AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 209
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....agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA no. IT(IT)/2/JPR/2023 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are exactly identical except the difference in the amount in other assessment year. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. IT(IT)/2/JPR/2023 is taken as a lead case. Based on the above arguments we have also seen that for both the appeals grounds are similar, facts are similar and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds, and arguments from the folder in ITA No. IT(IT)/2/JPR/2023. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. IT(IT)/2/JPR/2023 on the following grounds; "1. That on the facts and in the circumstances of the case, the Ld. CIT ....
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....it (FTC) on the ground that the "appellant is not being a resident" is not liable to claim the Foreign Tax Credit (FTC) and at the same time by treating the Appellant's salary income as taxable in India even though the same was earned and received outside India and not liable to be taxed in India being non-resident. All of the above Grounds of Appeal are independent of and without prejudice to each other. The Appellant craves leave to add to or alter, by deletion, substitution, or otherwise, any or all of the foregoing grounds of appeal at or before the hearing, and to submit such statements, documents, and papers as may be considered necessary either at or before the appeal hearing." 5. The fact as culled out from the records is that the appellant, a nonresident Indian filed his return of income on 04.06.2018 offering salary income of Rs. 31,78,220/- and seeking foreign tax credit w.r.t. taxes paid in Kenya. The return was processed by CPC u/s 143(1) of the Act and intimation dated 25.11.2020 was issued wherein no adjustment was made to the returned income but the claim of foreign tax credit of Rs. 7,88,945/- made in the return was not allowed by the CPC. The ....
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....on 154 is very limited and it covers only prima facie, patent and obvious mistakes arising from record on issues which are not debatable. Whether certain income was taxable or not is a debatable issue and can be determined only upon detailed examination and enquiry. This issue is beyond the scope of rectification that can be made u/s 154 of the Act. The AO's impugned order is found to be justified on this count as well. 9.4 The appellant has raised a ground that he had bona fide intention and no mens rea was involved in his action. It is observed that this is not a matter involving prosecution or imposing penalty upon the appellant but a simple case of processing of return by CPC accepting the data himself provided by the appellant voluntarily in the return of income. This ground is dismissed. 9.5 In this case, the appellant has not filed a revised return. Without prejudice to this fact, it is observed that even a revised return could not be of any help to the appellant in view of the recent decision of Hon'ble Supreme Court in Pr. CIT v. Wipro Ltd. [2022] 140 taxmann.com 223, wherein the Hon'ble Supreme Court, in para 9 of the order, has laid down tha....
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....ny taxable income in India except interest income, which was also below the basic exemption limit. Therefore, as per section 139(1) of the Act, the Appellant was not even liable to file the return of income in India as the interest income of INR 2,318/- earned in India is much below the basic threshold exemption limit. 5. That it is important to mention that, being a layman non-resident Indian, the appellant had e-filed his return of income on July 04, 2018 vide acknowledgement no. 633341020040618 for the AY 2018-19 and inadvertently declared and offered to tax his foreign salary income from AMR Kenya (amounting to Rs. 31,78,220) as taxable income in India along with foreign tax credit w.r.t. taxes paid in Kenya. 6. That while processing the income-tax return under section 143(1) of the Act, the Revenue had categorically chosen a certain portion of information, which means thereby, the tax department had treated the Appellant's salary income as taxable in India even though the same was earned and received outside India and not liable to be taxed in India. At the same time, while processing the return of income, the tax department had completely ignored the for....
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.... income is chargeable to tax and not otherwise. 3. That on the facts and in the circumstances of the case, the Ld. CIT (A) and the Ld. AO without appreciating the fact that the mistake captured in the intimation order passed u/s 154 r.w.s 143(1) of the Act is based on the mistake apparent from the record in Income-Tax Returns. 3.1 That on the facts and circumstances of the case and in law, the Ld. CIT (A) and Ld. AO has erred in not appreciating the undisputed fact that the Appellant was not required to pay taxes in India, and the income disclosed by the Appellant was clearly a mistake visible on the record, making it eligible for rectification. 3.2 That on the facts and in the circumstances of the case and in law, the Ld. CIT (A)and Ld. AO has erred in not considering the fact that the case of the Appellant is a mistake that is clear, glaring, and which is capable of being ratified by the Ld. AO. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) and Ld. AO has erred in not considering the fact that the Intimation under section 143(1) has been received by the appellant on 25 November 2020 i.e., after the lapse ....
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....ion 143(1) of the Act. It is further submitted that the tax return filed by the appellant duly processed declaring his foreign-sourced salary income aggregating to INR 31,78,218/- from ARM-Kenya be taxable in India. However, the credit of the taxes paid by him aggregating to INR 7,88,945/- in a foreign country was not allowed. 1.5. That it is humbly submitted before the Hon'ble Tribunal that the Income which was considered to be taxable in India by the revenue was not even taxable income as the assessee was a non-resident for the tax purpose as per section 6 of the Income-tax Act and also the Income of the assessee was accrued and received outside India. 1.6. That it is humbly submitted before the Hon'ble Tribunal that the Hon'ble High court of Madhya Pradesh directed the revenue to refund the whole tax paid on the exempted/ not taxable income of the assessee in the case of Madan Gopal Singh Nagi v. Commissioner of Income-tax [2020] 113 taxmann.com 581 (Refer Pg no. 67-70 of the paper book for caselaw) The court held as under:- "16. The Court records and reiterates its absolute commitment to adherence of Rule of Law in its strictest terms, without carving....
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....ll Citizens safe and Secure and making Our life free from all such Dangers, where they don't think of "Technicalities" while Fighting with Enemies at the Front, as to whether pulling the Trigger of their Gun would invite a "Court of inquiry" and from this practical perspective this Court wants to express its concern for not putting too much of technicalities in such matters by those who are invested with Administrative Powers to deal and decide the affairs of the Personnel of Indian Armed Forces. The Court records and reiterates its absolute commitment to adherence of Rule of Law in its strictest terms, without carving out any exception to it, however it intends to convey its concern for the welfare of the "War Heros" who marvels at the Borders and within the Country, should not be unnecessarily Harassed or Troubled, for Technical adherence to some archaic administrative procedures having no thoughtful purpose sought to be achieved, while denying Legitimate Relief to the Members of the Armed Forces." 1.8.That the Hon'ble Supreme court in the case of Navnit Lal C. Javeri Versus K.K. Sen, Appellate Assistant Commissioner of Income-tax 1965] 56 ITR 198 (SC) (Refer Pg no. ....
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.... to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate cases therefore it is open to the assessee to bring facts to the notice of the concerned authority on the basis of the return furnished which may have a bearing on the quantum of the refund, such as those the assessee could have urged under section 237 of the Act. The concerned authority, for the limited purpose of calculating the amount to be refunded under section 240 of the Act, may take all such facts into consideration and calculate the amount to be refunded. So viewed an assessee will not be placed in a more disadvantages position than what he would have been, had an assessment been made in accordance with law." That the Hon'ble Supreme court in the present case while discussing the issue held that if the assessee made any mistake on account of ignorance and paid taxes for the income which was otherwise exempted from the tax the assessee may bring that fact to the knowledge of the authorities and the authorities may grant him appropriate relief. That it is humbly submitted that, in the present case also the appellant has made a bonafide mistake while and....
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.... (i.e., Kenya), the appellant being a non-resident as per section 5 of the Act, is not liable to pay tax on income earned outside India. 2.1 That on the fact and in the circumstances of the case, The Ld. CIT (A) and Ld. AO erred in fact as well as in law that income tax can be levied upon the appellant only if the income is chargeable to tax and not otherwise. Submissions 2.1.It is humbly submitted before the Hon'ble Tribunal that the appellant had left India for the purpose of employment with ARM Cement PLC, Nairobi, Kenya on 21st February 2013. Since then, the appellant has made various occasional short trips to India to meet his family and friends. (Kindly refer to Pg no 109-113 of the paper book for the appellant's offer letter) 2.2.That the appellant stayed in India for an aggregate of 122 days in the 4 previous years immediately preceding the previous year under question. (Please refer Pg no. 114-127 of the paper book for the passport, visa and summary chart for the same). Consequently, making the appellant a non-resident within the meaning of section 6 of the Act. The Relevant portion of section 6 of the Act is reproduced herein below: - Section 6 For th....
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.... (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1.-Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2.-For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India. That it is humbly submitted before the Hon'ble tribunal that the income of the appellant in the present case the income of the appellant is accrued, earned and received outside of India hence the present income of the appellant is not liable to pay tax in India. That it is further submitted before the Hon'ble Tribunal that as per section 139(1) of the Act, the Appellant was not even liable to file the return of income in India as the interest income of INR 2,318/- earned in India is much below the basic threshold exempti....
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....employment services were entirely rendered outside India. Hence, the salary is not earned for rendering services in India. Therefore, salary for the entire year is not taxable. In this connection, reliance is placed on the following decisions:- (a) DIT (Intnl. Taxation) v Prahlad Vijendra Rao (2011) 198 Taxman 551 (Kar.)/(2011)24 CTR Kar.) 107; (b) Ranjit Kumar Bose v ITO (1986) 18 ITD 230 (Calcutta ITAT); (c) CIT v Avtar Singh Wadhwan (2001) 247 ITR 260 (Bom.); (d) Sreenivas Kumar Sistla (AAR No.514 of 2000). For the aforesaid reasons, the salary which was received by the assessee for the services rendered in Japan for the period 1/4/2005 to 31/3/2006 is not liable to tax in India." The Hon'ble court while deciding the matter held that the salary income received for the services rendered in Japan will not be taxed in India. In the present case also the whole income of the appellant received outside India with respect to services rendered in Kenya, hence the income of the appellant cannot be subject to tax in India. 2.7.That the Hon'ble Bombay High Court in case of Balmukund Acharya vs DCIT [2009] 176 Taxman 316 (Bombay)] hel....
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....T (A) and Ld. AO has erred in not appreciating the undisputed fact that the Appellant was not required to pay taxes in India, and the income disclosed by the Appellant was clearly a mistake visible on the record, making it eligible for rectification. 3.2.That on the facts and in the circumstances of the case and in law, the Ld. CIT (A)and Ld. AO has erred in not considering the fact that the case of the Appellant is a mistake that is clear, glaring, and which is capable of being ratified by the Ld. AO. Submissions 3.1.It is humbly submitted before the Hon'ble Tribunal that, the appellant had filed a rectification application under section 154 of the Act via Email dated May 14, 2021, along with all the necessary documents (Kindly refer to Pg no. 161-163 of the paper book for the Email). In response to the said email, the appellant received an Email reply dated June 15, 2021, stating that the case of the appellant does not come under the purview of section 154 of the Act. 3.2. That it is further humbly submitted before the Hon'ble Tribunal that, the appellant through his consultant filed a detailed reply via email dated August 09, 2021, requesting the Ld. AO to consider t....
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....ion in extending the due benefit as laid under the remedial provisions of the Act. 3.6. That the Hon'ble Chennai ITAT in the case of M/s. Chinna Ponnu Ammal Trust vs DCIT [ITA No.414/Chny/2021] held as under: (Refer Pg no. 352-355 of paper book for caselaw) "6. After perusal of Form No.10B as placed on record, it could be seen that the assessee has applied an amount of Rs.5,55,57,015/- for the purpose of charitable trust. However, as per Explanation-3 to Sec.11(1), the disallowance of Rs.48,69,504/- u/s 40(a)(ia) would not be considered as application of income. Thus, the amount which has been applied for charitable purposes would be differential of two i.e., Rs.5,06,87,511/-. The assessee has earned income of Rs.5,17,39,216 out of which an amount of Rs.5,06,87,511/- (as computed above) has been applied for charitable purpose. The balance i.e., Rs.10,51,705/- would be the income of the assessee since as per Form No.10B, the assessee has not set-apart any amount for application is subsequent years. This income is the same which has been computed by the assessee in its computation of income and paid taxes thereon. Therefore, correctly applying the provisions of law, the a....
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....t is call of duty in a socially accountable governance. [Para 9]" That as per the above-mentioned view at the time of passing the adverse rectification order under section 154 of the Act, the Ld AO. had overlooked the underlying principles that the income tax proceedings are not adversarial proceedings and that for the purpose of section 154, it is immaterial as to who is responsible for the mistake. The fact that the mistake is attributed to the appellant does not obliterate the fact of the mistake or legal remedies for resolving such a mistake. Additionally, in this process, it is not open to the Revenue authorities to take advantage of mistakes committed by the assessee. 3.8.That the Hon'ble Delhi High Court in case of Vijay Gupta vs CIT [WP(C) 1572/2013] held as under: (Refer Pg no. 361-373 of paper book for caselaw) "38. In the present case, as per the Petitioner, in his return of income, he has erroneously offered to tax gains arising on sale of shares as short-term capital gains instead of same being long term capital gains exempt from tax. Subsequently, the petitioner on 14.01.2011 filed the application under section 154 of the Act. The assessing officer on 2....
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....ling of revised return was 31st March 2020, and the intimation under section 143(1) has been received to the assessee on 25 November 2020, thereby making it impossible for the assessee to even file a revised return. 4.2.That it is most humbly submitted before the Hon'ble Tribunal That the Hon'ble Gujrat High Court in case of S.R. Koshti vs CIT [[2005] 146 TAXMAN 335 (GUJ.)] held as under: (Refer Pg no. 374-382 of paper book for caselaw) "18. The position is, therefore, that, regardless of whether the revised return was filed or not, once an assessee is in a position to show that the assessee has been over assessed under the provisions of the Act, regardless of whether the over-assessment is as a result of assessee's own mistake or otherwise, the CIT has the power to correct such an assessment under section 264(1) of the Act. If the CIT refuses to give relief to the assessee, in such circumstances, he would be acting de hors the powers under the Act and the provisions of the Act and, therefore is duty-bound to give relief to an assessee, where due, in accordance with the provisions of the Act." That irrespective of the fact that who has made the mistake once the asses....
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....rming the action of Ld. AO in considering the facts of the case as per their own convenience and disallow the Foreign Tax Credit (FTC) on the ground that the "appellant is not being a resident" is not liable to claim the Foreign Tax Credit (FTC) and at the same time by treating the Appellant's salary income as taxable in India even though the same was earned and received outside India and not liable to be taxed in India being non-resident. Submissions 5.1.That it is humbly submitted before the Hon'ble Tribunal That the revenue rejects the claim of FTC of the assessee as the assessee was the non-resident but on the other hand the revenue held the income of the assessee taxable in India, despite the fact that the whole income accrued, arise, and received outside India, and the assessee is a non-resident for the tax purpose in India. 5.2.That the Hon'ble High Court of Bombay in the case of CIT v Avtar Singh Wadhwan (2001) 247 ITR 260 (Bombay HC) held that the services rendered outside India are not taxable in India in case of non-resident. The relevant extract of the said judgment is as under (Refer to Pg no. 386-389 of the paper book for caselaw) "We find merit in t....
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....nally filed, the right to claim total exemption from sales tax was not based on the plea of promissory estoppel which was introduced only by way of amendments. Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law. Over a hundred and thirty years ago, Maule, J., pointed out in Martindale v. Falkner, (1846) 2 CB 706: "There is no presumption in this country that every person knows the law: it would be contrary to common sense and reason if it were so". Scrutton, LJ„ also once said : "It is impossible to know all the statutory law, and not very possible to know all the common law". But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans v. Bartlam, 1937 AC 473"...the fact is that there is not and never has been a presumption that everyone knows the law. There is the rule that ignorance of the law does not excuse a maxim of very different scope and application." It is, therefore, not possible to presume, in the absence of any material placed before....
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....t as well, as discussed above. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same." That in the case in hand also the authorities should help the assessee and collect the taxes which is legitimate. 5.5.That the same proposition has been affirmed in the case of Assam Company (India) Ltd. vs Commissioner Of Income-Tax 2002 256 ITR 423 Gauhati (Refer Pg no. 425-437 of the paper book for caselaw) "We consider it to be a solemn duty of the taxing authorities to correctly assess the tax liability of an assessee by duly following the relevant provision of law and therefore do not countenance an inflexible and mechanical adherence to the law of procedure and in the process deny an assessee a benefit to which it is otherwise entitled in law. In our considered opinion, that could not have been the purpose of framing the Appellate Tribunal Rules. There cannot be any estoppel against law. In this regard, we are reinforced by the observations of the apex court in Sangram Singh v. Election Tribunal, AIR 1955 SC 425, with reference to the Code of Civil Procedure as under (page 429) : "Now a code of procedure must be regarded as such. It is '....
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....oted that the assessee is a non-resident Indian earning income as salary from Keniya. The assessee has in pursuance of e-mail responded and filed ITR wherein he has inadvertently shown the income of salary earned out of India while filling the ITR. Both the parties have not disputed before us that the assessee is a non-resident Indian and earning income from salary sourced and earned from Keniya. As it is also not disputed that the assessee on bona fide belief wrongly shown on salary income which was charged to tax inadvertently for which he has requested the ld. AO to rectify order as per provisions of section 154 of the Act. The ld. AO dismissed the rectification application filed by the assessee on ground that the assessee has not disputed that the adjustment made u/s 143(1) of the Act. The Bench noted it would be two technical for non-resident Indian to go into the intricacy of Indian income tax once the assessee has fairly moved an application u/s 154 of the Act. The ld. AO should have guided the non-resident and have passed the order on merits. The Bench has also noted that ld. CIT(A) has dismissed the appeal of the assessee only on the reason that the scope of section 154 of....