SUMIT SETHI,JAIPUR V. ADIT, CPC/DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, JAIPUR

ITA 1338/JPR/2024

AI Insights

The case involves Shri Sumit Sethi, who appealed against the orders of the CIT(A) for the assessment years 2018-19 and 2019-20, which dismissed his appeals and upheld the orders under section 154 of the Income Tax Act, 1961, passed by the ADIT, CPC, Bengaluru. The primary issue was the non-allowance of deductions for foreign tax credits (FTC) claimed by the appellant, which were not permitted by the CPC, Bengaluru, due to the late submission of Form 67. The appellant argued that similar deductions were allowed in other assessment years, and the requirement to furnish Form 67 was only directory, not mandatory. The Department contended that the late submission of Form 67 was a mandatory requirement as per Rule 128(8) and (9) of the Income Tax Rules, leading to the rejection of the FTC claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 28423 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: Vaibhav Singh vs ITO, Ward 1(2), Suresh Kumar Doodi vs ACIT, Circle-6, Shri Sanjeev Agarwal vs DCIT, Central Circle-4, Jaipur, Shri Ritesh Kumar Garg vs ITO, Wared 4(2)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANUP SINGH
• Assessee Lawyers: S.R. SHARMA; R.K. BHATRA
• Keywords: Opportunity of being heard; Additional evidence; Salary income; Capital Gains; Source of fund; Double taxation relief; Residential status
• Section: 154; 143(1); 90; 2; 10B; 20

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “B” JAIPUR JhjkBkSM+ deys'kt;UrHkkbZ] ys[kk lnL; ,o aJhujsUnzdqekj] U;kf;dlnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;djvihy la-@ITA No. 1338 & 1339/JP/2024 fu/kZkj.k o\"kZ@Assessment Year: 2018-19 & 2019-20 Shri Sumit Sethi 417, Sethi Bhawan, Hanuman Ji Ka Rasta, Johri Bazar, Jaipur 302 002 cuke Vs. The DCIT Central Circle-1 Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGWPS 6966 M vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri S.R. Sharma, CA & Shri R.K. Bhatra, CA jktLo dh vksjls@Revenue by: Shri Anup Singh, Addl. CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 20/03/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 25 /03/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER. This common order is to dispose of the above captioned two appeals as the same involve almost same issues, which have been argued for the purposes of said appeals, both by the ld.AR for the appellant and ld. DR for the Department. 2. On 20-09-2024, as regards the assessment order 2018-19, the ld. CIT(A) dismissed the appeal filed by the assessee and thereby upheld Order u/s 154 of the 2 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR Act, passed by the ADIT, CPC, Bengaluru. Said dismissal of the appeal has led to filing of ITA No. 1338/JP/2024. 3. The second mentioned appeal- ITA No. 1339/JP/2024. Arises from order dated 20-09-2024, relating to assessment year 2019-20, whereby the ld CIT(A) has dismissed another appeal filed by the assessee and sustained the order under section 154 of the Act, and the intimation issued by CPC, Bengaluru u/s 143(1) of the Act. 4. Arguments heard. File perused. 5. As per facts available in the impugned orders the appellant is a resident of India, but also having salary from a concern in Italy. Income from capital gains and income from other sources (an account with SBI providing interest income), are his additional sources of income in India. 6. As per claim of the appellant, he has been regularly filing his return of income in India declaring income from salary received from the above said concern, other incomes and due taxes paid thereon as per provisions of Income Tax Act, 1961. He also being paying taxes as per provisions of tax laws applicable in Italy, as regards the income earned by way of salary in Italy, which entitled him to claim deduction of tax so paid in Italy, as per provisions of Sections 90 & 91 of the 3 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR Act, from the total tax due on the total income, including income from salary so declared in his return filed in India. 7. However, as regards the assessment years 2018-19 and 2019-20, even though he had deposited tax in Italy on the salary income, CPC Bengaluru- Faceless Assessing Authority did not allow said deductions for the said two assessment years, by processing his return u/s 143(1) of the Act. As further claimed by the assessee for rectification of above said mistake, he filed separate applications u/s 154 of the Act, but those came to be rejected. Feeling aggrieved by said rejection, he was in appeals before the ld. CIT(A), which too, as noticed above, came to be dismissed. 8. The only ground raised by the ld. AR for the appellant is that the assessee- appellant was allowed same deduction as regards assessment year 2017-18 and 2020-21, but for the two assessment years under consideration, the AO, CPC, Bengaluru fell in error in not allowing the said deduction, in consonance with the provisions of Section 90 and 91 of the Act and Circular issued by CBDT in this regard. 9. As is available from the order passed by the ld. CIT(A), Form 67 was not furnished by the appellant within time allowed by the statutory rules. He observed that for the assessment year 2018-19, said form was presented and filed on 24-08- 2021 whereas it should have been filed on or before 31-07-2018. 4 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR As regards the assessment order 2019-19, said form was filed on 25-08-2021 whereas the same should have been filed on or before 31-07-2019. In other words, said two Forms for the said two assessment years came to be presented after the due dates. 10. When Learned DR for the department has pointed out the above deficiency in the case of the appellant, and submitted that the lower authorities were justified in passing the orders under challenge, ld.AR for the appellant has submitted that requirement of furnishing Form 67 is only directory and not mandatory, as there is no such provision in Income Tax Act which requires that filing of said form is mandatory. Ld. AR has further submitted that Form 67 was presented before Ld. CIT(A). 11. Per contra, ld. DR for the Department has submitted that as per Rule 128(8) and (9) of the Income Tax Rules, furnishing of Form 67 is mandatory, and not directory, and since the same was not presented on or before the due date(s) , the appellant has rightly not been allowed the benefit of relevant provisions of the Act. At the same time, the ld. DR has pointed out that even though the appellant submitted Form 67 before the ld. CIT(A), the same was not admitted into evidence for want of any application from the appellant seeking permission to lead additional evidence. 5 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR Furthermore, ld. DR also referred to para (ix) and (x) of the impugned order available at page 23 and 24 of the ld. CIT(A) wherein he pointed out other deficiencies in the case of the appellant which disentitled him to claim said deductions. 12. As to whether, filing of Form 67 is mandatory or directory, ld. AR for the appellant has relied upon in particular decision cited at Sr.No.3, below, while referring to the following decisions. 1. Vaibhav Singh vs ITO, Ward 1(2), ITAT, Jaipur Bench dated 02- 01-2025; 2. Suresh Kumar Doodi vs ACIT, Circle-6 , ITAT, Jaipur Bench dated 28-07-2023; 3. Shri Sanjeev Agarwal vs DCIT, Central Circle-4, Jaipur , ITAT, Jaipur Bench dated 10-05-2023; and 4. Shri Ritesh Kumar Garg vs ITO, Wared 4(2), Jaipur ITAT, Jaipur Bench dated 15-09-2022.” 13. In Shri Sanjeev Agarwal vs DCIT, Central Circle-4, Jaipur , ITAT, Jaipur Bench dated 10-05-2023,(supra), having regard to the various decisions on subject, held that Form 67 even if filed by the assessee after the end of the relevant assessment year entitles the assessee to claim FTC. It was further held therein that 6 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR due to late filing of Form 67, the allowing of FTC by the AO CPC, Bengaluru was a mistake apparent on record. The relevant operative para of the decision in the case of Shri Sanjeev Agarwal (supra) is extracted hereunder for ready reference:- ‘’6.2……..Our attention was drawn toward section 80AC, sec. 80IA, sec 10A, sec. 10B etc However much language is not used in Rule 128(9). Therefore, such condition cannot be read into Rule 128. In this regard our attention was drawn to the recent decision passed by the Coordinate Bench of The Tribunal, Bangalore Bench in the case of Brinda Rama Krishna [2022] 135 taxmann.com 358 (Bangalore Trib.) [Case Law Page 12] which laid down the ratio that Rule 128(9) of Income Tax Rules, 1962, does not provide for disallowance of Foreign Tax Credit in case of delay in filing Form 67, and filing of Form 67 is not mandatory but a directory requirement. In the said case, assessee had not filed Form 67 before filing the return of income. Even such Form 67 was not filed before the time- limit prescribed under Section 139(4). When the FTC claimed by the assessee was rejected while processing the return of income under Section 143(1), assessee filed a rectification application. Such rectification application was rejected by the concerned Assessing Officer, similar to the case in hand, by stating that since Form 67 was not filed by the assessee, FTC was not to be allowed. On appeal preferred by the assessee before Hon'ble ITAT, Bangalore Bench, such appeal was allowed. Relevant extracts of the decision of Hon'ble ITAT is as under- ‘’…..I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No. 67; (ii) filing of Form No. 67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s. 154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings us. 154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s 154 of the Act was not on the ground that the issue was debatable but on merits….’’ 7 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR The aforementioned decision of Hon'ble ITAT, Bangalore Bench, has been subsequently followed by different benches of ITAT, including ITAT, Jaipur Bench, in the below mentioned cases – S.N. Case Law ITA No. Bench Case Law page 1. Ritesh Kumar Garg 261/JP/2022 Jaipur Page 7 2. Bhaskar Dutta 1869/DEL/2022 New Delhi Page 16 3. Sumedha Arora 1399/DEL/2022 New Delhi Page 20 The Coordinate Bench of the Tribunal, Jaipur Bench, in the case Ritesh Kumar Garg, ITA 261/JP/2022, under identical set of facts, held that filing of Form 67, in accordance with Rule 128 was only a procedural/directory requirement and not a mandatory requirement. The Coordinate Bench also relied upon the decision of ITAT Bangalore Bench in the case of Brinda Rama Krishna (supra). ‘’ 14. In view of the decision of Coordinate Bench, ITAT, Jaipur Benches, based on various decisions relied upon therein, we find that the AO, CPC, Bengaluru and the ld. CIT(A) fell in error in not entertaining Form 67 and disallowing the deduction claimed for two assessment years on the ground that Form 67 was not submitted in respect of said years on or before the due date i.e. 31-07-2018 as regards 2018-19 and 31-07-2019 as regards assessment year 2019-20. 15. ld. CIT(A) did not admitted into evidence copies of Form(s) 67 during appellate proceedings for want of application for additional evidence, when the said documents was sought to be presented there. It is true that before the ld. 8 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR CIT(A), the appellant was required to submit an application with the prayer that additional evidence be taken on record and considered. In this regard, it may be mentioned here that before us, the appellant has submitted copies of Forms 67. In the given facts and circumstances and for the effective adjudication of the matter in issue, when said Forms are necessary, we allow the prayer of the appellant and take on record Forms 67. 16. Para (ix) & (x) of the impugned order need to be reproduced for ready reference, the same reads as under:- ‘’Further it is also notice that in the Form 67 the amount of foreign tax credit claimed is mentioned as ‘----’ in the forms of the assessment year 2018-19 as well as assessment year 2019-20. The \"credit claimed\" is required to be filled in tabulated details in point 5 of the from where the appellant has mentioned ‘—’. When the appellant himself did not claim the foreign tax credit in Form 67, the question of allowing the same in the proceedings under section 143(1) does not arise. (x) Also in view of the facts of the case, the facts of the case regarding the claim made by the appellant regarding the foreign tax credit are not verifiable from record. Crucial documents are absent. The issue requires analysis of the facts/figures of the appellant with respect to the DTAA provisions and Income Tax Act and involves a long-drawn process. The claim of the appellant cannot be realised without a debate or dissertation. The claim made by the appellant is not glaring, obvious or self-evident mistake. Considering the facts of the case and the material on record, the issue in hand is debatable and not obvious or self- evident.’’ 9 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR 17. From the above observations, the DR has rightly pointed out that there were certain deficiencies in Forms 67. It was for the appellant to do the needful. But, in this regard, appellant required an opportunity to do the needful or supply the requisite detail(s) missing from the said Forms. ld. CIT(A) could afford opportunity to the assessee to furnish requisite detail(s) so that deficiencies were made good. But, it appears that the impugned orders came to be passed having regard to the details as available in the Forms. 18. In the given situation, we deem it a fit case where assessee should be provided an opportunity of being heard for the purposes of removal of deficiencies or furnishing requisite information/details, and for the purupose of verification of the claims of the appellant. Result 19. As a result, both the appeals are disposed of for statistical purposes, and matters are remitted to the concerned AO to entertain Forms 67 in respect of each of the assessment years 2018-19 and 2019-20 and provide reasonable opportunity of being heard to the assessee. The assessee to comply with directions of the AO, if any issued, from time to time, for the purpose of effective adjudication of issue(s) involved concerning grant of benefit of FTC 10 ITA NOS. 1338 & 1339/JP/2024 SHRI SUMIT SETHI VS DCIT, CENTRALL CIRCLE-1, JAIPUR Files be consigned to the record room, after the needful is done by the office. Order pronounced in the open court on 25 /03/2025. Sd/- Sd/- ¼jkBkSM+ deys'k t;UrHkkbZ ½ ¼ujsUnz dqekj½ (RATHOD KAMLESH JAYANTBHAI) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 25/03/2025 *Mishra, Sr. PS vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Sumit Sethi, Jaipur 2. izR;FkhZ@ The Respondent- The DCIT, Central Circle-1, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZ QkbZy@ Guard File ITA No. 1338 & 1339/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar "