DR. SANGHMITRA DASGUPTA,BENGALURU vs. ITO, WARD-2(2)(3), BENGALURU

The assessee has raised several grounds of appeal; however, the principal grievance is that the delay in filing the appeal was not condoned and that credit for foreign tax of ₹79,742, claimed in the return of income, was not granted merely because Form No. 67 was treated as not having been filed in time.

Briefly stated, the assessee is a dental surgeon and a managing partner of a partnership firm in Bengaluru. She regularly filed her return of income and paid the taxes due thereon. Her income comprised partner’s remuneration from the firm, interest from seven bank accounts, professional fees from Elite Dental Clinic Limited, Tanzania, and commission from another company. She also claimed interest on borrowed capital under the head “Income from house property.”

For assessment year 2018-19, she filed her return on 31 October 2018 declaring total income of ₹15,18,630 and claimed foreign tax credit of ₹79,242 under section 90 of the Act. She also filed Form No. 67, as evidenced by the e-filing acknowledgement dated 31 October 2018, before the due date for filing the return.

The return was processed by the Central Processing Centre on 3 September 2019, raising a demand of ₹99,290, primarily because the foreign tax credit claimed in the return was disallowed.

The learned CIT(A) noted that the intimation under section 143(1) was passed on 3 September 2019 and held that the appeal was filed with a delay of 1,933 days. The assessee explained that the delay occurred because she was unaware of the procedure for filing a statutory appeal in Form No. 35 on the income-tax portal. The learned CIT(A) rejected the explanation as not being in accordance with law and dismissed the appeal without condoning the delay.

Aggrieved by that order, the assessee is in appeal before us. The learned Advocate, Ms. Sahana THM, submitted that there was no fault on the part of the assessee in relation to filing Form No. 67 for claiming foreign tax credit, which had been claimed in the return of income. She further submitted that the Assessing Officer ought to have granted the credit by rectifying the mistake, since Form No. 67 was available before the due date for filing the return and, in any event, at the time of processing the return. She also submitted that, under Article 265, tax cannot be collected except by authority of law. She further submitted that the learned CIT(A) ought to have condoned the delay, as the assessee was unaware of the procedure for filing Form No. 35 on the income-tax portal. Once she received assistance from a Chartered Accountant or Advocate, she filed the appeal before the learned CIT(A) seeking foreign tax credit, which had been claimed in return but denied by the CPC. According to her, the assessee was unaware of the appeal-filing process and did not know that an appeal could be filed against an intimation issued under section 143(1) of the Act. Such ignorance should not be held against the assessee when she was otherwise entitled to the foreign tax credit claimed in the return of income. She submitted that the lower authorities deprived the assessee of lawful tax credit on technical grounds. She further submitted that, where technical objections and merits are weighed against each other, the lower authorities ought to have assisted the assessee and granted the foreign tax credit. The delay resulted solely from ignorance of the prescribed filing procedure.

Sri Ganesh R. Ghale, learned Standing Counsel for the Income-tax Department, strongly submitted that the assessee failed to substantiate the delay of 1,933 days by showing sufficient cause. Therefore, no fault can be found with the orders of the lower authorities.

We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also perused the paper book filed by the assessee, containing copies of the return of income, Form No. 67, certificate of tax deduction in Tanzania, the Double Taxation Avoidance Agreement between India and Tanzania, and the written submissions filed before the learned CIT(A). The assessee has stated that the delay was caused by her ignorance of the procedure for filing the appeal. The limited issue in this appeal is whether foreign tax credit, claimed in the return of income and supported by Form No. 67 available before processing the return, could be denied. In our view, the assessee could not have been denied such credit under section 90 of the Income-tax Act.

We find that the assessee explained the delay arising from her lack of awareness of the procedure for filing an appeal before the learned CIT(A) in Form No. 35 through electronic mode. Once she received advice from a Chartered Accountant, she immediately filed the appeal and raised her claim. Since the assessee was unaware of the online procedure for filing Form No. 35 before the learned CIT(A) and was also unaware that an appeal could be filed against an intimation issued by the Central Processing Centre, it cannot be said that she lacked sufficient cause for the delay.

In view of the above facts, while we Also do notuphold the finding of the learned CIT(A) that the explanation for the delay was not supported by sufficient cause, we note that the assessee’s claim for foreign tax credit ought to have been examined on merits. The Assessing Officer should have granted the credit if Form No. 67 was filed on or before the due date for filing the return and the claim was supported by the return of income. No tax can be collected without authority of law. Since the assessee furnished details of tax paid in Tanzania, supported by the Double Taxation Avoidance Agreement, the certificate of tax deduction dated 27 October 2018, and Form No. 67, the assessee deserves verification of her claim for foreign tax credit of ₹79,742.

Accordingly, we restore the matter to the file of the Assessing Officer with a direction to the assessee to substantiate the claim for foreign tax credit by producing Form No. 67, the certificate of tax deducted in Tanzania, and the corresponding income offered by her. The Assessing Officer shall examine the material and, if the claim is found to be in accordance with law, grant the foreign tax credit after proper verification.

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