2014 (10) TMI 349 - AT - Income Tax

Validity of cross objection filed by the legal heir of the assessee - Authorization by the wife of the deceased assessee - Held that - the demise of Sh. Sudhir Sareen with the request to bring Sh. Siddharth Sareen as his legal heir on record - The request was acted upon and assessment was concluded after bringing Sh. Siddharth Sareen as legal heir on record by the AO - the arguments of the CIT DR dehors facts cannot be accepted - Sh. Siddharth Sareen is accordingly taken as the sole legal heir of the Late Sh. Sudhir Sareen in the absence of any fact or evidence to the contrary placed on record by the Ld. CIT DR Decided against revenue. Condonation of delay of 855 days - Whether on facts the delay of 855 days in filing the cross-objections can be condoned or not Held that - Sh. Sudhir Sareen was only physically unwell which did not make him mentally incapacitated as a little out of sync with how families are normally bound by emotions of love care and consideration - The scenario of a family battling with natural tragedies on account of illness and subsequent demise resulting in a period of grieving confusion and loss cannot be expected to exhibit a level of alertness towards its financial affairs - the delay of 855 days in filing the Cross objection is condoned. Status of the assessee - Resident & Ordinarily Resident or Non resident - Whether the status of the assessee can be varied for 2002-03 to 2008-09 assessment years where admittedly no incriminating material was found? - Held that - The status on facts of the present case determined by the CIT(A) as NRI has been upheld as departmental appeals have been dismissed as admittedly nothing has been found in the search. The status change accordingly on facts was not correctly made by the AO. - Decided in favor of assessee. Inclusion of sum of being amounts remitted from abroad and a gift to the maternal grand- daughter Sesha Gupta out of his overseas bank account Held that - Since the additions has been deleted by the CIT(A) which stood made only on account of the status change made in the assessment order dehors facts and the Cross Objections filed are partly supportive of the impugned orders and the impugned orders in each of the years stands upheld in toto the Cross Objections filed are partly allowed Decided in favour of assessee.

Issues Involved:
1. Legitimacy of filing Cross-objections by legal heir.
2. Condonation of delay in filing Cross-objections.
3. Validity of Cross-objections in absence of incriminating material found during the search.
4. Change of residential status for assessment years 2002-03 to 2008-09.
5. Admissibility of secondary evidence in absence of original passport.
6. Applicability of Explanation (b) to section 6(1)(c) of the Income Tax Act.
7. Validity of additions made by the AO based on change of residential status.

Issue-wise Detailed Analysis:

Issue 1: Legitimacy of filing Cross-objections by legal heir
The Tribunal found the departmental objections to Sh. Siddharth Sareen filing Cross-objections as legal heir of Late Sh. Sudhir Sareen unsustainable. The Tribunal noted that no effort was made by the department to bring the correct legal heirs on record. The return filed for Late Sh. Sudhir Sareen by Sh. Siddharth Sareen as legal heir was accepted by the AO, supporting the conclusion that Sh. Siddharth Sareen is the legal heir. The Tribunal held that Sh. Siddharth Sareen is the sole legal heir of Late Sh. Sudhir Sareen in the absence of any contrary evidence.

Issue 2: Condonation of delay in filing Cross-objections
The Tribunal condoned the delay of 855 days in filing the Cross-objections, finding the explanation offered by the legal heir satisfactory. The delay was attributed to the prolonged illness and subsequent death of the original assessee, Sh. Sudhir Sareen, and the subsequent period of confusion and grieving faced by the family. The Tribunal found the explanation reasonable and consistent with the judicial precedent in the case of Siddharth Sareen.

Issue 3: Validity of Cross-objections in absence of incriminating material found during the search
The Tribunal deferred its decision on this issue for the time being. It noted that the assessments for 2002-03 to 2005-06 assessment years stood concluded and no incriminating material was found during the search. The Tribunal acknowledged the judicial precedent in the case of Siddharth Sareen and other relevant cases but decided to address this issue after considering the other issues.

Issue 4: Change of residential status for assessment years 2002-03 to 2008-09
The Tribunal found that the assessee had adequately demonstrated his status as a Non-Resident Indian (NRI) through various evidences, including the Employment Agreement, UAE resident visa, and consistent filing of returns over the years. The Tribunal rejected the department's objections regarding the genuineness of the Employment Agreement and the loss of the original passport. The Tribunal upheld the CIT(A)'s finding that the assessee was settled abroad and visited India for managing his investments and being with his family.

Issue 5: Admissibility of secondary evidence in absence of original passport
The Tribunal held that the secondary evidence by way of notarized photocopy of the original passport was admissible. It found that the notarized copies were produced in response to the oral request of the ADI and were consistent with the information disclosed in the returns filed over the years. The Tribunal noted that the loss of the original passport was genuine and supported by the opinion of a London Solicitor. The Tribunal concluded that the secondary evidence could not be discarded.

Issue 6: Applicability of Explanation (b) to section 6(1)(c) of the Income Tax Act
The Tribunal found that the assessee fell within the category of "being outside India" as considered in Explanation (b) to section 6(1)(c). The Tribunal rejected the department's argument that "visit" means a singular visit and not multiple visits. It relied on the judicial precedent in the case of Suresh Nanda, which held that "visit" includes multiple visits. The Tribunal upheld the CIT(A)'s finding that the assessee was a non-resident during the relevant years.

Issue 7: Validity of additions made by the AO based on change of residential status
The Tribunal found that the additions made by the AO were solely based on the change of residential status, which was not justified. The Tribunal upheld the CIT(A)'s deletion of the additions, concluding that the amounts remitted from abroad were not taxable in India as the assessee was a non-resident. The Tribunal held that the additions made by the AO could not be sustained.

Conclusion:
The Tribunal dismissed the departmental appeals and partly allowed the Cross-objections filed by the legal heir. The Tribunal upheld the CIT(A)'s finding that the assessee was a non-resident during the relevant years and deleted the additions made by the AO based on the change of residential status.

← Previous Next →