Nilangsu Mitra Vs ITO (ITAT Bangalore)
Bengaluru ITAT: Salary Is Taxable Only When It Becomes Due; Mere Reporting in Form 16 or Form 26AS Does Not Conclusively Establish Taxability
The Bengaluru Bench of the ITAT held that salary is chargeable to tax under section 15 when it becomes due from the employer, irrespective of its actual receipt. Accordingly, where an employee disputes the salary reported by the employer, the decisive question is whether the disputed amount had actually become due under the terms of employment, and not merely whether it was reflected in Form 16, Form 26AS or the employer’s reply under section 133(6).
In the present case, the assessee challenged the addition of ₹2,74,958 as salary income, contending that he had received only ₹50,000 and that the employer had erroneously reported a higher amount despite non-payment of salary. While the Revenue relied upon Form 16, Form 26AS and the employer’s confirmation, the Tribunal observed that non-receipt shown in the bank statement is not by itself decisive, since salary may still be taxable if it has become due. Equally, the employer’s reporting alone does not conclusively establish that the salary had in fact become due to the employee.
Since the determination of taxability depended upon whether the disputed salary had actually become due under the employment agreement, the Tribunal restored the matter to the Assessing Officer with directions to examine the terms of employment, verify the employer’s claim, consider the evidence produced by the assessee, and determine whether the disputed salary had legally become due before bringing it to tax. The appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. This appeal by the assessee, Mr. Nilangsu Mitra, for A.Y. 2020-21, is directed against the order dated 07-01-2026 of the learned CIT(A), whereby the assessee’s appeal against the reassessment order passed by the Income Tax Officer was dismissed.
