SRI. VIKRAM SHETTY,BANGALORE vs. INCOME TAX OFFICER, WARD-5(3)(1), BANGALORE

The Appellant's then Authorised Representative CA Chikkerur filed an Appeal on 22nd April 2016 with the Honorable Commissioner of Income Tax (Appeals) - 5, Bangalore against the Impugned Order of Assessment dated 30th March 2016 passed U/s 144 of the IT Act, 1961 for the Assessment Year 2013-14.

On 19th June 2018, another grievance was submitted. stating that CA Chikkerur, had approached the Commissioner of Income Tax (Appeals) - 5 but was not permitted to submit hard copies of supporting documents. Consequently, he emailed all relevant documents to the Commissioner of Income Tax (Appeals) – 5 based on the response received from Jurisdictional Assessing Officer. 17. On 26th September 2022, CA Chikkerur. submitted another grievance, highlighting that an order under Section 250 of the Income Tax Act. 1961, was passed without affording the Appellant a reasonable opportunity of being heard and the Appellant had consistently maintained that he was not guilty of any wrongdoing and had not availed of any incorrect sections, thereby disputing liability for demand and penalties. 18. On 17th May 2023, the response was given for the aforesaid date stating that the Jurisdiction falls under Income Tax Officer. Ward - 2(1), International Taxation, Bangalore since the Appellant was a Non-Resident. 19. The Appellant denies the liability to pay interest u/s 234B and 234C of the Act. The interest having been levied erroneously is to be deleted.

The brief facts of the case show that the assessee is an individual, deriving salary income with ANZ Operations & Technology Pvt. Ltd., Bangalore, filed his return of income on 31.7.2013 at a total income of Rs.43,24,130. The return was picked up for scrutiny, notices were issued to the assessee, however, there was no response, therefore assessment was completed ex parte. Ld. AO noted that case of the assessee was selected for verification of large deduction claimed u/s. 54 of the Act [ in fact it is tax credit claimed by the assessee u/s 90 of the Act] of Rs.7,04,594 in the return of income. Same was disallowed. The assessee has also claimed deduction under Chapter VIA of Rs.1,10,977 which was also disallowed and assessment order u/s. 144 of the Act was passed on 30.3.2016 determining total income of assessee at Rs.44,35,107.

Aggrieved with the assessment order, assessee preferred appeal before the ld. CIT(Appeals) wherein 2 notices were issued for hearing on 22.12.2017 & 25.1.2018 which were not responded and therefore the ld. CIT(A) applying the decision of CIT v. Multiplan India Ltd., 38 ITD 320 dismissed the appeal for want of prosecution. The appellate order was passed on 28.2.2018.

Against this appellate order, the appeal was filed on 14.11.2024. Assessee filed an affidavit explaining the reasons for the delay in filing of appeal as under: -

The ld. AR reiterated the facts stated in the application for condonation of delay and the affidavit and submitted that the delay despite the length is because of sufficient cause deserves to be condoned. He submits that in this case there is sufficient cause for delay in filing of appeal, therefore it should be condoned.

The ld. DR, Mr. Ganesh R. Gale, Standing Counsel, vehemently opposed the same stating that the delay is :-

We have carefully considered the rival contentions and perused the orders of the ld. lower authorities as well as the delay involved in the appeal. In this case the order of the ld. CIT(A) was passed and received by the assessee on the same day on 28.2.2018 and no doubt, the appeal is filed on 14.11.224 causing delay of 2390 days. The facts clearly show that at the time of filing of return of income for that year, assessee has claimed relief u/s. 90 of Rs.7,04,594 and deduction under Chapter VIA of Rs.1,10,977 in the return of income filed on 31.7.2013 declaring total income of Rs.43,24,130. Assessee is working in Australia sine 29.5.2014. Therefore the return of income which was picked for scrutiny resulted into an ex parte assessment order u/s. 144 of the Act as assessee could not participate in assessment proceedings. However, the claim of the assessee is that he did not receive any notices. It is also his claim that being a non-resident, unfamiliar with Indian tax laws, assessee has authorised his CA to respond to the income tax department. However as the ex parte assessment order was received, the CA filed appeal before the ld. CIT(A). The notice of hearing on 22.12.2017 was received by the assessee on 3.1.2018, therefore could not be responded to. On the same date, another notice was issued fixing the date of hearing for 25.1.2018. But due to Karnataka Bandh, assessee requested reschedulement of the date as per the email dated 23.1.2018, but suddenly on 28.2.2018 the appellate order was passed. Surprisingly the appellate order did not consider the submissions already made by the assessee. Therefore on 2.3.2018 assessee submitted to the CIT(Appeals) that as the submissions were not considered, the same order may be passed after giving consideration to the submissions already made. This was the grievance application. In response to the grievance application, the assessee was asked to approach the CIT(Appeals) for rectification of the order on 31.3.2018. The assessee approached the CIT(Appeals) on 22.5.2018 and also on 13.6.2018 by making a written communication for rectification of the order. On 19.6.2018 the assessee also made another

No doubt, while condoning the delay, we must look into the fact whether the assessee was exercising his right or remedy is not availed for a considerable long time, then the delay could not have been condoned. For the delay, the assessee is duty bound to show that there is a sufficient cause. This is a condition precedent to condone the delay. In fact wherever there is a request for condonation of delay, the assessee has to explain as to what was the sufficient cause which means

It is in the light of the above legal position that now we have to test whether the inordinate delay in filing the proposed appeal ought to be condoned or not in this case. The order of the ld. CIT(Appeals) was passed on 28.2.2018. Upto 18.7.2018 the assessee approached the CIT(Appeals) as well as the grievance was also made. When the grievance petition and rectification application was made, nothing more the assessee could have done, as both of these petitions were not rejected. Subsequently when the assessee was approached for demand, another grievance was raised which was responded to on 17.5.2023. Thereafter there was a change in the consultant and assessee approached by filing an application u/s. 119(2b) of the Act which was rejected on 23.7.2024. The assessee approached the CA, who advised

It has to be noted that the assessee is a non-resident, residing in Australia. Naturally he was not aware and was solely dependent on the consultant, who in fact took several decisions by knocking the doors of various authorities such as the CIT(Appeals), grievance application, the AO, may be the door is wrong, but the efforts of the assessee cannot be said to be lacking in his bonafides. It is also startling that despite knocking so many doors by the assessee of several income tax authorities, none of them advised him to file an appeal before ITAT, but everybody gave his own reason to not address the grievance of the assessee. Even the CIT(Appeals), the AO, who were considered to be well-versed with the law at least should have given one line in their response asking a non-resident to immediately file an appeal before the Tribunal. It has not happened. Thus, looking at the full compass of facts and situation of the assessee, we are of the view that the delay caused in filing of the appeal by the assessee is for sufficient reason and hence condoned.

The assessee has also submitted a copy of the decision in wherein the delay caused of around 6 years in filing of appeal before the Tribunal was condoned. As the Hon’ble Supreme Court in 4 SCR 241 (supra) has categorically held that because merely some persons obtained relief of similar nature, it does not mean that others are also entitled to the same benefit, if the court is not satisfied with the cause shown for the delay in filing of appeal. Thus, no precedent can be cited or is required to be considered in condoning the delay which has to be only because of sufficient cause shown by the assessee.

The ld. DR has vehemently relied upon the decision of the Hon’ble Supreme Court as stated above. The Hon’ble Supreme Court did not interfere in the decision of the Hon’ble High Court in not condoning the delay of 5659 days for the reason that the claimants were negligent in pursuing the reference and then in delay in filing. Further most of the claimants have accepted the decision of the reference court Thus the Hon’ble Supreme Court found that there is apparently no due diligence on the part of the petitioner in pursuing the matter. The ld. DR could not show us how the assessee was negligent when he constantly approached the various authorities and did not accept their decision. Therefore, the facts of the case before the Hon’ble Supreme Court compared to the case before us are quite distinct.

On the merits of the case, we find that the ld. CIT(Appeals) has dismissed the appeal of the assessee not on the merits of the case, but holding that the assessee is not willing to prosecute the appeal and applied the decision of the CIT v. Multiplan India Ltd., 38 ITD 320. On carefully looking at the provisions of section 250(6), the CIT(Appeals) has to decide the appeal on its own merits. According to section 251 in an appeal against the order of assessment, he has to confirm, reduce, enhance or annul the assessment by giving the detailed reason. He cannot short-circuit the appeal of the assessee and dismiss it for want of prosecution. Even this allegation of the ld. CIT(A) also does not hold water for the reason that all the notices issued by him were responded to by the assessee. Thus dismissing appeal of the assessee by the ld. CIT (A) is not in accordance with the law.

Before the ld. AO, the assessment took place in absence of the assessee. The notices might have been issued to the assessee at his Bangalore address, but it is apparent that by that time assessee for employment purpose shifted to Australia. Looking at the Statement of Facts before the CIT(Appeals) as part of Annexure to Form 35, it is apparent that assessee got an email on 1.4.2016 containing the assessment order passed u/s. 144 of the Act. It is also contended that assessee has not received any other email about the notice of hearing. Further assessee has also not claimed any deduction u/s. 54, therefore the reason for selection of scrutiny is also incorrect. In view of the above facts, the only grievance of the assessee is the grant of foreign tax credit u/s. 90 of the Act of Rs.7,04,594, which was disallowed by the AO stating that it is a deduction u/s. 54 of the Act and further disallowance of deduction claimed under Chapter VIA of Rs.1,10,977.

Before us, the assessee has furnished various details of such foreign tax credit and the deduction claimed. Naturally same have not been verified. Thus, it needs verification by the lower authorities. As the assessee is based in Australia, the ld. AR was directed to submit the requisite detail before the ld. AO for verification.

In view of the above facts, we restore the whole appeal back to the file of the ld. AO with a direction to the assessee to submit the necessary details within 90 days from the date of receipt of this order to the concerned jurisdictional Assessing Officer, who after verification and granting opportunity of hearing, may decide the issue of claim of foreign tax credit in the return of income as well as deduction under Chapter VIA of the Act claimed by the assessee.

In the result, all the grounds of appeal are restored back to the ld. AO and the appeal of the assessee is allowed for statistical purposes.