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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against theorder dated 24.02.2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year(“AY”) 2017-18.
The assessee has raised the following grounds of appeal:-
1. Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 13,43,083/- which as per dates of acquisition stated in Return relate to A.Y.2018-19. Appellant Prays to delete the same.
2. CIT(A) has erred in confirming addition of RS. 13,43,083/-only for the reason that according to him same is not offered for AY.2018-19. Appellant prays to delete the same as same is offered and included under the head salary in Form 16, at value as on date of acquisition for A.Y.2018-19 and even it not included same can be thought to Tax for A.Y.2017-18.
3. CIT(A) has erred in adopting value of Stock options exercised, wrongly stated in Return Schedules, as of date of filing Return, instead of date of acquisition.
Appellant prays for deletion of addition of Rs.8,10,190/-which is difference the value wrongly adopted as of date of Filing Return and as of date of acquisition.
CIT(A) has erred in confirming addition of Rs.8,10,190/-. Appellant Prays to delete the same.
5. CIT(A) has not acted as just and fair in not showing the Remand Report called by him from Assessing Officer and Confirming the addition.
6. CIT(A) has erred in Stating Interest u/s 234B, 234A is consequential, instead of deleting the same.
7. Appellant Prays for just and equitable relief.
8. Appellant prays to add, alter, amend, modify and/or withdraw the ground.”
Briefly stated, the facts of the case are that the assessee is an employee of a Software Company, named Nvidia Graphics India Pvt. Ltd. For AY 2017-18, the assessee filed belated return of income on 09.02.2018 declaring total income of Rs.25,16,060/-. The case of the assessee was selected for limited scrutiny under CASS to verify the issue “Foreign asset”. Accordingly, notice u/s 143(2) and 142(1) of the Income Tax Act, 1961 (the “Act”) alongwith questionnaire were issued and served upon the assessee calling for various details. In response thereto, the assessee submitted various details through e-filing portal which was duly verified by theLd. Assessing Officer (“AO”)but he found them incomplete. From the ITR filed by the assesseethe Ld. AO noticed that the assessee is having foreign assets and income from source outside India. As per the Ld. AO the assessee had acquired stocks of the parent US company under the subject option scheme (“ESOP”) amounting to Rs.30,44,843/- during the relevant AY 2017-18, the details of which are provided in para 4 of his assessment order. The assessee was therefore asked to furnish details of new foreign asset as per Table D of the Schedule FA of ITR filed for AY 2017-18.In response thereto, the assessee submitted Form 16 and Form 12BA for AYs 2015-16 and 2016-17 but not for AY 2017-18. Due to lack of complete submission and supporting documentary evidence filed by the assessee, the Ld. AO completed the assessment by making an addition of Rs.30,44,843/- on account of difference in investment in capital asset, to the total income of Rs.25,16,060/- returned by the assessee resulting in the assessed income of Rs.55,60,903/- vide order dated 23.12.2019 passed u/s 143(3) of the Act.
4. Aggrieved with such order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)/NFAC. Before the Ld. CIT(A)/NFAC, the assessee claimed that the addition of Rs.30,44,843/- made by the Ld. AO should be deleted because:(a) Rs.13,43,083/- (Rs.12,31,723/- + Rs.1,11,360/-) worth stocks are not related to the year under assessment i.e. AY 2017-18 as these stocks were acquired on 31.08.2017 and 25.09.2017; (b) Rs.8,91,570/- worth stocks are included in salary as perquisite and have already been offered to tax and (c) Rs.8,10,190/- being the difference between the quoted/market value of stocks as on 09.02.2018 i.e. date of filing the return mistakenly taken by the assessee as against the value on date of acquisition i.e. cost of acquisition. However, the Ld. CIT(A)/NFAC rejected the above claim(s)of the assessee by observing as under : “8.1. It is pertinent to note that the Ld. AO has added amount of stocks worth Rs.13,43,083/- to the appellant's income as the appellant has submitted the details of the said stocks in her return of income filed for the Assessment Year 2017-18. However, the date of acquisition of the said stocks as mentioned by the appellant falls in the FY 2017-18 relevant to the Assessment Year 2018-19. It is relevant to mention that the return of income filed for A.Y. 2018-19 has been perused and it is seen that details of the said stocks worth Rs. 13,43,083/- which were acquired in FY 2017-18 were not declared in her return of income filed for AY 2018-19. As such, claim by the appellant is devoid of facts. In this regard, it is held that the appellant's attempt to avoid the payment of taxes on such shares by not furnishing any of such details in return of income for the A.Y. 2017-18 and 2018-19, is not acceded. Hence, Ground No. 3 of appeal raised by the appellant is hereby dismissed. 8.2. The Ld. AO stated that the appellant has not submitted the Form-16 and Form 12BA for AY 2017-18 during the assessment proceedings. During the course of appellate proceedings, the appellant has submitted the said documents s and it is verified from such submissions that the said amount of Rs. 8,91,570/- worth stocks has indeed been included in Salary as perquisite by her employer. As it is evident that the amount of Rs. 8,91,570/- has been included in income under head 'Salary' and already been offered for tax. Hence, the Ground No. 4 of appeal raised by the appellant is hereby allowed. 8.3. The appellant's claim that the AO has erred in adding an amount of Rs.17,01,760/- which is the appreciated value of stocks worth Rs.8,91,570/- as on 09/02/2018 is not valid as the appellant herself has submitted the cost on date of acquisition as Rs.17,01,760/- in her return of income. The appellant has not mentioned any additional details in her revised return of income for AY 2017-18 which she filed on 14/09/2018 and the appellant has also not submitted any documentary evidence during the appellate proceedings in support of her claim. As the amount of Rs. 8,91,570/- has been included in income under head 'Salary' and already been offered for tax, the addition of the difference amount of Rs.8,10,190/- to the appellant's income is justifiable. Hence, the Ground No. 5 of appeal raised by the appellant is hereby dismissed.”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that while filing the return of income, in the foreign asset (FA) schedule, the assessee admittedly made the following mistakes: (i) she should have given details of holding as of31.03.2017 but gave holdings upto date of filing return i.e. 08.02.2018 and included two holdings acquired during FY 2017-18 i.e. 31.08.2017 and 25.08.2017 in Y 2017-18 under dispute; and (ii) she showed the value quoted as of 09.02.2018 i.e. date of filing return. He further submitted that the show cause notice issued by the Ld. AO remained un-complied due to the reason that the window to file reply was open only for 48 hours and thereafter it was closed. Before the Ld. CIT(A), the assessee filed additional evidence and a remand report from the Ld. AO was called for. However, copy of the remand report and comments of the Ld. AO, if any, received was not provided to the assessee inspite of the request of the assessee. The Ld. AR also raised an alternate plea that the impugned stock was allotted in the AY 2018-19 and hence no addition can be made in AY 2017-18. The assessee has offered the same for taxation in next year as a part of perquisite. The Ld. AR submitted the following chart showing the details of foreign assets included in perquisites for AY 2017-18 and 2018-19 :
6.1 He summarized the above contentions as stated below and prayed for deletion of the entire amount of addition aggregating to Rs.30,44,843/-: Sr. No. Amount (Rs.) Contention of the assessee 1. Rs.13,43,083/- Included in Rs. 30,44,843should be deleted because the same does not relate to AY 2017-18. 2 Rs.8,10,190/- Being difference in market value and cost (instead of cost,value taken at market value as on date of filing return i.e.09.02.2018. 3 Rs.8,91,570/- Value of stock (ESOP) included in salary certificate, Form 16 and Form 12BA and also in the return of income.
The Ld. DR relied on the order of the Ld. AO and Ld. CIT(A)/NFAC.
We have heard the Ld. Representatives of the parties, perused the material on record, paper bookas well as written submissionsfiled by the Ld. AR. We find that the Ld. AO has made the impugned addition of Rs.30,44,843/- to the returned income of the assesseeon account of foreign assets (ESOPs) alleging that the said foreign assets are not included in the assessee’s returned income for AY 2017-18. The details of shares / stocksof the foreign parent companyacquired by the assessee along with the date(s) of its acquisition is provided in para 4 by the Ld. AO in the assessment order. It is the submission of the Ld. AR that out of total addition of Rs.30,44,843/-, stocks worth Rs.12,31,723/- were acquired on 31.08.2017 and stock worth Rs.1,11,360/- were acquired on 25.09.2017 aggregating to Rs.13,43,083/- and hence these transactions pertain to AY 2018-19 and not the relevant AY 2017-18 under dispute. Hence, the same should be excluded. He further submitted that the assessee had in fact pointed this out before the Ld. AO vide rectification application u/s 154 but the Ld. AO rejected the same. The Ld. AR contented that the Ld. AO himself should have excluded these transactions, though the assessee has shown these transactions mistakenly in her return of income under the head “foreign assets/investment”.
8.1 As regards the balance stocksamounting to Rs.17,01,760/- (Rs.30,44,843/- minus Rs.13,43,083/-), these are wrongly taken by the assessee at quoted value as on 09.02.2018 i.e. date of filing of return as against the cost of acquisition. By referring to Form 16 and Form 12BA and TDS-Trace which were also available with the Ld. AO/CIT(A)/NFAC, the Ld. AR demonstrated that the cost of stock option is Rs.8,91,570/- as against the value of Rs.17,01,760/- which has been mistakenly taken by the assesseeconsidering the market value as on the date of filing return as against the cost on date of acquisition. Form 16- Part B duly shows the perquisite value of stock option (ESOPs) as part of gross salary of Rs.28,44,817/- (comprising of salary of Rs.19,52,320/- + perquisite as per Form 12BA Rs.8,91,570 + Rs.717/-). Therefore, excess of Rs.8,10,190/- i.e. (Rs.17,01,760/- minus Rs.8,91,570/-) should be deleted.
8.2 Before the Ld. CIT(A)/NFAC, the assessee had filed certain additional evidence for which a remand report from the Ld. AO was called for, however, a copy of thesaid remand report was not made available to the assessee and hence the contents of the same are not known to the assessee. We find that the Ld. CIT(A)/NFAC has rejected the above contentions/claim of the assessee and granted only partial relief in respect of value of perquisite included in assessee’s salary certificate amounting to Rs.8,91,570/-. In respect of relief claimed for Rs. 13,43,083/- as stated in Para 8 of the impugned order, the Ld. CIT(A)/NFAC though agreed that these were acquired during the FY2017-2018 relevant to A.Y.2018-2019 instead of AY 2017-18 under dispute, he still dismissed the assessee’s claim observing that even for A.Y.2018-19 the same has not been offered to Tax of stock option exercisedThis observation of the Ld. CIT(A)/ NFAC is not correct. The facts on record reveal that the cost of acquisition of the impugned stocks has been included in Form 16 as perquisite for A.Y.2018- 2019 amounting to Rs.10,82,612/-. In support thereof, the Ld. AR produced the following chart detailing the factual matrix of the case in respect of disclosures/ claims made in ROI for AY 2017-18 ,the stocks acquired and offered for taxation as perquisite in AY 2017-18 and AY 2018-19:
In light of the above discussion and based on the factual matrix of the case, we find force in the arguments advanced by the Ld. AR, however, in our view,the claim of the assessee requires verification as both the Ld. AO and Ld. CIT(A)/ NFAC have notappreciated these facts in correct perspective. We, therefore, deem it fit to set aside the order of the Ld. CIT(A)/NFAC and restore the matter to the file of the Ld. AO to re-examine the issues involved and grant appropriate relief to the assessee as a result of such verification thereof, in accordance with facts and law, after affording reasonable opportunity of hearing to the assessee. Needless to say, the assessee shall provide full support in terms of filing the requisite details/evidence before the Ld. AO to substantiate her case. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 30th September, 2025.