) at page 29 of his order, the Ld. AR submitted that for making the amount of salary earned in England taxable in India, the three conditions are to be satisfied.
7. Regarding other grounds of appeal, the Ld. AR straightway came to ground No.8 and submitted that the additional evidence was filed with Ld. CIT(A) who had not admitted the same and therefore, it was prayed that additional evidence should have been considered. He submitted that assessee had furnished copies of his Bank Accounts in UK so as to prove that remittance in NRE Account in India with ICICI Bank were made from his Bank Accounts in U.K. It was submitted that Ld. CIT(A) rejected the additional evidence by holding that normally copies of the Bank accounts should have been available with the assessee and since the assessee had remitted certain sums from his account in England, the necessary evidence in the form of Bank Statements should have been obtained and kept for production before the Taxing Authority in India. It was submitted that assessee was under bonafide belief that Bank Accounts in UK were not required before the Income Tax Authority and therefore, when asked he made efforts to obtain copies of Bank Account in U.K and the Bank statements were received after framing of assessment and thus could not be produced before the A.O. It was submitted that non production of Bank Accounts was only because of the fact that Bank Accounts were to be obtained from U.K. It was submitted that Bank Accounts are very vital documents in 8 I TA Nos.257 & 267 (Asr)/2012 Asst. Year: 2007-08 order to correctly determine the tax liability which the Ld. CIT(A) ought to have admitted the evidence.
8. The Ld. DR was asked that since additional evidence filed by assessee was vital and important, the case can be sent back to AO for reconsidering the issue after considering the additional evidence to which ld. DR had no objection.
The Ld. DR further submitted that the appeal filed by Revenue on account of relief granted by Ld. CIT(A) should also be considered by AO afresh.
9. We have heard the rival parties and have gone through the material placed on record. We find that the additional evidence in the form of copy of Bank Accounts from where the amounts were remitted in India in NRE Account of the assessee are important and relevant documents for computation of real income of the assessee and therefore, we deem it appropriate to remit the case back to the office of Assessing Officer, who should decide the case of the assessee afresh in view of the of the additional evidence submitted by assessee before Ld. CIT(A). Since, the issue in dispute has been remitted back to the office of Assessing Officer, the other grounds raised by assessee need not be adjudicated.
10. As regards the additional ground of appeal raised by assessee, we find that the article 16(1) of DTAA between England and India as reproduced by Ld. CIT(A) 9 I TA Nos.257 & 267 (Asr)/2012 Asst. Year: 2007-08 in his order refers that remuneration derived by a resident of a Contracting State in respect of an employment shall not be taxable in that other state unless the employment is exercised in other contracting state. However, the exception to Article-1 states that remuneration derived by a resident of a contracting state in respect of an employee exercised in other contracting states shall not be taxed in that other state if following three conditions are fulfilled.
a) he is present in the other State for a period or periods not exceeding in the aggregate 183 days during the relevant fiscal year.
(b) the remuneration is paid by, or on behalf of, an employment who is not resident of that other state and
(c) the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State As per the provisions of Art.16 (2) these are cumulative conditions which are required to be fulfilled for making the salary earned in UK taxable in India, therefore, the Assessing Officer is directed to consider the taxability of income earned by the assessee in U.K in view of the DTAA provisions.
11. In nutshell the appeal filed by assessee is allowed for statistical purposes.
12. As regards the appeal filed by Revenue, we find that since the Ld. CIT(A) had allowed relief out of the total addition and we have remitted back the appeal of assessee to Assessing Officer, therefore, the appeal filed by Revenue is also remitted to Assessing Officer who would frame fresh assessment De novo, however, it is also directed that Assessing Officer would restrict himself to the 10 I TA Nos.257 & 267 (Asr)/2012 Asst. Year: 2007-08 additions made by him in his original order. Needless to say that assessee will be provided sufficient opportunity of being heard.
13. In view of the above, the appeal filed by Revenue as well as assessee are allowed for statistical purposes.
Order pronounced in the open Court on 21.02.2017.
Sd/- Sd/-
(A.D. JAIN) (T. S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 21.02.2017.
/PK/Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By Order