Loading judgment…
Facts
The assessee claimed foreign tax credit, which was disallowed by the CPC while processing the return. Multiple attempts to rectify the disallowance with the CPC and AO failed, leading to significant delays in filing appeals.
Held
The Tribunal condoned the delay in filing the appeal, finding the assessee's reasons genuine and acknowledging their vigilance in pursuing the issue. The case was remitted to the CIT(A) for a decision on merits.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the disallowance of foreign tax credit needs to be decided on merits.
Sections Cited
143(1), 154, 128(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
These are the appeals filed by the assessee challenging the orders of the Addl/JCIT(A)-2, Surat dated 09/10/2024 and 15/10/2024 in respect of the A.Ys. 2017-18 and 2019-20.
Both the appeals are related to the same assessee and the issue involved in both the appeals are similar. We decided to take up both the appeals together and pass a common order for the sake of convenience.
& 2343/Bang/2024 3. The brief facts of the case are that the assessee had claimed the foreign tax credit in his return of income but the same was not considered by the CPC while processing the return and an intimation u/s. 143(1) of the Act was issued. Thereafter the assessee filed a rectification return u/s. 154 of the Act on 17/04/2020 for claiming the foreign tax credit but the same was rejected by the CPC since the same is a fresh claim and the assessee was directed to approach the AO for getting the necessary relief. Thereafter an e-nivaran application was filed with the AO seeking the rectification of the mistake apparent from the record which was also rejected by the AO by stating that he is not an appellate authority and directed the assessee to approach the CIT(A) or the PCIT to review the order. Thereafter another e- nivaran application was filed on 21/05/2021 since the assessee was of the view that the above order is incorrect. The said application was also dismissed and thereafter the assessee filed an appeal against the intimation u/s. 143(1) of the Act on 04/03/2019 in which the foreign tax credit was disallowed by the CPC. The limitation for filing the appeal ends on 03/04/2019 but because of the above said reasons, the assessee filed the appeal on 07/02/2023 with a delay of 1403 days for A.Y. 2017-18 and 660 days for A.Y. 2019-20.
The Ld.AR further submitted that if the covid period commencing from 15/03/2020 to 28/02/2022 is excluded, the delay is only minimal and properly explained. The assessee also filed an application to condone the said delay and explained the various attempts made by him to correct the intimation but having failed his attempts, finally the assessee preferred the appeal on 07/02/2023. The Ld.CIT(A) without considering the case on merits, had rejected the said application on the ground of limitation. As against these orders, the assessee is in appeals before this Tribunal.
At the time of hearing, the Ld.AR submitted that the assessee had field their return of income correctly and claimed the foreign tax credit in the return but the CPC without considering the said claim, had disallowed the said claim. The Ld.AR further submitted that once the assessee had paid & 2343/Bang/2024 the tax in foreign countries, then as per Rule 128(1) of the Rules, he is entitled for credit but unfortunately the CPC had not granted the said deduction while processing the return. The Ld.AR further submitted that even if the rejection is on account of non-filing of form 67, he submitted that the form 67 was introduced from the Assessment Year 2018-19 but the case of the assessee relates to the period 2017-18 and therefore submitted that the assessee is having a good case on merits but unfortunately the Ld.CIT(A) without deciding the appeal on merits, had dismissed the same by not condoning the delay which is not correct and prayed that if one more opportunity is granted, that the assessee will appear before the Ld.CIT(A) in order to decide the issue on merits.
The Ld.DR submitted that the delay is abnormal and therefore the Ld.CIT(A) is correct in dismissing the same and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We will take up the appeal in A.Y. 2017- 18 as the lead case and the result arrived in the said appeal will apply mutatis mutandis to the appeal in for A.Y. 2019- 20.
The only issue raised by the assessee is the disallowance of the foreign tax credit available to the assessee which was also claimed in the return of income filed by the assessee but the same was disallowed by the CPC while processing the return. We have also perused the intimation and in the said intimation, the CPC had not furnished the reasons for disallowing the foreign tax credit claimed by the assessee. Further, we have also seen that the assessee had not kept idle after the said intimation was communicated to the assessee but rightly or wrongly took several steps to get the necessary relief from the CPC and also from the AO which were all failed and therefore & 2343/Bang/2024 there is a delay in approaching the Ld.CIT(A). The various steps taken by the assessee would demonstrate that he is vigilant and took steps to rectify the intimation but unfortunately he was not successful in his attempts and thereafter the appeal has been filed before the Ld.CIT(A) with a delay of 1403 days. We have also considered the submission that the covid period between 15/03/2020 to 28/02/2022 has to be excluded for calculating the period of limitation and if the said period has been excluded, the delay would be a minimal one and the said delays were also properly explained by the assessee.
We find that the reasons given by the assessee are all genuine reasons and the issue of disallowance of foreign tax credit also to be decided on merits and therefore we are accepting the explanation offered by the assessee and condone the said delay in filing the appeal before the Ld.CIT(A) and therefore we set aside the order of the Ld.CIT(A) and remit the issue to the file of the Ld.CIT(A) and direct the Ld.CIT(A) to decide the appeal on merits after hearing the assessee.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 21st February, 2025.