2022 (6) TMI 1432 - AT - Income Tax

Addition to income declared - difference in figures between Schedule SI (Income that are subject to a special rate of tax) and Schedule CG (capital gain) and Schedule OS (Other source) - HELD THAT - AO has ignored schedule BFLA (Brought Forward Loss Adjustment) while making addition. In Schedule CG the STCG on Shares/Units on which STT was paid which is to be taxed only at 15% is shown as Rs.1,41,384 whereas this figure after BFLA of Rs.33,007 is Rs.1,08,733. Similarly in Schedule SI, LTCG on others of Rs.5,52,538 is claimed as taxable at 20% and the corresponding figure in Schedule CG is shown at Rs.7,62,220. This figure after BFLA of Rs.2,09,682 is Rs.5,52,538. Thus it is clear that if schedule BFLA is considered then there will not be any discrepancy. Assessee did not participate in the proceedings before CIT(A) and could not explain this aspect. This aspect requires examination by the AO and therefore the issue has to be set aside to the AO for fresh consideration. AO will look into the schedule BFLA also and thereafter decide the issue afresh after affording the assessee opportunity of being heard. Credit for taxes paid in US - As one of the requirements is that the assessee has to file Form 67 which was filed before the AO only after the date of intimation u/s 143(1). Filing of Form No.67 is only a procedural requirement and therefore that cannot be the basis to deny credit for taxes paid in US. AO shall consider the claim of the assessee for credit for taxes paid in USA also in the set aside proceedings. AO will afford opportunity of being heard to the assessee in the set aside proceedings. Allow appeal of the assessee for statistical purposes.

Summary

Issues:
1. Discrepancy in figures between Schedule SI, Schedule CG, and Schedule OS.
2. Denial of tax credit under section 90 of the Income Tax Act for dividend income received in the USA.

Analysis:
1. The assessee, an individual, filed a return of income for Assessment Year 2018-19, declaring various sources of income. The Assessing Officer (AO) made adjustments to the total income, including an addition of Rs.2,35,108 due to a discrepancy in figures between Schedule SI, Schedule CG, and Schedule OS. The First Appellate Authority upheld the AO's decision. The assessee appealed to the Tribunal, focusing on this specific variation. The Tribunal observed that the discrepancy arose due to the AO ignoring Schedule BFLA (Brought Forward Loss Adjustment). The Tribunal directed the AO to re-examine the issue, considering Schedule BFLA, and provide the assessee with a hearing opportunity.

2. Regarding the tax credit under section 90 of the Act for taxes paid in the USA on dividend income, the AO had denied the credit due to a procedural issue related to the late filing of Form 67. The Tribunal noted that the filing of Form 67 is a procedural requirement and should not be the sole reason to deny the tax credit. The Tribunal directed the AO to reconsider the claim for tax credit in the fresh proceedings, ensuring that the assessee is given a chance to present their case. The Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the importance of providing a fair opportunity to be heard.

In conclusion, the Tribunal addressed the issues raised by the assessee regarding the discrepancy in income figures and the denial of tax credit under section 90 of the Income Tax Act. The Tribunal directed the AO to re-examine both matters, considering all relevant aspects and providing the assessee with a fair hearing opportunity. The appeal of the assessee was treated as allowed for statistical purposes, highlighting the need for procedural fairness in tax assessments.