Ajit Kumar Vs ACIT (International Taxation) (ITAT Bangalore)
ITAT Bangalore allowed the appeal filed by an assessee against the final assessment order passed under section 147 read with section 144C(13) of the Income Tax Act, 1961 for Assessment Year 2015-16. The assessee, an NRI individual, had not originally filed a return of income and his case was reopened after transactions were flagged under the verification module of the Insight Portal.
In response to notice under section 148A(d), the assessee filed a return declaring total income of Rs.5,04,279/- and claimed a refund of Rs.2,63,670/-. During reassessment proceedings, the assessee furnished documents relating to purchase and subsequent sale of immovable property and computed a resulting capital loss of Rs.43,04,205/-.
The Assessing Officer denied the refund, taking the view that reassessment proceedings were for the benefit of the Revenue and that a refund could not be claimed where the assessee had not originally filed a return under section 139. The DRP dismissed the assessee’s objections and the final assessment order was passed accordingly. Before the Tribunal, the assessee submitted that there was no dispute regarding the TDS deducted by the buyer and reflected in Form 26AS, and that the TDS represented income tax paid by the deductor on the assessee’s behalf. ITAT Bangalore noted that there was no dispute regarding the TDS and held that the TDS amount appearing in Form 26AS could not be treated as escapement of income since the amount was already lying with the Income Tax Department.
The Tribunal held that the TDS credit was eligible to be set off against any tax liability and that, where the TDS exceeded the tax liability, the assessee was eligible for refund of the excess income tax payment. The lower authorities’ view was therefore held to be unjustified. The Assessing Officer was directed to give TDS credit/tax refund after due verification. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal filed by the assessee is against the final assessment order passed by the CIT(A), under section 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter called ‘the Act’), for the Assessment Year 2015-16.
2. Assessee is a NRI individual and did not file return of income for the impugned Assessment Year. His case was reopened as the assessee was flagged under the verification module of Insight Portal (in accordance with risk management strategy). From the Insight Portal, it was observed that during the Assessment Year, assessee had made the following transactions:
3. But it was also observed that assessee did not file his return of income. Accordingly, a notice under section 148A(d) of the Act, was issued to the assessee on 29.04.2022, after obtaining necessary approval. In response to the notice, assessee filed return of income on 08.07.2022 declaring total income of Rs.5,04,279/- and assessee claimed refund of Rs.2,63,670/-. Notice under section 143(2) of the Act was issued to the assessee on 27.06.2023. Thereafter, other statutory notices were issued on different dates. During the course of reassessment proceedings, it was observed that the assessee had purchased immovable property in 2008 for a consideration of Rs.21,72,722/- as land cost and paid Rs.78,76345/- as construction cost and the necessary documents were furnished. Loan document for Rs.79,44,679/- was also furnished. In the Assessment Year, the said property was sold at Rs.1,33,00,000/- but the assessee did not file return of income accordingly a show cause notice was issued tp the assessee stating that the assessee has not offered capital gain for tax. The assessee furnished reply on 14.12.2023 working of capital gain on sale of property which is the resulting loss of Rs.43,04,205/-. The AO observed that while filing response to the notice under section 148 of the Act, assessee claimed refund of Rs.2,63,670/-. The AO observed that the reassessment proceedings are for the benefit of the Revenue and not for the benefit of the assessee if the assessee had not stated while claiming by filing original return of income under section 139 of the Act assessee cannot make a claim the benefit under section 148 of the Act. In support of his view, he relied on the judgment of Hon’ble Madras High Court in the case of Chettinad Corporation Pvt. Ltd., Vs. CIT (Madras). The AO relied on section 239(1) of the Act and observed that the assessee can claim refund only after filing return of income (RoI) as per section 139 of the Act (RoI filed in response to notice under section 148 of the Act). Therefore, the assessee is not eligible for refund. Accordingly, the AO passed the Order under section 144C(1) of the Act on 08.03.2024.
4. Aggrieved from the draft Order, assessee filed objection before the learned DRP. The learned DRP passed Order under section 144C(5) of the Act on 08.11.2024, dismissing the objections raised before them. In pursuant to the direction of DRP, final Assessment Order was passed on 30.12.2024.
5. Aggrieved from the above final Assessment Order, assessee filed appeal before us. The learned Counsel reiterated the submissions made before the lower authorities and submitted that the return of income filed by the assessee was accepted and loss incurred and transfer of capital asset was also accepted. There is no addition on the transaction and the TDS was deducted by the buyer of the said property which is appearing in Form No.26AS, the same has been offered in the return of income filed under section 148 of the Act. Therefore, assessee is eligible for refund. It is income tax paid by the deductor on behalf of the assessee. Therefore, whatever the TDS was appearing in Form 26AS, the Income Tax Department is bound to give tax credit and submitted that the judgment relied on by the Revenue authorities are not applicable. However, he accepted that the provision of section 148 of the Act is the benefit to the Income Tax Department for assessing the income but not to deny TDS credit which was paid as income tax by the deductor on behalf of the assessee.
6. On the other hand, learned DR relied on the Order of the lower authorities and submitted that assessee did not file return of income under section 139(1) of the Act. Therefore, assessee is not eligible for claim of refund. The lower authorities have discussed the issue in detail and relied on the judgment. Therefore, he requested that the Order of the lower authorities should be upheld.
7. Considering the rival submissions and on perusal of the entire material available on record and Orders of authorities below, we noted that have huge transaction incurred during the year, the assessee did not file his return of income and he filed return of income only in response to notice issued under section 148 of the Act and claimed refund of the TDS as appearing in Form No.26AS. There is no dispute regarding TDS. The dispute here is only that the assessee is not eligible to claim refund in the return filed under section 148 of the Act. However, this TDS was paid by the deductor on behalf of the assessee as income tax payment which is part of the income appearing in the Form No. 26AS, therefore, it canot be said that it was a escapement of income,since, the TDS deduction was lying with the Income TAX Department. Therefore, whatever the TDS made and appearing as TDS credit in Form No.26AS is eligible to set off, if any tax liability arises and if there is any over and above the tax liability, the assessee is eligible for refund of excess income tax payment. Therefore, the view taken by the lower authorities are not justified. The AO is directed to give TDS credit / tax refund after due verification.
8. In the result, appeal filed by the assessee is allowed.
Pronounced in the court on the date mentioned on the caption page.
