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Facts
The assessee filed his return declaring a total income of Rs. 91,10,560/-. During assessment, the AO noticed a claimed deduction of Rs. 22,43,100/- under Section 90 of the Act, which was rejected for want of evidence. The assessee's appeal to the CIT(A) was dismissed due to a delay of 753 days.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the ground of delay, especially when the assessee had filed applications under Section 154 of the Act and relied on a CBDT circular. The Tribunal directed the AO to allow the claim under Section 90.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal on delay without considering the merits of the case, particularly in light of Board's Circular No. 4 of 2012?
Sections Cited
250, 90, 154, 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “B”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL
This appeal by assessee is directed against the order of NFAC, Delhi dated 21.05.2025 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal: -
1. Honourable commissioner of Income tax Appeal has erred in rejecting the application for condonation of delay.
Shiv Prakash Mohpal 2. The honourable commissioner of Income tax Appeal has erred in not deciding the appeal on merit and allowing deduction under Sec.90 amounting to Rs. 22,43,100.00.
3. On the facts and in the circumstances of the case this appeal should be decided on merits as the same tax which has already been paid in USA cannot be recovered twice.
4. Any other ground which may be taken at the time of appeal.
The brief facts of the case are that the assessee filed his return of income on 05.08.20214 declaring total income at Rs. 91,10,560/-. The case of the assessee was selected for limited scrutiny under CASS. During the assessment proceedings it was noticed by the AO that the assessee has claimed deduction of tax amount under section 90 of the Act amounting to Rs. 22,43,100/-. As per the AO the assessee has not furnished any evidence to substantiate this claim of Rs. 22, 43,100/-. Hence, the same was rejected and consequential amount of demand with tax raised against the assessee (although return income was accepted) the assessee being aggrieved preferred the appeal before the ld. CIT (A) who in turn dismissed the appeal of the assessee on the ground of delay, as there was a delay of 753 days in filing of appeal. The assessee being further aggrieved preferred the present appeal before us.
3. We have gone through the order of the AO, order of the ld. CIT (A) and submissions of the assessee. It is observed from the document filed before us that after the assessment order the assessee filed two applications u/s. 154 of the Act vide dated 09.01.2017 and 20.09.2018 relying on Board’s Circular No. 4 of 2012 Shiv Prakash Mohpal dated 20.06.2012. It is observed that these applications filed by the assessee were disposed of by the AO vide his order dated 11.02.2019 (disposal was given for application filed on 20.09.2018 and no order was passed for application filed on 09.01.2017) in his order passed u/s. 154 of the Act the AO dismissed the application of the assessee. Although, there was no appeal filed by the assessee against the dismissal of the order passed u/s. 154 of the Act.
4. As the assessee has relied upon Board’s Circular No. 4 of 2012 dated 20.06.2012, we deem it fit to reproduce the same to verify the applicability of the same in the case of the assessee as under:-
119 OF THE INCOME-TAX ACT, 1961 - INCOME-TAX AUTHORITIES - INSTRUCTIONS TO SUBORDINATE AUTHORITIES - AUTHORIZATION OF AOs IN CERTAIN CASES TO RECTIFY/RECONCILE DISPUTED ARREAR DEMAND CIRCULAR NO. 4 OF 2012, DATED 20-6-2012 The Board has been apprised that in certain cases the assessees have disputed the figures of arrear demands shown as outstanding against them in the records of the Assessing Officer. The Assessing Officers have expressed their inability to correct/reconcile such disputed arrear demand on the ground that the period of limitation of four years as provided under sub-section (7) of section 154 of the Act has expired. Further, in some cases, the Assessing Officers have uploaded such disputed arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Centre (CPC), Bengaluru which has resulted in adjustment of refund arising out of processing of Returns against such arrear demand which has been disputed by such assessees on the grounds that either such demand has already been paid or has been reduced/ eliminated in the appeals, etc. The arrear demands, in these cases also were not corrected / reconciled for the reason that the period of limitation of four years has elapsed.
2. The Board, in consideration of genuine hardship faced by the abovementioned class of cases, in exercise of powers vested under section 119(2)(b) of the Act, hereby authorize the Assessing Officers to make appropriate corrections in the figures of such disputed arrear demands after due verification/reconciliation and after examining the same on merits, whether by way of rectification or otherwise, irrespective of the fact that the period of limitation of four years as provided under section 154(7) of the Act has elapsed.
In view of the above the following has been decided: (a) In the category of cases where based on the figure of arrear demand uploaded by the Assessing Officer but disputed by the assessee, the Centralized Processing Canter (CPC), Bengaluru has already adjusted any refund arising out of processing of return, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits. After due verification of any such claim on merits, the Assessing Officer shall issue refund of the excess amount, if any, so adjusted by CPC due to inaccurate figures of arrear demand uploaded by the Assessing Officer. The Assessing Officer, in appropriate cases, will also upload amended figure of arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Centre (CPC), Bengaluru wherever there is balance outstanding arrear demand still remaining after aforesaid correction/ reconciliation. (b) In other cases, where the assessee disputes and requests for correction of the figures of arrear demand, whether uploaded on CPC or not uploaded and still lying in the records of the Assessing Officer, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits and after due verification of such claim, will make suitable correction in the figure of arrear demand in his records and upload the correct figure of arrear demand on CPC portal.
It is specifically clarified that these instructions would apply only to the cases where the figures of arrear demand is to be reconciled/ corrected - whether such arrear demand has been uploaded by the Assessing Officer on to Financial Accounting System (FAS) of CPC or it is still in the records of the Assessing Officer. This may be brought to the notice of all the officers of your CCA region.
We have gone through the circular relied upon by the assessee and reproduced (supra). Vide para 2 (in bold) it is categorically discussed and mentioned to deal with the cases like that of the assessee. It is found that the AO misinterpreted the above circular and dismissed the application of the assessee filed u/s.154 of the Act. If this application of the assessee would have been allowed earlier by the AO u/s. 154 of the Act, this issue would have been reached to its logical and legal conclusion.
Shiv Prakash Mohpal 6. As far as the decision of the ld. CIT (A) is concerned, as mentioned (supra) the appeal was delayed by 753 days hence dismissed in limine. Although the ld. CIT (A) also discussed the assessment order as well as the communications and order u/s. 154 of the Act. As far as the delay is concerned no doubt the period of delay is extra-ordinary but we took note of assessee’s application u/s. 154 of the Act and disposal thereafter by the AO (which is grossly wrong) and ultimately, the substantive right of the assessee is being defeated i.e. demand not enforceable/collectable imposed on the assessee. In view of this, especially when this fact was there on the record of ld. CIT (A) also, he should have been allowed the appeal of the assessee on merits after condonation of delay.
We have gone through the documents filed by the assessee issued by the Internal Revenue Service, United States Department of the Treasury. Which confirms the deductions of tax there and consequential claimed in India u/s. 90 of the Act. It is further observed that in the Assessment Year 2015-16 the claim of the assessee u/s. 90 of the Act has been accepted by the department even in absence of any evidence and rather mentioned therein that the same will be reversed in case any adverse information is received.
In view of above facts and considering the assessment order for Assessment Year 2015-16 we do not have any hesitation in allowing the grounds raised by the assessee by setting aside the order of the Ld. CIT(A) and the AO. The AO is directed to allow the claim of the assessee amounting to Rs. 22, 43,100/- u/s. 90 of the Act.
In the result, the appeal of the assessee is allowed.
The Order is pronounced in the open court on the 12th day of September 2025.