R.Krishnamoorthy, CHENNAI V. ADIT, CHENNAI

ITA 40/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4525 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Salary income; Bonafide mistake
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 40/MDS/2013 ASSESSMENT YEAR : 2009-10 R. KRISHNAMOORTHY, PLOT NO.5, KAVERI APARTMENTS, FLAT NO. 10, BAGHWANDAM STREET, T.NAGAR, CHENNAI 600 017. [PAN: ADTPR 9903 R] (APPELLANT) VS THE ASST. DIRECTOR OF INCOME-TAX, INTERNATIONAL TAXATION-I, CHENNAI (RESPONDENT) APPELLANT BY : SHRI M. KARUNAKARAN, ADVOCATE RESPONDENT BY : SHRI T.N. BETGERI, JCIT DATE OF HEARING : 01-10-2013 DATE OF PRONOUNCEMENT : 01-10-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, CHEN NAI DATED 22-11-2012 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 9-10 U/S. 154 R.W.S 143(1) OF THE INCOME TAX ACT, 1961 (HEREI N AFTER REFERRED TO AS THE ACT). I.T.A. NO. 40/MDS/2013 2 2. THE ASSESSEE IS AN INDIVIDUAL (NON-RESIDENT) HAV ING INCOME BY WAY OF SALARY FROM M/S. AIBEL UK LTD., ENGLAND. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY. 2009-10 ON 0 1-01-2010 DECLARING HIS INCOME AS ` 19,590/- AFTER CLAIMING DEDUCTION OF ` 33,15,315/- UNDER CHAPTER VIA. WHILE PROCESSING TH E RETURN U/S.143(1), THE INCOME OF THE ASSESSEE WAS DETERMIN ED AT ` 32,34,900/- BY RESTRICTING THE ADMISSIBLE DEDUCTION UNDER CHAPTER VIA TO ` 1.00 LAKH. AGGRIEVED AGAINST THE ADDITION MADE IN THE INCOME RETURNED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS). THE CIT(APPEALS) VIDE IMPUGNED ORDER DATED 22-11-2012, DISMISSED THE APPEAL OF THE ASSESSEE. THE CIT(APPEALS) HELD THAT THE ASSESSEE HAS COMMITTED A MISTAKE WHILE FILING HIS R ETURN OF INCOME. THE SALARY EARNED FROM A FOREIGN COMPANY O UTSIDE A COUNTRY BY NRI IS NORMALLY TO BE EXCLUDED FROM THE COMPUTATION OF INCOME CHARGEABLE UNDER THE HEAD SALARIES. WHERE AS, THE ASSESSEE HAS MISTAKENLY INCLUDED THE SAID RECEIPTS UNDER CHAPTER VIA AND IS THUS ELIGIBLE FOR DEDUCTION ACCORDINGLY. THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE SHOULD HAVE CLAIMED THE RECEIPTS OF ` 33,18,315/- BY EXCLUDING IT FROM THE INCOME UNDER T HE HEAD SALARIES. THE DEDUCTION UNDER CHAPTER VIA ARE SPECIFIC AND THE TOTAL AMOUNT OF DEDUCTION IS RESTRICTED TO ` 1.00 LAKH. I.T.A. NO. 40/MDS/2013 3 THE CIT(APPEALS) FURTHER OBSERVED THAT THE MISTAKES OR THE ERRORS COMMITTED BY THE ASSESSEE WHILE FILING THE RETURN O F INCOME CANNOT BE CORRECTED WHILE PROCESSING THE RETURN OR U/S.154 OF THE ACT. THE ASSESSEE SHOULD HAVE FILED RETURN OF INCOME BY RECT IFYING THE ERRORS/OMISSIONS, IF ANY. AGGRIEVED AGAINST THE ORDER OF THE CIT(APPEALS), T HE ASSESSEE HAS COME IN APPEAL BEFORE US. 3. SHRI M. KARUNAKARAN, ADVOCATE APPEARING ON BEHAL F OF THE ASSESSEE SUBMITTED THAT THE CIT(APPEALS) AFTER COMI NG TO THE CONCLUSION THAT THERE WAS A MISTAKE WHILE FILING TH E RETURN OF INCOME, WHEREIN EXEMPTED SALARY INCOME OF A NON-RES IDENT WAS WRONGLY OFFERED AS INCOME, THE SAME SHOULD HAVE BEE N ALLOWED TO BE RECTIFIED. THE LD. COUNSEL FURTHER CONTENDED TH AT IT IS AN ADMITTED FACT THAT THE ASSESSEE IS A NON-RESIDENT A ND HAS EARNED SALARY FROM A FOREIGN COMPANY OUTSIDE INDIA WHICH I S NOT TAXABLE. THEREFORE, THE SAME SHOULD NOT HAVE BEEN BROUGHT TO TAX AND THE CIT(APPEALS) SHOULD HAVE DIRECTED THE ASSESSING OFF ICER TO EXCLUDE THE SAME. THE LD. AR SUBMITTED THAT FOR TH E AY. 2010-11, THE ASSESSEE HAD FILED HIS RETURN OF INCOME CLAIMIN G EXEMPTION OF HIS FOREIGN INCOME TO THE TUNE OF ` 34,50,745/- UNDER CHAPTER VIA. SUBSEQUENTLY, ASSESSEE FILED A PETITION U/S. 264 OF THE ACT TO I.T.A. NO. 40/MDS/2013 4 RECTIFY THE SAME AND EXEMPT THE FOREIGN INCOME. THE ASSESSEE WAS ALLOWED TO RECTIFY BONAFIDE MISTAKE AND HIS PET ITION U/S. 264 WAS ALLOWED. 4. ON THE OTHER HAND, SHRI T.N. BETGERI, APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE C IT(APPEALS). 5. BOTH SIDES HEARD. AFTER PERUSAL OF THE ORDERS O F THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED OPINION THAT THE MISTAKE HAS BEEN COMMITTED BY THE ASSESSEE IN FILIN G THE RETURN OF INCOME BY OFFERING EXEMPT SALARY INCOME FOR TAXATIO N CLAIMING DEDUCTION UNDER CHAPTER VIA. THE FACT THAT THE ASS ESSEE IS A NON- RESIDENT INDIAN AND THE SALARY HAS BEEN RECEIVED FR OM A FOREIGN COMPANY OUTSIDE INDIA IS NOT DISPUTED BY THE REVENU E. THE ONLY ISSUE IS WHETHER THE ASSESSEE SHOULD HAVE BEEN ALLO WED TO RECTIFY THE MISTAKE AT THIS STAGE. IT IS A WELL SETTLED LA W THAT THE PROCEDURES OF LAW ARE HAND MADE OF JUSTICE. IT SHO ULD NOT BE DETRIMENTAL TO THE INTEREST OF THE SUBJECTS OF THE STATE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SANCHIT SOFTWARE AND SOLUTIONS P. LTD., VS. CIT & OTHERS REPORTED AS 349 ITR 404 (BOM) WHILE DEALING WITH THE SIMILAR ISSUE HAS HELD AS UNDER: I.T.A. NO. 40/MDS/2013 5 IN ANY CIVILIZED SYSTEM, THE ASSESSEE IS BOUND TO PAY THE TAX WHICH HE LIABLE UNDER THE LAW TO THE GOVERNMENT. TH E GOVERNMENT ON THE OTHER HAND IS OBLIGED TO COLLEC T ONLY THAT AMOUNT OF TAX WHICH IS LEGALLY PAYABLE BY AN ASSE SSEE. THE ENTIRE OBJECT OF ADMINISTRATION OF TAX IS TO SECURE THE REVENUE FOR THE DEVELOPMENT OF THE COUNTRY AND NOT TO CHARG E THE ASSESSEE MORE TAX THAN THAT WHICH IS DUE AND PAYA BLE BY THE ASSESSEE. IT IS IN THE AFORESAID CIRCUMSTANCES TH AT AS FAR BACK AS IN APRIL 11, 1955, THE CENTRAL BOARD OF D IRECT TAX HAD ISSUED A CIRCULAR DIRECTING THE ASSESSING OFFIC ER NOT TO TAKE ADVANTAGE OF THE ASSESSEE'S IGNORANCE AND/OR M ISTAKE. THE RELEVANT PORTION OF THE ABOVE CIRCULAR IS AS UNDER : '3. OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANT AGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY , PARTICULARLY IN THE MATTER OF CLAIMING AND SECURI NG RELIEFS AND IN THIS REGARD THE OFFICERS SHOULD TAKE THE INITI ATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPART MENT FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SU RE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOU GH, THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH ASSESSEE ON WHOM IT IS IMPOSED BY LAW, OFFICERS SHOULD:- (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO WHICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE O MITTED TO CLAIM FOR SOME REASON OR OTHER ; I.T.A. NO. 40/MDS/2013 6 (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS T O THEIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPTED FOR CLAIMING REFUNDS AND RELIEFS.' THEREFORE, THE ABOVE CIRCULAR SHOULD ALWAYS BE BORN E IN MIND BY THE OFFICERS OF THE RESPONDENT-REVENUE WHILE ADM INISTERING THE SAID ACT. THE FILE IS REMITTED BACK TO THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH AFTER TAKING INTO CONSIDERATION THE FA CT THAT THE SALARY EARNED BY THE ASSESSEE IS EXEMPT FROM TAX AS PER TH E PROVISIONS OF THE ACT. THE ASSESSING OFFICER SHALL PASS ORDER IN ACCORDANCE WITH LAW. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 1 ST OCTOBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 1 ST OCTOBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR