SAKET AGARWAL,JAIPUR V. .INCOME TAX OFFICER WARD 1(3) JAIPUR, JAIPUR

ITA 1112/JPR/2024

AI Insights

The case involves Saket Agarwal, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2018-19. The primary dispute was the taxability of a salary income of Rs. 29,86,963 received from M/s Saket Gems (H.K.) Ltd., Hongkong, which the assessee claimed was not taxable in India as he was a non-resident during the relevant period. The Income Tax Officer (ITO) had treated him as a resident and included the income in his taxable income for the year. The CIT(A) upheld the ITO's decision, leading to the present appeal. The Income Tax Appellate Tribunal (ITAT) found merit in the assessee's arguments and restored the matter to the CIT(A) for a fresh examination based on additional documents to be provided by the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469919 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Other Referred Cases: Collector, land Acquisition vs. Mst. Katiji and Others, Commissioner of Income-tax v. Morgenstern Werner, Pradeep Kumar Joshi v. Income-tax Officer, Ward-1, International Taxation, Ahmedabad, Ashish Bhardwaj v. Income-tax Officer, Ward-36(4), New Delhi, Pramod Kumar Sapra v. Income Tax Officer, Ward-3, Panipat, Uday Desai HUF v. National Faceless Assessment Centre, Delhi, Cheftalk Food and Hospitality Services (P.) Ltd. v. Income-tax Officer, Rahim Saib Hiriyur Hyder Ali v. National Faceless Assessment Centre, Anurag Chaudhary, In re, British Gas India (P.) Ltd., In re, Manoj Kumar Reddy v. Income-tax Officer (International Taxation) Ward-1(3), Bangalore, Suresh Nanda v. Assistant Commissioner of Income-tax, Central Circle-13, New Delhi
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: RAHUL PANDYA
• Keywords: Condonation of delay; Set aside; Business income; Revised return; Salary income; Period of limitation; Principle of natural justice; TDS; Services rendered outside India; Residential status
• Section: 143(3); 142(1); 139(1); 22; 139; 6

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ,o Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;djvihy la-@ITA No. 1112/JP/2024 fu/kZkj.k o\"kZ@Assessment Year :2018-19 Saket Agarwal 27, Everest Vihar, Kings Road, Nirman Nagar, Jaipur cuke Vs. Income Tax Officer, Ward 1(3), Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.:AEKPA 9319 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Sh. Rahul Pandya, Adv. jktLo dh vksjls@Revenue by: Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@Date of Hearing : 28/11/2024 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 17/12/2024 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Feeling aggrieved by the order passed by the National Faceless Appeal Centre, Delhi on 07/06/2024 [ for short ‘NFAC/CIT(A)’] the above named assessee has preferred present appeal. The dispute relates to the assessment year 2018-19. 2 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO Impugned order arises on challenge of the assessment order dated 23.04.2021 passed under section 143(3) read with section 144B of the Income Tax Act, [ for short “AO”] by Assessing Officer . 2. At the outset of hearing, we find that there is delay of 18 days in filing of the appeal. The assessee has filed an application for condonation of delay with following prayers: “Application under Section 5 of the Limitation Act for condonation of delay in filing of Appeal. Respectfully 1. That the applicant has filed an Appeal before the Hon'ble INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH, JAIPUR 2. That my registered Address in Rajasthan 27,EVEREST VIHAR, KINGS ROAD, NIRMAN NAGAR, JAIPUR (Rajasthan). 3. That the Learned CIT(A) passed the Order on Dt 07-06-2024 & the due date to file the Appeal was 06-08-2024 but the Appeal efiled on Dt 24-08-2024 due to ill health of the Humble Appellant. That the Humble Appellant was on Bed Rest from 04-08-2024 to 10-08-2024 but even after he was not feeling comfortable & on 15-08-2024 the papers were given to A/R for preparation of Appeal. That on Dt 17-08-2024 the A/R had made payment Stamp Duty & send the papers for signature but the health of the Humble Appellant was not well due to which the same could not be handed over to A/R. That on Dt 24- 08-2024 the Papers were delivered to A/R for submission before the Hon’ble Income Tax Appellate Tribunal, Jaipur Bench. Being 24 Saturday & 25 Sunday, thus the hardcopy was filled on 27 of August 2024. 4. That the delay in filing the Appeal is neither intentional nor will full but due to the Genuine and sufficient reasons shown herein above. Further the Humble Appellant have timely filled all the replies before the Ld Income Tax Officer & Another Appeal for AY 2014-15 before the hon’ble Bench was also filled in time, just due to health issues, the same cannot be filled in time. 3 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 5. That in Interest of justice demands that the present application is allowed and the delay in filing of Appeal is condoned so that the matter can be adjudicated upon on its merit. 6. It is, therefore, most respectfully prayed that this application may kindly be allowed and the delay of 18 days in filing the Appeal may kindly be condoned and the matter may kindly be heard on its merit in the interest of justice. Such other orders as deemed fit and proper in the facts and circumstances of the case may kindly also be passed.” 3. In the course of hearing, Ld. DR has not objected to assessee’s application for condonation of delay being allowed and rather submitted that Court may decide the issue as deemed fit in the interest of justice. 4. We have heard the contention of the parties and perused the materials available on record. The prayer by the assessee for condonation of delay of 18 days has merit, due to the reason that he was not keeping good health, and the same finds support from his affidavit. Since as the assessee was prevented by sufficient cause in filing of appeal within the prescribed period of limitation, the delay of 18 days in filing the appeal by the assessee is condoned, having regard to the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC). 4 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 5. Appeal has also been argued on merits. Assessee-appellant has raised following grounds: - “1. That order of Learned Assessing Authority is bad in law, illegal and againstfacts and circumstances of the case. a. That the SCN issued on Dt 19-04-2021 for hearing Date 22-04-2021 ieLess than 7 days time to File the reply. b. That the Salary received outside India for the services rendered outside India cannot be taxable in India. 2. That learned Assessing Authority grossly erred in law and facts in makingadditions of Rs. 29,86,963/-. 3. That learned Assessing Authority grossly erred in law and facts in treating the Humble Appellant as an resident Instead of Non Resident. 4.That order of learned Assessing Authority is based on assumptions and presumptions and against real facts of the case. 5. That the learned Assessing Authority, grossly erred in law and facts ininitiating proceedings under section 270A of the Act. 6. That further submissions in support of appeal shall be made at the time of hearing. 7. That appellant craves leave to add, amend or alter all or any grounds of appeal before or at the time of hearing.” 6. Succinctly put, the facts as culled out of the records are that the case was selected for Complete Scrutiny assessment under the E-assessment Scheme, 2019 on Exports/Imports issue. For the year under consideration, the assessee filed its return of income declaring total income of Rs. 15,38,300/- on 30.03.2019. Notice u/s 5 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 143(2) of the Income-tax Act, 1961 was issued on 28.09.2019 which was served through e-filing account of the assessee and registered e-mail id of the assessee.Notices u/s 142(1) were issued to the assessee to provide details of purchases made by the assessee during A.Y.2018-19. The assessee had replied and furnished the details. The details were examined and found to be in order by the ld. AO. Vide reply dated 11.02.2020 and 12.02.2020, the assessee provided the revised computation of his income for A.Y.2018-19 declaring revised total income of Rs.5,80,930/-. Assessee claims to be a proprietor of M/s Saket Gems and also to have acted as Director in a foreign based company, namely, M/s Saket Gems (H.K.) Ltd. situated in Hongkong, China. It is also his case that while filling the ITR he inadvertently consolidated the financial statement of both i.e. M/s Saket Gems & M/s Saket Gems (H.K.) Ltd. in his ITR for the A.Y. 2018-19 and as such shown Directors Emoluments of Rs. 29,86,963/-, which he had received from M/s Saket Gems (H.K.) Ltd., as expenditure in his Profit & Loss account of the ITR for the A.Y.2018-19. Said emoluments were actually received from the foreign company i.e. M/s Saket Gems (H.K.) Ltd. So, the assessee claims that he is not liable for taxation as per Income Tax Act, 1961 due to the NRI status during the financial year 2017- 6 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 18. As per assessment order, Ld. AO noted that in the ITR filed by the assessee for the A.Y. 2018-19 assessee had shown his residential status as \"Resident\" during the year under consideration. In this regard, notice u/s 142(1) dated 12.03.2021 was issued to the assessee. The assessee vide reply dated 13.03.2021 provided copies of passport and details in prescribed format as regards his stay outside India during F.Y.2017-18. Said details as given in the assessment order read as under : In the light of these facts, notice u/s 142(1) dated 19.03.2021 was issued to assessee seeking justification for the claim of residential status and the reason for not admitting salary income of Rs. 29,86,963/-,being Directors emoluments received from M/s Saket Gems (HK) Ltd. during A.Y 2018-19. 7 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO Vide reply dated 19.03.2021 assessee is stateds to have provided the details in the prescribed format and his passport pages copies. Assessee claimed to have stayed in India for more than 60 days during A.Y 2018-19 and for more than 365 days during 4 preceding previous A.Ys i.e. from AY 2014-15 to A.Y 2017-18. Thus, he claimed that his residential status during A.Y 2018-19 was Resident only, as per provisions of section 6(1)(c) of the IT Act, 1961. However, subsequently, in his response dated 19.03.2021, the assessee claimed that residential status for A.Y 2018-19 as Non-resident. Ld. AO noted that the assessee could not have two residential status for A.Y 2018-19 i.e. Non-residential status for Salary Income and Residential Status for Business Income. While observing that the assessee having claimed to resident individual was taxable in India and accordingly, the same was considered as Salary income of the assessee for A.Y 2018-19 and thereby salary income of Rs. 29,86,963/-, being Director’s emoluments received from M/s Saket Gems (HK) Ltd. during A.Y 2018-19, of the assessee was found to be taxable in India. Accordingly, addition was made. 8 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 7. Aggrieved by the assessment order, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos of the grounds so raised in that appeal the relevant finding of the ld. CIT(A)/NFAC are reiterated here in below: 6.0 Decision and Reason. The statement of fact, grounds of appeal and the order appealed against have been perused. 6.1.1. The first ground of appeal is general eneral in nature. Therefore, it needs no separate adjudication especially in absence of documents/evidence on the part of the appellant. 6.2. Vide the second ground of appeal, the appellant has contended that the learned A.O. has erred in making addition of Rs.29,86,963/- salary SKINCOME received from M/s. Saket Gems (HK) Ltd. during the F.Y.2017-18, relevant to the A.Y.2018-19. 6.2.1. On perusal of the order appealed against, it is observed that the case of the appellant was selected for complete scrutiny for the A.Υ.2018-19. Accordingly, statutory notices u/s.143(2) and u/s.142(1) of the IT Act were issued and duly served on the appellant requesting the appellant to furnish the required details/documents/explanation for not admitting the salary income received from M/s. Saket Gems (HK) Ltd. in the ITR filed for the A.Y.2018-19. The appellant submitted in his reply that the salary of Rs.29,86,963/- was received outside India as a NRI and for this reason the said amount of salary is not liable to be taxed in India. The A.O. had found the reply of the appellant as not acceptable. Therefore, the A.O. had completed the assessment by making addition of Rs.29,86,963/- on account of unadmitted income and added the same to the total income of the appellant for the A.Y 2018-19. 6.2.2. During the appellate proceeding, notices u/s.250 of the IT Act were issued to the appellant on different dates and in response, the appellant has submitted his submission on 30.10.2023 which is perused and considered. Further, it is observed that the appellant was requested vide notices of the IT Act, dt.11.03.2024, 20.03.2024 and 01.05.2024 to u/s.250 submit few required details/documents related to the case of the appellant, but instead of submitting the required details/documents, the appellant had requested for adjournments on 18.03.2024, 04.04.2024 which were considered and adjournments were made. In response to notice dt.01.05.2024, again the appellant has requested for 9 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO adjournment which is not tenable as sufficient opportunities / adjournments were already given to the appellant for submission of the required details. 6.2.3. On perusal of the order appealed against and the submission of the appellant, it is observed that the appellant has received salary of Rs.29,86,963/- outside India as the director of M/s. Saket Gems (HK) Ltd., Hongkong during the F.Y.2017-18. But, it is found that the appellant has neither admitted the salary income in the IT return filed for the A.Y.2018-19 for taxation purpose in India nor paid any tax amount outside India on the said salary amount. 6.2.4. Further, the appellant has voluntarily filed his IT ret return stating his status as 'Resident. So, it is clear that the appellant himself declaring as a 'Resident'. 6.2.5. Further, the appellant has relied upon decision of Hon'ble ITAT, Delhi in the case of Pramod Kumar Sapra -v- ITO(2017) 87 taxmann.com.98/167 ITD 596 and few other cases and claimed that the status of the appellant is Non- resident and thus, salary income of Rs.29,86,963/- received from M/s. Saket Gems (HK) Ltd., Hongkong is not taxable in India. But, it is seen from the order appealed against that in all these cases relied upon by the appellant, the taxpayers were salaried employees only and their residential status of Non- resident was not disputed. Hence, the said decisions are not squarely applicable to the appellant's case. 6.2.6. Further, as per the provisions of the IT Act, the appellant cannot declarehimself for two residential status for the same year i.e. A.Y.2018-19 i.e. Non-resident status for salary income and Residential status for business income.So, the residentials status of the appellant is hereby held as 'Resident only. 6.2.7. Further, during the assessment proceedings, the appellant has submitted a revised computation of income for the same A.Y.2018-19 declaring revised total income of Rs.5,80,930/- requesting the A.O. to accept it, but the A.O. had found it as not acceptable. Because, an assessee can claim deduction only by filing a revised return. In this case, the appellant has not filed the revised return for the A.Y.2018-19 and hence the claim of the revised income of the appellant is not acceptable. 6.2.8. Further, it is observed that the appellant has shown his residential status as 'Resident' in the IT return filed for the A.Y.2018-19. In the reply, while submitted the revised computation of income, the appellant has requested the A.O. to accept the status of the appellant as 'Non-resident'. But, the A.O. had found that the request of the appellant is not acceptable as the fresh claim for treating him as a 'Non-resident is made without filing of revised IT return for the A.Y.2018-19. Hence, with respecting the judicial pronouncement by the Hon'ble Supreme Court of India in the case of M/s. Goetze (India) Ltd. -v- CIT(2006) 284 itr 323 (SC) which is squarely applicable in the case of the appellant, the revised claim of the appellant to treat himself as Non-resident cannot be considered. Therefore, as it is 10 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO proved that the status of the appellant is \"Resident', the income earned by the appellant as salary received from M/s. Saket Gems (HK) Ltd., Hongkong is taxable le in India. During the appellate proceedings, the appellant was asked to provide the following information vide notices dated 11.03.2024, 20.03.2024 and 05.05.2024. 1. Copy of passport reflecting absence of more than 180 days and day wise stay in countries. 2. Balance sheet and P&L account of M/s. Saket Gems Hong Kong and M/s. Saket Gems India. 3. Appointment letter from employer. 4. Ownership details of M/s. Saket Gems Hong Kong. 5. Ledger copy of M/s. Saket Gems India in the books of M/s. Saket GemsHong Kong and ledger of Saket Gems Hong Kong in books of M/s. Saket Gems India. 6. Ledger copy of Sh. Saket Agrawal in the books of M/s. Saket Gems Hong Kong. However, the appellant ahs sought repetitively adjournment on the ground that the required documents are in Hong Kong office and key is with him and he is in India to take care of his family. However, the submission of the appellant is not acceptable as the appellant has not provided even the copy of passport indicating period of foreign stay, which must be with the appellant as he is visiting India. Further, the appellant is the Director of the foreign entity having all control on the foreign company but the appellant did not provide any details of its foreign company. 6.2.9. From the above and on a totality of the case of the appellant, the following main facts are found (1) The appellant has voluntarily declared himself as 'Resident' in the ITR filed for the A.Y.2018-19. (2) The appellant has not provided any evidence of payment of tax on the salary received outside India (3) The appellant has only submitted a revised computation of income and a claimed his status as 'Non-resident' without filing the revised IT return for the Α.Υ.2018-19. 11 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO Further, during the appellate proceedings, the appellant failed to provide the copy of passport reflecting his foreign stay for more than the prescribed period. Thus, the claim of appellant regarding residential status is not verifiable. 6.2.10. Keeping in view the facts and circumstance of the case and after perusal of the submission of the appellant, it is held that the status of the appellant is 'Resident' and the salary received to the tune of Rs.29,86,963/- is taxable in the hands of the appellant in India. Therefore, the addition of Rs.29,86,963/- made by the A.O. as unadmitted salary received by the appellant from M/s. Saket Gems (HK) Ltd., Hongkong is hereby sustained. 6.2.11. The second ground of appeal is dismissed. 6.3. The third ground of appeal has already been discussed and disposed of in above paras. Therefore, it needs no separate adjudication. 6.4. The fourth ground of appeal is general in nature and needs no separate adjudication especially in absence of documents/evidence on the part of the appellant. 6.5. The fifth ground of appeal is related to initiating penalty u/s 270A of the I.T. Act, 1961. This ground of appeals is premature. 6.5.1. Accordingly, this ground of appeal is dismissed as premature. 6.6. The sixth, seventh and eighth grounds of appeal are general in nature. Therefore, these need no separate adjudication. 7.0. The appeal of the appellant is dismissed.” 8. To support the various grounds so raised by the ld. AR of the assessee, has filed written submissions in respect of the various grounds raised in this appeal and the same are reproduced herein below: “That the Humble Appellant filed his Return of Income for A.Y.2018-19 declaring total income of Rs.15,38,300/- on 30-03-2019. The case was selected for Complete Scrutiny assessment under the E-Assessment Scheme, 2019. That the Humble Appellant was residing in Hong Kong during the Year stayed 188 days and Indian business of my firm was carried by the business manager. The Learned Assessing Officer have verified all the transaction & made the addition of Salary received of Rs. 29,86,963/- from Saket Gems (HK) Ltd., 12 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO Hong Kong. The remuneration received outside India is not liable to Tax in India, since the Humble Appellant was stayed for Employment outside India for more than 182 days as per Explanation 1 to Section 6(1) C. That the Humble Appellant received Salary From Saket Gems (HK) Ltd to look after the work of their business in Hong Kong:- 1. The Humble Appellant have rich experienced in Production & Quality Check of Gems Stones since last several years. Thus the company decided to given the remuneration. That the Humble Appellant have submitted the Copy of salary certificate during the Assessment Proceeding before the Learned Assessing Officer. 2. That the Rough(semi finished Stones) are purchased after Checking the Quality & thereafter assorted according to size & weight and thereafter manufactured into finished Stones, which required a knowledge of manufacturing and the trade due to which the company paid the salary. That the Humble Appellant had submitted details of stay in India during FY 2017-18 wherein Humble Appellant had stayed outside India for 188 days and same was supported by copy of passport and documents and the same is accepted by Learned Assessing Officer during the course of assessment proceedings. That the Learned Assessing Officer in the show cause notice have agreed &Accepted that the Humble Appellant earning salary income outside India (i.e. Saket Gems (HK) Ltd, Hong Kong company) and is hence employed outside India and therefore the conditions mentioned above is satisfied for taking the benefit of relaxation and no clubbing of Salary is permissible in facts of the case. That on the above facts as the Humble Appellant have stayed in India for less than 182 days during the relevant year, the Humble Appellant will be considered as non resident regardless of being in India for 365 days or more during four preceding previous years, thus the Humble Appellant cannot be treated as resident of India and only Indian Income will be taxable in India. Thus, based on the above submission it humbly requested to your honour that salary income earned in Hong Kong is not liable to taxed in India. That the Ld Assessing officer have grossly erred in law and facts, in making additions & initiating the penalty proceeding u/s 270A for under reporting of income. Thus the Ld Assessing officer without verification of facts & documents & with predetermined Mind made the additions & created the Demand of Rs. 29,86,963/-. 13 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO ThehumbleAppellantpraystosetasidetheDemandandaccepttheRet urnIncome. GROUNDSOFAPPEAL 1. That order of Learned Assessing Authority is bad in law, illegal and against facts and circumstances of the case. a. That the SCN issued on Dt 19-04-2021 for hearing Date 22-04-2021 ie Less than 7 days time to File the reply. b. That the Salary received outside India for the services rendered outside India cannot be taxable in India. 2. That learned Assessing Authority grossly erred in law and facts in making additions of Rs. 29,86,963/-. 3. That learned Assessing Authority grossly erred in law and facts in treating the Humble Appellant as an resident Instead of Non Resident. 4. That order of learned Assessing Authority is based on assumptions and presumptions and against real facts of the case. 5. That the learned Assessing Authority, grossly erred in law and facts in initiating proceedings under section 270A of the Act. 6. That further submissions in support of appeal shall be made at the time of hearing. 7. That appellant craves leave to add, amend or alter all or any grounds of appeal before or at the time of hearing. TheGroundsofAppealarediscussedinDetailasperbelow:- 1. ThatorderofLearnedAssessingAuthorityisbadinlaw,illegalandagainstf actsandcircumstancesofthecase. i) That the SCN issued on Dt 19-04-2021 for hearing Date 22-04-2021 ie Less than 7 days time to file the Reply. That the Learned Assessing Officer issued SCN on Dt 19-04-2021 for hearing Date 22-04-2021. Infact the Learned Assessing Officer issued mostly Notices wherein less than 15 days time for submission of Reply. A screenshot of Income tax Portal is as per below:- That the Hon’ble HIGH COURT RAJASTHAN incase of Bijendra Singh Chief Commissioner of Income that “Where Assessing Officer issued on assessee a notice under section 148A(b) 14 That the Hon’ble HIGH COURT RAJASTHAN incase of Bijendra Singh Commissioner of Income-tax* [2024] 162 taxmann.com 66 (Rajasthan) that “Where Assessing Officer issued on assessee a notice under section 148A(b) ITA No. 1112/JP/2024 Saket Agarwal vs. ITO That the Hon’ble HIGH COURT RAJASTHAN incase of Bijendra Singh v. Principal [2024] 162 taxmann.com 66 (Rajasthan) held that “Where Assessing Officer issued on assessee a notice under section 148A(b) 15 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO dated 16-3-2022 calling upon him to file response on or before 23-3-2022, since impugned notice was posted on 17-3-2022 and date fixed for response was 23-3- 2022 and excluding two days, i.e., date of sending notice as well as last date indicated notice fell short of seven days, impugned notice deserved to be set aside” That the Hon’ble HIGH COURT OF DELHI in case of APHV India Investco. (P.) Ltd. v. Assistant Commissioner of Income-tax (International Taxation)* [2024] 158 taxmann.com 544 (Delhi) held that “Section 142 of the Income-tax Act, 1961 - Assessment - Inquiry before assessment (Opportunity of hearing) - Assessment years 2015-16 and 2016-17 - Revenue issued notices to assessee under sections 142(1) and 148 for relevant assessment years - Assessee claimed to receive only one notice dated 12-7-2022 - It responded with a brief reply via e-mail on 20-7- 2022 and also sought an extension until 5-8-2022 for filing a detailed reply - Assessing Officer passed a draft assessment order on 26-7-2022, ignoring assessee's reply - Final assessment order dated 10-9-2022 was issued, leading to consequential demand notices - Whether since Assessing Officer overlooked assessee's email reply on 20-7-2022, disclosing vital facts and seeking an extension until 5-8-2022, this non-application of mind rendered draft and final assessment orders invalid - Held, yes - Whether further, notice dated 12-7-2022 under section 142(1) was clearly vitiated on account of granting hardly three days to assessee to respond and denial of sufficienttime to respond was not just an abrogation of jus naturale but same also infringed clause B(1) of Standard Operating Procedure dated 19-11-2020 of CBDT, according to which normally a response time of 15 days had to be given to assessee in order to respond to notice under section 142 - Held, yes - Whether therefore, impugned draft assessment orders, final assessment orders and demand notices were liable to be set aside - Held,yes [Paras 7, 8 and 9] [In favour of assessee]” that the Hon’ble HIGH COURT OF BOMBAY incase of Uday Desai HUF v. National Faceless Assessment Centre, Delhi* [2021] 132 taxmann.com 117 (Bombay) held that “Section 144B of the Income-tax Act, 1961 - Faceless assessment (Opportunity to reply to notice-cum-draft assessment order) - Assessment year 2018-19 - Assessee filed its return of income - Thereafter, a notice-cum-draft assessment order was served upon assessee proposing certain additions and only one day was granted to respond to same - Assessee sought adjournment on same day on ground that time granted was too short to file a response to said notice - However, Assessing Officer passed a final assessment order in terms of draft assessment order even before time of adjournment expired - Whether time granted of only one day in show-cause notice certainly could not be accepted as sufficient time given to assessee to respond - Held, yes - Whether, therefore, impugned assessment order passed by Assessing Officer without providing assessee due opportunity to file his submissions to notice-cum-draft assessment order was in violation of principles of natural justice and, same was to be set aside - Held, yes [Para 6] [In favour of assessee]” 16 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO that the Hon’ble HIGH COURT OF BOMBAY incase of Cheftalk Food and Hospitality Services (P.) Ltd. v. Income-tax Officer* [2024] 165 taxmann.com 415 (Bombay) held that “INCOME TAX : Where assessment order was passed without giving seven days time to assessee to file objections in response to Show Cause Notice issued, impugned order was in breach of principles of natural justice and deserved to be quashed and set aside”. That the Hon’ble HIGH COURT OF KARNATAKA incase of Rahim Saib Hiriyur Hyder Ali v. National Faceless Assessment Centre* [2022] 145 taxmann.com 116 (Karnataka) held that “Section 144B, read with section 143, of the Income-tax Act, 1961 - Faceless assessment - (Personal hearing) - Assessment year 2010-11 - Tribunal remitted matter back to Assessing Authority by issuing specific directions regarding examining certain claim of assessee - However, Assessing Officer had not complied with categorical and specific directions issued by Tribunal and passed impugned assessment order - This order was passed within period of two days from date of issuance of show-cause notice enclosing approved assessment order to furnish his reply - It was noted that such short period of time given by Assessing Officer to assessee to furnish his reply was not only contrary to directions issued by Tribunal but was also violative of principles of natural justice - Further, there was specific assertion on part of assessee that if one more opportunity was granted, assessee would produce additional documents in support of his claim and in consonance with directions issued by Tribunal while remitting matter back to authority - Whether, on facts, impugned assessment order was to be quashed - Held, yes [Para 6] [In favour of assessee]” That the Learned Assessing Officer allowed time to file the Reply against the Query Raised in the present case is as per below:- Date of Notice Issued Date of Hearing Time Allowed Order U/s 143(3) ORDER PASSED ON Dt 23- 04-2021 [DIN-ITBA/AST/S/143(3)/2021- 22/1032653454(1)] NA 19-04-2021 22-04-2021 2 days time to file the reply (19 & 22 has to be excluded as per the Judgement) 19-03-2021 21-03-2021 1 days time to file the reply (19 & 21 has to be excluded as per the Judgement) 12-03-2021 14-03-2021 1 days time to file the reply (12 & 14 has to be excluded as per the Judgement) 29-01-2020 12-02-2020 13 days time to file the reply (29 & 12 has to be excluded as per the Judgement) 17 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 08-01-2020 22-1-2020 13 days time to file the reply (8 & 22 has to be excluded as per the Judgement) Since the learned Assessing Officer have not followed the CIRCULAR F. NO. PR. CCIT/NeAC/SOP/2020-21, DATED 19-11-2020, we therefore request your honour to kindly quash the Order & Oblige. ii) That the Salary Received outside India for the services rendered outside India cannot be taxable in India. That as per \"Section 5: Scope of Total Income.— (1) Subject to the provisions of this Act, the total income of any previous year of person who is a resident includes all income from whatever source derived which — (a)is 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; or (c )accrues or arises to him outside India during such year : Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set-up in India. (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which — (a )is 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 as per Section 6: Residence in India For the purposes of this Act,— 18 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO (1) An individual is said to be resident in India in any previous year, if he — (a )is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or (b )[***] (c )having within the four years preceding that year 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. Explanation. - In the case of an individual, (a )Being a citizen of India, who leaves India in any previous year as a member the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 for the purposes of employment outside India, the provisions of sub- clause (c) shall apply in relation to that year as if for the words \"sixty days\", occurring therein, the words \"one hundred and eighty-two days\" had been substituted; The term 'non-resident' is defined in section 2(30) to mean \"a person who is not a resident. . .\" The Explanation to this sub-section provides that a citizen of India who leaves India for the purpose of employment outside India can be considered as resident of India, if he has been in India for 182 days or more even though he may have been in India for more than 365 days in 4 preceding years. The net effect of section 6(1) read with the Explanation is that for an individual who has left India for employment outside India, he should be treated as resident of India only if he was in India during the relevant period/year for 182 days or more. In other words, if an individual has spent less than 182 days in India during a previous year and was outside India for the purposes of employment, then regardless of his being in India for 365 days or more during 4 preceding previous years, he cannot be treated as a resident of India. 19 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO From the facts, the applicant satisfies neither clause (a) nor clause ( c) of section 6(1) so as to merit treatment as a non-resident of India during the relevant period. It necessarily follows that the applicant was a 'non-resident' during the relevant period. Consequently his income that accrued outside India in Hong Kong by reason of his employment there cannot form part of the total Income taxable in India. The Learned Assessing Officer in its Assessment Order dated 23-04-2021 has also mentioned that the Appellant remained out of India for 188 days (Stay in India 365-188= 177) during the Financial Year 2017-18. Thus, the Humble Appellant being a non-resident during the previous year 2017-18, the income earned by him from his employment in Hong Kong cannot be taxed under Income-tax Act, 1961. In support of our claim we are referring Anurag Chaudhary, In re [2010] 190 Taxman 296 (AAR - New Delhi)” & British Gas India (P.) Ltd., In re [2006] 155 Taxman 326 (AAR - New Delhi)”. “Effect of individual spending less than 182 days in India - If an individual has spent less than 182 days in India during a previous year and was outside India for purposes of employment, then regardless of his being in India for 365 days or more during four preceding previous years, he cannot be treated as a resident of India as held in case of Anurag Chaudhary, In re [2010] 190 Taxman 296 (AAR - New Delhi)”. “Individual leaving India - A careful reading of Explanation (a) to section 6(1) would show that requirement of the Explanation is not leaving India for employment but it is leaving India for the purposes of employment outside India; for the purpose of Explanation an individual need not be an unemployed person who leaves India for employment outside India - British Gas India (P.) Ltd., In re [2006] 155 Taxman 326 (AAR – New Delhi)”. We therefore request you to kindly delete the Additions of Rs. 29,86,963/- & Oblige. 20 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 2. That learned Assessing Authority grossly erred in law and facts in making additions of Rs. 29,86,963/- of Salary Received in Hong Kong outside India. i. That the applicant left India for Hongkong for employment purposes, he was in India for 177 days (188 days outside India) in the Assessment Year 2018-19. A copy of Salary Certificate dated 26-04-2018 from Saket Gems (HK) Limited worked at the Hong Kong office of the Company, basis of work done as per below:- a. The Humble Appellant have rich experienced in Production & Quality Control & Sorting of Gems Stones since last several years. Thus the company decided to given the remuneration. That the Humble Appellant have submitted the Copy of salary certificate during the Assessment Proceeding before the Learned Assessing Officer. b. That the Rough (Semi Finished Stones) are purchased after Checking the Quality & thereafter assorted according to size & weight and thereafter manufactured into finished Stones, which required special knowledge of manufacturing and the trade. Thus the company paid the salary for carrying of Activity in Hong Kong. Consequently his income that accrued outside India in Hong Kong by reason of his employment there cannot form part of the total Income taxable in India. The Learned Assessing Officer in its Assessment Order dated 23- 04-2021 has also mentioned that the Appellant remained out of India for 188 days (Stay in India 365-188= 177 ie less than 182 days) during the Financial Year 2017-18. That on the above facts as the Humble Appellant have stayed in India for less than 182 days during the relevant year assessee will be considered as non resident regardless of being in India for 365 days or more during four preceding previous years, thus the Humble Appellant cannot be treated as resident of India and only my Indian Income will be taxable in India. 21 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO Thus, based on the above submission it humbly requested to your honour that salary income earned in Hong Kong is not liable to taxed in India. That as per Section 5 sub section 1 & Clause C is as under:- 37(1) Subject to38 the provisions of this Act, the total income39 of any previous year of a person who is a resident includes all income from whatever source derived which— (a) is received40 or is deemed to be received40 in India in such year by or on behalf of such person ; or (b) accrues or arises40 or is 40deemed to accrue or arise to him in India during such year ; or (c) accrues or arises40 to him outside India during such year : Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) * of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. That we are submitting herewith the Salary Certificate along with following Judicial Pronouncements for your kind perusal:- a. The Hon’ble SUPREME COURT OF INDIA incase of Commissioner of Income-tax v. Morgenstern Werner* [2003] 132 Taxman 214 (SC)/[2003] 259 ITR 486 (SC)/[2003] 18...[2003] 132 Taxman 214 (SC) held that “Section5, read with section6, of the Income-tax Act, 1961 - Income - Accrual of - Assessment years 1990-91 and 1991-92 - Petitioner, a German technician on deputation in India, stayed for more than 182 days during assessment years under consideration - He received daily allowance in India from BHEL but salary from its employer-company in Germany - His salary was held taxable in India - Whether petitioner was 'not ordinarily resident' in India as during nine out of ten preceding years, he had stayed outside India - Held, yes - Whether, he would be governed by proviso to section5(1)(c) and, hence, salary accrued in Germany was not 22 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO taxable in India - Held, yes” b. The Hon’ble ITAT AHMEDABAD BENCH 'D' incase of Pradeep Kumar Joshi v. Income-tax Officer, Ward-1, International Taxation, Ahmedabad* [2021] 133 taxmann.com 283 (Ahmedabad - Trib.) held that Section 6 of the Income-tax Act, 1961 - Residential status (Individual) - Assessment year 2016-17 - Whether while counting days of stay in India for considering status of 'resident', day of arrival has to be excluded - Held, yes - Whether assessee having stayed in India during year under consideration for less than 182 days could not be considered as resident of India in year under consideration - Held, yes [Para 9] [In favour of assessee] c. The ITAT DELHI BENCH 'SMC-1' I case of Ashish Bhardwaj v. Income-tax Officer, Ward-36(4), New Delhi* [2021] 130 taxmann.com 197 (Delhi - Trib.) held that “Section 6, read with section 5, of the Income-tax Act, 1961 - Residential status (Individual) - Assessment year 2011-12 - Assessee had shifted to Hong Kong for purpose of employment and received salary in Hong Kong - Assessing Officer made addition in respect of income earned by assessee from his foreign employer - Whether since assessee was outside India for a period of more than 182 days, he had became a non-resident and, therefore, salary income received by assessee outside India from a foreign employer for services rendered outside India could not be brought to tax in India - Held, yes [Para 10] [In favour of assessee]” d. THE ITAT DELHI BENCH 'B' in case of Pramod Kumar Sapra v. Income Tax Officer, Ward-3, Panipat* [2017] 87 taxmann.com 98 (Delhi - Trib.) held that Section 6, read with sections 5 and 263, of the Income-tax Act, 1961 - Residential status (Salary) - Assessment year 2011-12 - Assessee, employed with RIL, was deputed as Country Manager to Kurdistan, Iraq, and for purpose of his employment in Iraq, he had received salary - In annual return of income filed in India, assessee had claimed exemption of salary earned outside India - Assessing Officer passed assessment order accordingly - Commissioner revised said order observing that income 23 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO was received by assessee in his bank account in India and it had to be taxed in India - Whether since assessee's stay outside India was for 203 day, more than threshold limit of 182 days in terms of sub- section (1) of section 6, salary income of assessee for previous year could not be held to be taxable because he was not resident in India - Held, yes [Para 8] [In favour of assessee] e. THE ITAT DELHI BENCH 'D' incase of Assistant Commissioner of Income-tax, Circle-35(1), New Delhi v. Col. Joginder Singh* [2014] 45 taxmann.com 567 (Delhi - Trib.) held that “Section 6 of the Income-tax Act, 1961 - Residential status (Individual) - Assessment year 2005-06 - Whether where an assessee, a citizen of India, had left India during previous year for purpose of employment outside India and his stay in India during relevant period was only 68 days, his stay being much less than period of 182 days as per statutory provisions of Act, he could not be treated as resident of India and his status would be of non-resident Indian for purpose of levying of tax as per provisions of Act - Held, yes [Para 10] [In favour of assessee]” f. THE ITAT DELHI BENCH 'D' incase of Assistant Commissioner of Income-tax, Circle 33(1) v. Jyotinder Singh Randhawa* [2014] 46 taxmann.com 10 (Delhi - Trib.) held that “Section 6 of the Income-tax Act, 1961, read with Article 17 of OECD Model Tax Convention - Residential status (Artistes and sportsmen) - Assessment year 2009-10 - Whether going abroad for purpose of employment also means going abroad to take up employment or any allocation which takes in self employment like business or profession - Held, yes - Assessee, a world known professional golfer, pursued vocation of sportsman - During current and earlier years, he participated in gold tournament in various countries and remained outside India for considerable period in these years - Whether assessee being a professional golfer is a self employed professional and requirement for being treated as resident of India is his stay of 182 days in India in previous year as per Explanation (a) to section 6(1)(c) - Held, yes - Whether 24 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO since present assessee had stayed in India less than 182 days, he was not resident of India for assessment purpose on claimed receipts from his outside employment - Held, yes [Para 8] [In favour of assessee]” g. THE ITAT DELHI BENCH 'F' incase of Assistant Commissioner of Income-tax, Circle -48 (1), New Delhi v. Raj Jain* [2013] 38 taxmann.com 133 (Delhi - Trib.) held that “Section 6, read with section 5 of the Income-tax Act, 1961 - Residential Status [Individual] - Assessment year 2006-07 - Assessee filed its return of income and declared income under head salary - However, during assessment proceedings, assessee pleaded that salary income was not taxable in India as he was working for Whirlpool, China and his salary was credited in HSBC Hongkong - Assessing Officer rejected contention of assessee and made assessment on ground that assessee was already employed prior to leaving India - Whether since assessee had left India for purpose of employment outside India and his stay was less than 182 days in India, he would be considered as non-resident - Held, yes - Whether assessee was already employed prior to leaving India should not effect its residential status and therefore, salary income of assessee accrued or arose during employment in China was not taxable in India - Held, yes [Para 3] [In favour of assessee] h. THE ITAT DELHI BENCH 'G' incase of Suresh Nanda v. Assistant Commissioner of Income-tax, Central Circle-13, New Delhi* [2012] 23 taxmann.com 386 (Delhi) held that “Section 6 of the Income-tax Act, 1961 - Residential status - Assessment years 2001-02, 2002-03 and 2004-05 - Whether residential status of a person for purpose of section 6 is to be determined only on basis of number of days of his stay in India and there is no restriction for number of days spent abroad - Held, yes - Whether if period of stay of a person in India is less than 182 days then status to be applied would be of non-resident and his global income cannot be taxed in India in such case - Held, yes [In favour of assessee]” i. AUTHORITY FOR ADVANCE RULINGS (INCOME- 25 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO TAX), NEW DELHI incase of Anurag Chaudhary, In re* [2010] 190 Taxman 296 (AAR - New Delhi) held that “Section 5, read with section 6, of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 2008-09 - During relevant assessment year, applicant was assigned by his Indian employer-company to work in its group company in USA for 243 days and, thus, during relevant assessment year, applicant was in India for only 122 days - Whether applicant was a non-resident during relevant period and, consequently, his income, that accrued outside India in USA by reason of his employment there, cannot form part of total income taxable in India - Held, yes” j. THE ITAT BANGALORE BENCH 'A' incase of Manoj Kumar Reddy* v. Income- tax Officer (International Taxation) Ward-1(3), Bangalore [2009] 34 SOT 180 (Bangalore) held that “Section 6 of the Income-tax Act, 1961 - Residential status - Assessment year 2005-06 - Assessee, a citizen of India, was an employee of IBM Global Services India (P.) Ltd. - On 23-1-2004, employer issued a deputation letter to assessee and he was directed to work with designated IBM Global Services Customers on specified projects and location was decided in USA - As per deputation order, assessee was to remain an employee of IBM Global Services India (P.) Ltd. - Assessee left for USA on 1-2- 2004 - From April 2004 to January 2005, assessee received salary for assignment in USA - During aforesaid period, assessee visited India from 18-8- 2004 to 6-9-2004 - Finally, assessee arrived in India for permanent settlement on 31-1-2005 - On aforesaid facts, assessee claimed status of non-resident in assessment year-in- question - According to Assessing Officer, assessee had left India on 1-2-2004, i.e., during previous year 2003-04 and, therefore, Explanation (a) to section 6(1)(c) would not be applicable as he had not left India during relevant previous year - Assessing Officer, thus, adopted status of assessee as resident in accordance with section 6(1)(c) - On appeal, assessee contended that clause (b) of Explanation to section 6(1)(c) was applicable to his case when he came on a visit to India - Assessee further submitted that since he had come on a visit to India for less than 182 days, 26 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO as per section 6(1)(c), read with Explanation (b), his status should have been taken as non-resident - Commissioner (Appeals) held that Explanation (b) to section 6(1)(c) was not available to assessee to claim relief - Accordingly, he upheld order of Assessing Officer - Whether since assessee was on deputation from April 2004 to January, 2005, his stay in India from 18-8-2004 to 6-9-2004 was in respect of visit to India which was to be excluded while computing period of 60 days as mentioned in section 6(1)(c) - Held, yes - Whether further, in view of facts (i) that assessee arrived in India on 31-1-2005 (ii) that as per section 9 of General Clauses Act, first day in series of days was to be excluded, and (iii) thus, assessee's stay in India from 1-2-2005 to 31-3-2005 was only 59 days, i.e., less than 60 days as mentioned in section 6(1)(c), assessee's status was to be regarded as non-resident - Held, yes” k. THE ITAT DELHI BENCH 'SMC' incase of Avdesh Kumar v. Deputy Commissioner of Income-tax,Circle-1, Ghaziabad* [2018] 96 taxmann.com 340 (Delhi - Trib.) held that “Section 6, read with section 5, of the Income-tax Act, 1961 - Residential status (Individual) - Assessment year 2013-14 - Assessee had shifted to Korea for purpose of employment and received salary in Korea - Assessing Officer made addition in respect of income earned by assessee from his foreign employer on ground that TDS was deducted on such salary income by employer - Whether since assessee was outside India for a period of more than 182 days, he had became a non-resident and, therefore, salary income of assessee received outside India could not be held to be taxable in India merely because TDS was deducted on such income - Held, yes [Para 9] [In favour of assessee]” We therefore request you to kindly delete the Additions on Account of Salary of Rs. 29,86,963/- (HK$ 360000/-) received for services rendered in Hong Kong. 3. That learned Assessing Authority grossly erred in law and facts in treating the Humble Appellant as an Resident Instead of Non 27 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO Resident. That as per section 5(1)(c) it is clear that for the income earned by the applicant on account of employment in Hong Kong to be taxable in India, the applicant should have been resident of India during the relevant previous year. In other words, if the applicant is held to be a 'resident' of India during the financial year 2017-18, then, his salary income from employment in Hong Kong would be taxable under the Income-tax Act, 1961. Sub-section (1) of section 6, which determines the residential status of an individual, requires that either the applicant should have been in India for 182 days [vide clause ( a)] or for 60 days or more, if he was in India for 365 days or more in four preceding years [(vide clause (c)]. The Explanation to this sub-section provides that a citizen of India who leaves India for the purpose of employment outside India can be considered as resident of India, if he has been in India for 182 days or more even though he may have been in India for more than 365 days in 4 preceding years. The net effect of section 6(1) read with the Explanation is that for an individual who has left India for employment outside India, he should be treated as resident of India only if he was in India during the relevant period/year for 182 days or more. In other words, if an individual has spent less than 182 days in India during a previous year and was outside India for the purposes of employment, then regardless of his being in India for 365 days or more during 4 preceding previous years, he cannot be treated as a resident of India. We therefore request you to kindly accept the residential status as Non Resident & delete the Additions on Account of Salary of Rs. 29,86,963/- & Oblige. In view of the above we request you to kindly accept the return Income & delete the Additions & oblige 9. Learned AR has vehemently argued that it is not in dispute that the assessee had stayed in India during last 188 days as tabulated at page 3 of 28 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO the assessment order and as such income which he earned outside India could not be subjected to tax . In support of this contention, ld. AR of the assessee has also filed following documents: S No Particulars Page No. 01. Certificate of Incorporation – Saket Gems (H.K) Limited 1 02. Memorandum & AOA of Saket Gems (H.K) Limited 2-10 03. HSBC Bank Statement of Saket Agarwal Maintained in Hong Kong 11-18 04. Audited Balance Sheet of Saket Gems (H.K) Ltd 19-33 05. Reply Dt 12-02-2020 & 11-02-2020 for submission of Revised Computation of Income 34-35 06. Reply Dt 22-04-2021 for submission of Revised Computation of Income 36-40B 06. Revised Computation of Income 41-43 07. Copy of ITR V & Computation of Income 44-48 08. Reply Dt 13-03-21 & 19-03-21 for submission of Passport 49-92 S No Particulars Page No. 01. Application for condonation of delay in filing of Appeal. 1 02. Written Submission 2-13 03. Circular F No. PR.CCIT/NeAC/SOP/2020-21 14-25 04. Salary Certificate 26 05. [2021] 133 taxmann.com283 (Ahmedabad – Trib.) 27-32 06. [2003] 132 taxman 214 (SC) 33-34 10. Per contra, Ld. DR has heavily relied on the findings of ld. CIT(A), ld. DR and submitted that the assessee-apparent received salary of Rs. 29,86,963/- outside India as the Director of M/s Saket Gems (HK) Ltd., Hongkong during the F.Y 2018-19 but the assessee has neither reflected said salary income in the ITR for taxation in India nor paid any tax outside India, and contended that the orders of lower authorities be sustained. 29 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 11. We have heard the rival contentions and perused the material placed on record. Ground nos. 2,3 & 4 raised by the assessee deal with the charging of salary income which were earned by the assessee from an entity registered outside India. Pursuant to the notices issued by ld. AO, the assessee submitted reply and filed the details required which were examined and found to be in order by the ld. AO. While doing so, ld. AO noted that the assessee vide reply dated 11.02.2020 and 12.02.2020 provided the revised computation of his income for A.Y.2018-19 declaring revised total income of Rs.5,80,930/- and from that ld. AO noted that assessee was a proprietor of M/s Saket Gems and also acted as Director in a foreign based company named M/s Saket Gems (H.K.) Ltd. situated in Honkong, China. Whereas the assessee in the ITR filed declared himself to be \"Resident\", but subsequently in his reply dated 11.02.2020 & 12.02.2020, claimed that he was NRI during the financial year 2017-18. He claimed that being out of India for 188 days , for 177 days he was in India. Vide reply dated 19.03.2021 assessee provided the details in the prescribed format and copies of passport pages. From said record, ld. AO noted that the assessee stayed in India for more than 60 days during A.Y 2018-19 and for more than 365 days during 4 preceding previous A.Ys i.e. 30 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO from AY 2014-15 to A.Y 2017-18. Thus, the residential status of the assessee during A.Y 2018-19 was held to be Resident only, based on the provision of section 6(1)(c) of the Act. Having considered thus, the assessee as resident ld. AO considered Salary income of the assessee earned from M/s Saket Gems (HK) Ltd., and as such same income was added to the total income of the assessee for A.Y 2018-19. Ld. CIT(A) confirmed the findings of the ld. AO on the very same reason that the assessee had shown his residential status as 'Resident' in the IT return filed for the A.Y.2018-19. Record reveals that while submitting the revised computation of income, the appellant had requested the A.O. to accept the status of the appellant as 'Non-resident', said request was disallowed while observing that fresh claim for treating him as a 'Non-resident was made without filing of revised IT return for the A.Y.2018-19. Having regard to the judicial pronouncement by the Hon'ble Supreme Court of India in the case of M/s. Goetze (India) Ltd. -v- CIT(2006) 284 ITR 323 (SC), it was observed by the AO that the revised claim of the appellant to treat himself as Non-resident could not be considered. 31 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 12. Record reveals that during the appellate proceedings, the appellant was asked to provide the following information vide notices dated 11.03.2024, 20.03.2024 and 05.05.2024; 1. Copy of passport reflecting absence of more than 180 days and day wise stay in countries. 2. Balance sheet and P&L account of M/s. Saket Gems Hong Kong and M/s. Saket Gems India. 3. Appointment letter from employer. 4. Ownership details of M/s. Saket Gems Hong Kong. 5. Ledger copy of M/s. Saket Gems India in the books of M/s. Saket Gems Hong Kong and ledger of Saket Gems Hong Kong in books of M/s. Saket Gems India. 6. Ledger copy of Sh. Saket Agrawal in the books of M/s. Saket Gems Hong Kong. 13. Ld. CIT(A) noted that the assessee sought the adjournment on the ground that the required documents were in Hong Kong office and key was with him and also that he was in India to take care of his family. Said information was not provided and therefore, the claim of the appellant-assessee was not considered by the ld. CIT(A). Before us, Ld. AR of the assessee has submitted all the documents required to prove that the assessee was Non resident were placed on record. A.O clearly observed in the assessment order recorded that the assessee had stayed outside India for 188 days. But when the matter was carried before the ld. CIT(A) the assessee was asked to place on record the details as listed by ld. CIT(A) and reproduced herein above. 32 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO In the course of proceedings before this Appellate Tribunal, copies of certain documents from Sr.No. 1 to 6 have been furnished, but the Index is without any certification as to which of the documents were before the ld. AO or which were before ld. CIT(A). As regards the claim of the assessee changing the residential status, ld. AO observed that the assessee was outside India for 188 days. 14. As per Explanation 1of section 6(1) the stay of the assessee for 188 days beyond India would be enough to consider him “Resident outside India”. Relevant provision is reproduced hereunder: Residence in India. 6. For the purposes of this Act,— (1) An individual is said to be resident in India in any previous year, if he— (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or (b) [***] (c) having within the four years preceding that year 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. Explanation 1.—In the case of an individual,— (a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words \"sixty days\", occurring therein, the words \"one hundred and eighty-two days\" had been substituted ; (b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words \"sixty days\", occurring therein, the words \"one hundred and eighty-two days\" had been substituted and in case of such person having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, for the words \"sixty days\" occurring therein, the words \"one hundred and twenty days\" had been substituted. 33 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO Explanation 2.—For the purposes of this clause, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed. (1A) Notwithstanding anything contained in clause (1), an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature. 15. However, since the assessee was also directed to place on record the copy of Balance sheet and P&L account of M/s. Saket Gems Hong Kong and M/s. Saket Gems India, Appointment letter from employer, Ownership details of M/s. Saket Gems Hong Kong, Ledger copy of M/s. Saket Gems India in the books of M/s. Saket Gems Hong Kong and ledger of Saket Gems Hong Kong in books of M/s. Saket Gems India, Ledger copy of Sh. Saket Agrawal in the books of M/s. Saket Gems Hong Kong, but the assessee has placed on record copies of documents and that too without any certification as to which of said documents were forming part of the records before the ld. CIT(A) and which were before the ld. AO, it is not possible for us to decide the fact that he earned the income of Salary of Rs. 29,86,963/- outside India. This fact needs to be considered by Ld. CIT(A) after providing opportunity to the assessee of being heard. 16. As regards the change of the residential status during the assessment proceeding, this aspect being the change in the factual aspect of the matter 34 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO and the assessee having rectified the same on having realized the mistake even before the completion of the assessee, the lower authority should have considered said fact to be correct. In this regard, we find support from the decision of Hon’ble Gujarat High Court in the case of Principal Commissioner of Income Tax Vs. Babubhai Ramanbhai Patel [ 84 taxmann.com 32 (Gujarat) ], wherein it was observed; 4. Before us learned counsel for the revenue placed heavy reliance on the provisions contained in sub-section (3) of Section 139 to contend that an assessee who wishes to carry forward any loss must file a return under sub-section (3) within the time permitted and only upon which the same would be treated as return under Section 139(1) of the Act. Counsel for the revenue submitted that when no return in terms of sub-section (3) of Section 139 claiming carry forward or set off loss was filed, such claim cannot be subject matter of a revised return. Had the assessee filed such return, the possibility of revising such return on finding any error would arise. 5. We may notice that under sub-section (1) of Section 139, every person whose income for the previous year exceeds the maximum amount not chargeable to tax, is required to file a return before the due date. Sub-section (3) of Section 139 provides that any person who has sustained a loss and claims that the loss should be carried forward would file a return of loss within the time prescribed under sub- section (1) and thereupon all the provisions of the Act shall apply as if it was a return under sub-section (1) of Section 139 of the Act. Under sub-section 4 of Section 139, a person who has not furnished a return within the time allowed under sub-section (1) may still furnish a return at any time before the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Sub-section (5) of Section 139 provides that any person having furnished a return under sub-section (1) or sub-section (4) discovers any omission or a wrong statement therein, he may furnish a revised return any time before the expiry of one year from the end of relevant assessment year or before the completion of the assessment whichever is earlier. 6. Sub-section (5) of Section 139, therefore, gives right to an assessee who has furnished a return under sub-section (1) or sub-section (4) to revise such return on discovery of any omission or a wrong statement. Such revised return, however, can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. This is precisely what the assessee did while exercising the right to revise the return. Sub- section (5) of Section 139 does not envisage a situation whereupon revising the return if a case for loss arises which the assessee wishes to carry forward, the 35 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO same would be impermissible. In terms, sub-section (5) of Section 139 allows the assessee to revise the return filed under sub- section (1) or sub-section (4) as long as the time frame provided therein is adhered to and the requirement of the revised return has arisen on discovery of any omission or a wrong statement in the return originally filed. Accepting the contention of the revenue would amount to limiting the scope of revising the return already filed by the assessee flowing from sub- section (5). No such language or intention flows from such provision. 6.1 The Allahabad High Court in case of Dhampur Sugar Mills Ltd. v. CIT [1973] 90 ITR 236, in the context of the Income Tax Act, 1922 held that the assessee is given a right to file a correct and complete return if he discovers an error or omission in the return filed earlier. The assessment can be completed only on the basis of the correct and complete return. The earlier return, after a revised return has been filed, cannot form the basis of assessment although it may be used to indicate the conduct of the assessee. There is a clear distinction between a revised return and a correction of return. Once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. 7. The Madras High Court in the case of CIT v. Periyar District Co-operative Milk Producers Union Ltd. [2004] 266 ITR 705/137 Taxman 364 held that once the assessee had filed a return claiming carry forward loss under sub-section (3) of Section 139, a revised return could be filed in respect of such a return. We are conscious that we are not directly concerned with such a situation. 8. In view of the above discussion, we do not find any error in the view of the Appellate Tribunal. Tax appeal is, therefore, dismissed. 17. Following said ratio respectfully and based on the observations as mentioned herein above, the assessee must place on record documents, as desired by ld. CIT(A) before him to enable him to decide the issue. Based on these observations ground no. 2, 3 & 4 are dealt with for statistical purposes, and the matter is restored to the file of the ld. CIT(A), who will decide the issue on the material to be placed on record by the assessee. 18. Ground no. 1 raised by the assessee being technical ground challenging the assessment order since we have decided the grounds of 36 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO appeals of the assessee on merits, this ground does not require to be decided. 19. Ground no. 5 being premature at this stage same is not required to be decided. 20. Grounds no. 6 & 7 being general and no specific grievance raised the same are not required to be adjudicated. 21. In the result the appeal of the assessee is allowed for statistical purposes and the matter is restored to the file of the ld. CIT(A), who will decide the issue, as mentioned above, based on the material to be placed on record by the assessee. Order pronounced in the open court on 17/12/2024. Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17/12/2024 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Saket Agarwal, Jaipur 2. izR;FkhZ@ The Respondent- Income Tax Officer, Ward 1(3), Jaipur 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 37 ITA No. 1112/JP/2024 Saket Agarwal vs. ITO 6. xkMZ QkbZy@ Guard File (ITA No. 1112/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "