KRISHNA MOHAN SAHU.,HYDERABAD. vs. INCOME TAX OFFICER, INTL. TAXATION-1., HYDERABAD

Brief facts of the case are that the assessee is an individual and an NRI. He filed his return of income for the A.Y 2010-11 on 30.03.2011 by admitting taxable income at Rs.4,29,727. During the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee had admitted capital gain of Rs.3,21,503 but the details about the purchase and sale of some of the scripts and their values are not furnished. The assessee was therefore, asked to file the details of share transactions. The assessee submitted the revised computation sheet by admitting the capital gain income from the transactions of shares at Rs.6,60,474. The AO after verifying the same, brought the difference of the amount of Rs.3,38,971 to tax.

Apart from the above, the AO also observed from the return of income that under the head “Income from other sources”, the assessee had admitted interest income of Rs.1,45,458 from HDFC Bank whereas as per Form 26AS, the assessee has received an amount of Rs.8,37,989. The assessee was therefore, asked to produce the details of difference in the amount admitted in the return of income and the TDS certificates to the tune of Rs.6,92,531. The assessee submitted its reply stating that as per section 195 of the Act, any payment made to an NRI attracts TDS and hence securities/brokerage firms, deduct TDS at 10% on any sale of securities and remitted to his account notwithstanding whether the non-resident has gained or has incurred loss on such transaction and since the deduction of TDS, whether on interest or on sale of securities is done u/s 195, it becomes difficult to figure out as to how much TDS has been for interest and how much is for the others. Observing that the

Further, on examining the Bank A/c statement of the assessee, the AO observed that the assessee has received an amount of Rs.91,097 as interest from various banks but the assessee has failed to admit the same in his return of income. Therefore, he brought this amount of Rs.91,097 also to tax. The AO further observed that the assessee has received an amount of Rs.36,895 from AXIS Bank Ltd as interest income and the assessee has admitted only an income of Rs.13,341 as per the TDS certificate enclosed. Therefore, the difference of Rs.23,454 was also added to the returned income of the assessee and brought to tax.

Aggrieved by the above additions, the assessee preferred an appeal before the CIT (A) but with a delay of 970 days. The assessee submitted that the difference in the TDS has arisen because the Banks have failed to issue Form No.16 on time to the assessee and the AO has taken the entire credit as interest income and has passed the order u/s 143(3) of the Act. It was submitted that since the said information was not available with the assessee, he has helpless and it was only after obtaining the Form No.16 from the Bank, that the assessee filed a petition u/s 154 of the Act before the AO and also filed a revised computation of income in which he admitted income of Rs.8,41,020 and requested to modify order u/s 143(3) of the Act dated 11.03.2013

The CIT (A) however, did not condone the delay and dismissed the assessee’s application and the assessee is in second appeal before us.

The learned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the assessee being an NRI, all the payments made to him are subject to TDS u/s 195 of the Act. It was submitted that due to the failure of the Bankers to issue form No.16, in time, the AO has brought the income mentioned in Form 26AS as assessee’s income. He submitted that the assessee is now filing the form 16 issued by the Bankers and the same may be directed to be considered by the AO for the capital gains as well as the interest income.

The learned DR, however, supported the orders of the authorities below.

Having regard to the rival contentions and the material on record, I find that the assessee’s appeal has been rejected by the CIT (A) mainly on the ground of delay. Without going into the merits of the appeal, I find that the assessee has been pursuing application u/s 154 and before the Income-Tax Ombudsman for redressal of his grievances which has resulted in the delay of 970 days in filing of the appeal before the CIT (A). In the following cases, the Hon'ble Supreme Court has held that if the assessee has shown sufficient cause, the delay ought to be condoned and the appeal should be considered on merits. i) Collector, Land Acquisition Vs. MST.Katiji & Ors., reported in 167 ITR 471 (SC) ii) Mithailal Dalsangar Singh v. Annabai Devram Kini , [(2003) 10 SCC 691] iii) Ganesh Prasad Badinarayan vs. Sanjeev Prasad Jamnaprasad Chourasiya (2004) 7SCC 482. iv) Commissioner of Central Excise vs. Raj Petroleum Products (2015) 5 TMI 449

I find that the assessee was pursuing the application u/s 154 which has resulted in the delay and therefore, I condone the delay of 970 days in filing the appeal before the CIT (A). However, instead of remitting the matter back to the CIT (A), I deem it fit and proper to remit back the issue to the file of the AO as the details now filed by the assessee needs verification by the AO. AO is therefore, directed to consider the evidence filed by the

In the result, assessee’s appeal is treated as allowed