ADITYA KAPOOR,HARYANA vs. INCOME TAX OFFICER, WARD - 5(3)(2), BANGALORE

This appeal by Mr. Aditya Kapoor for assessment year 2018-19 is directed against the appellate order dated 10 February 2026 passed by the Additional/Joint Commissioner of Income Tax (Appeals), Raipur. By the impugned order, the appeal filed by the assessee against the intimation dated 28 February 2019 issued under section 143(1) of the Income Tax Act was dismissed, denying foreign tax credit and refusing to condone the delay of 1,856 days in filing the appeal.

The Assessee has raised the following grounds of appeal:

The order passed by the learned Commissioner of Income Tax (Appeals) under section 250 of the Act, is opposed to law, equity, weight of evidence, natural justice, probabilities, and facts and circumstances of the Appellant’s case.

The Appellant denies himself liable to be assessed to the net tax liability of Rs. 14,18,873/- as against the returned net tax liability of Rs.10,03,571/- under the facts and circumstances of the case.

The learned Commissioner of Income Tax (Appeals) erred in law and on facts in dismissing the appeal solely on the grounds of delay in filing the appeal, without appreciating that the appellant had sufficient and reasonable cause for the delay, on the facts and circumstances of the case.

The learned Commissioner of Income Tax (Appeals) failed to appreciate that the appellant had reasonable causes for not filing the appeal on time before the learned Commissioner of Income Tax (Appeals) and therefore, dismissal of appeal without hearing the same on merits of the case is bad in law on the facts and circumstances of the case.

The learned Commissioner of Income Tax (Appeals) is not justified in not condoning the delay of 1,856 days in filing the appeal before the learned Commissioner of Income Tax (Appeals) without appreciating the fact that the appellant has reasonable cause for not filing the appeal within time and consequently ought to have condoned the delay in filing the appeal on the facts and circumstances of the case.

The order passed by the learned Commissioner of Income Tax (Appeals) is in violation of principle of natural justice on the facts and circumstances of the case.

The learned Commissioner of Income Tax (Appeals) is not justified in law by dismissing the appeal without giving the appellant any opportunity of being heard on the facts and circumstances of the case.

The learned Commissioner of Income Tax (Appeals) is not justified in disallowing the relief claimed of Rs. 4,15,302/- under section 90 of the Act.

The learned authorities below erred in law and on facts in not granting the foreign tax credit while processing the return under section 143(1) of the Act, despite the appellant having duly filed Form 67 within the prescribed time.

The denial of foreign tax credit is contrary to the provisions of section 90 of the Act and Rule 128 of the Income-tax Rules and consequently the intimation issued under section 143(1) is therefore bad in law on the facts and circumstances of the case.

The learned authorities erred in not furnishing any reason or basis for denial of foreign tax credit in the intimation u/s 143(1) of the Act and consequently the variation made in the intimation issued under section 143(1) of the Act is bad in law on the facts and circumstances of the case.

The Learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in making the disallowance of Rs. 4,15,302/- on account of foreign tax credit claimed by the appellant in respect of taxes paid in the Germany and availed the relief from the double taxation as per treaty between Indian and Germany.

The Learned Commissioner of Income Tax (Appeals) has erred in disallowing the Foreign Tax Credit by ignoring the settled position of law that the foreign Tax credit paid by the appellant shall be allowed as a credit against the Indian Tax, payable by a resident Indian to give him relief from the double taxation on the same Income.

Without prejudice, the Learned Commissioner of Income Tax (Appeals) failed to appreciate that Rule 128(9) is a procedural requirement and is not mandatory requirement and violation of procedural norm does not extinguish the substantive right of claiming the credit of Foreign Tax Credit.

The learned authorities below are not justified in levying interest under section 234B and 234C of the Act and further the calculation of interest under section 234B and 234C of the Act is not in accordance with law since the rate, method of calculation, quantum is not discernible from the order of assessment on the facts and circumstance of the case.

The appellant craves leave to add, alter, modify, delete or substitute any or all of the grounds and to file a paper book at the time of hearing the appeal.

In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity. 3. Briefly stated, the assessee filed his return of income for assessment year 2018-19, which was processed under section 143(1) of the Income Tax Act, 1961 by the Central Processing Centre, resulting in a demand of ₹4,76,970. The dispute arose because the assessee claimed relief under the Double Taxation Avoidance Agreement in respect of taxes paid in Germany on a stock option plan payout. However, the assessee filed the appeal before the learned CIT(A) only on 29 April 2024, resulting in a delay of more than five years and one month. In Form No. 35, the assessee explained that the delay occurred due to unforeseen personal and professional challenges during the relevant period, which affected his ability to attend to tax-related matters. He further stated that the complexity of the tax assessment for the year, particularly the treatment of income from the stock option plan payout received from SAP Germany, required a detailed review and consultation with tax 4 advisers, which consumed additional time. The COVID-19 pandemic, along with lockdowns and isolation restrictions, also hindered his ability to pursue the matter promptly. The assessee further submitted that he made several attempts to upload the corrected income tax return and Form No. 67 on the income tax portal but faced technical glitches. Despite these difficulties, he diligently pursued rectification of the demand by consulting tax professionals, approaching the Assessing Officer, and contacting the income tax helpline. As these efforts did not resolve the matter, he ultimately filed an appeal before the learned CIT(A), admitting a delay of five years and one month but requesting that it be condoned as having occurred for sufficient cause. 4. The learned CIT(A) refused to condone the delay, holding that the assessee had not shown sufficient cause. He observed that the limitation period for filing the appeal expired on 30 March 2019 and that the period from April 2019 to March 2020 remained unexplained by the plea based on COVID-19. He further noted that more than two years had elapsed after the COVID-19 period and, therefore, rejected that explanation. As regards the alleged technical glitches, he held that no documentary evidence had been produced to substantiate the claim. After referring to several judicial precedents and relying on the decision of the Hon’ble Supreme Court, he concluded that the assessee had failed to explain the delay for the specific periods 2019–20, being the pre-pandemic period, and 2022–2024, being the post-pandemic period. Accordingly, he declined to condone the delay and dismissed the assessee’s appeal in limine. 5. Aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. The learned authorized representative, Shri Monish Sowkar, Advocate, filed a paper book comprising 87 pages and relied on several judicial precedents to support the claim for foreign tax credit despite the alleged non-filing or delayed filing of Form No. 67. He referred to the condonation petition filed before the learned CIT(A), placed at page 34 of the paper book, and the submissions filed before him at pages 30 to 33. His principal contention was that the assessee, who was employed with SAP Germany, received a stock option plan payout of €17,120.27, which was duly disclosed in the return of income for the relevant assessment year as long-term capital gain. Tax of €5,943, equivalent to ₹4,15,302, was paid in Germany, and the assessee was entitled to foreign tax credit under the Double Taxation Avoidance Agreement between India and Germany. However, the actual Indian tax liability on such long-term capital gain was approximately ₹2,64,430, and the relief allowable under the treaty was limited to that amount. Due to inadvertence, the assessee claimed the entire German tax of ₹4,15,302 as foreign tax credit in the return instead of the correct amount of ₹2,64,413 and subsequently deposited the differential tax of ₹1,50,889. The Central Processing Centre, while processing the return, did not grant any foreign tax credit, although Form No. 67 had been filed through the income tax portal. It was further submitted that the assessee faced repeated technical glitches on the portal and pursued the matter with the technical support team, which indicated that the issues may have arisen due to migration of the portal and advised him to continue trying. Ultimately, the assessee was able to upload the documents successfully, though with some delay. The assessee therefore filed an application for condonation of delay before the learned CIT(A), explaining the unforeseen personal circumstances, complexity of the case, disruption caused by the COVID-19 pandemic, and technical issues on the income tax portal. The learned authorized representative submitted that the condonation petition was rejected merely because the assessee could not produce documentary evidence of the technical glitches. He argued that these were unprecedented times and that there were sufficient causes for the delay in filing the appeal. The learned CIT(A) ought to have considered the matter from the assessee’s perspective while examining whether sufficient cause existed. On merits, he submitted that numerous decisions of coordinate benches support the assessee’s claim. 6. The learned Departmental Representative strongly supported the order of the learned CIT(A). He submitted that, since the delay exceeded five years and the assessee had failed to establish sufficient cause, the learned CIT(A) committed no error in refusing to condone the delay. 7. We have carefully considered the rival submissions and perused the orders of the lower authorities. The facts show that the assessee filed his return of income declaring long-term capital gain arising from a stock option plan granted by SAP, a German company, which was subsequently sold in Germany. The payout received in Germany was €17,110.27, equivalent to ₹11,56,552, on which the assessee paid German tax of €5,943. This tax payment was reflected in the assessee’s German tax statement for the relevant financial year. Inadvertently, while filing the return of income, the assessee claimed full credit of the German tax of ₹4,15,302 instead of the correct proportionate credit of ₹2,64,413. While processing the return, the Central Processing Centre did not grant credit for the foreign tax paid, although Form No. 67 had been filed. The intimation was issued on 28 February 2019. The assessee filed the appeal against that intimation only on 29 April 2024, resulting in a delay of five years and one month. The reasons for the delay, as stated by the assessee, have been discussed by the learned CIT(A) in his order and have also been noted by us. The assessee attributed the delay partly to personal difficulties, partly to the COVID-19 pandemic, partly to glitches on the income tax portal, and partly to the complexity of the tax issue involved. We find that it is not unusual for a taxpayer to face difficulty in dealing with such circumstances, particularly when personal problems, the COVID-19 pandemic, portal-related issues, and the complexity of the tax matter coincided. In fact, the assessee had initially claimed the entire foreign tax paid in Germany, though only proportionate relief was allowable. The assessee has accepted this position and now seeks only proportionate tax relief. It is also not disputed that Form No. 67 was on record. The only issue is whether the learned CIT(A) was justified in refusing to condone the delay. The learned CIT(A) declined to accept the explanation regarding portal glitches primarily because the assessee had not produced documentary evidence. However, it is a matter of common experience that, at times, the income tax portal has caused difficulties for taxpayers. In these circumstances, we see no reason why the learned CIT(A) should not have condoned the delay in filing the appeal. It is also well settled that an assessee is not required to explain each day’s delay, and the length of delay is not decisive. Where sufficient cause is shown, even a long delay may be condoned; conversely, where sufficient cause is absent, even a short delay may not be condoned. Considering the facts before us and those recorded by the learned CIT(A), we hold that the assessee had sufficient cause for the delay in filing the appeal before the learned CIT(A). We therefore condone the delay and reverse the order of the learned CIT(A) on this issue. 8. In the present case, the only dispute concerns the denial of foreign tax credit to the assessee. The facts discussed above indicate that the assessee is entitled to credit for foreign taxes paid in Germany under the Double Taxation Avoidance Agreement between India and Germany. However, without expressing any opinion on the merits, we restore the issue to the file of the jurisdictional Assessing Officer. The assessee shall substantiate his claim for foreign tax credit, and the Assessing Officer shall examine the same in accordance with law. If the claim is found to be admissible, the Assessing Officer shall grant the assessee the correct credit for taxes paid in Germany. 9. Since the entire issue has been restored to the file of the learned jurisdictional Assessing Officer, separate adjudication of each ground of appeal raised by the assessee is unnecessary. The Assessing Officer shall decide the matter afresh, and the assessee shall be at liberty to raise all contentions before him.

In the result, the appeal filed by the assessee is allowed for statistical purposes.