2021 (11) TMI 306 - AT - Income Tax

Claim of modification in salary income during the assessment proceedings - Assessee changing income and reducing income offered in the return of income without filing the Revised return of income - assessee has inadvertently included the higher income in the return of income filed and withholding tax - HELD THAT - Contentions of the Ld.AR that that the assessee should not be made to pay the tax on higher salary but only actual salary has to be taxed - mistake on the part of the employee is not a wanton act but due to oversight the correct income could not be considered in the return of income filed. We found the submissions of the Ld.AR are realistic. The assessee should not be deprived of his legitimate claim and tax has to be levied on the income actually generated. We considering the overall facts, circumstances and judicial decisions are inclined to grant one more opportunity to the assessee to substantiate the claim. Accordingly, the disputed issue is restored to the file of the AO for limited purpose and the A.O shall examine and pass the order. We allow the grounds of appeal of the assessee for statistical purpose.

Summary

Issues:
1. Discrepancy in salary income disclosure and withholding tax claim.
2. Validity of reducing salary income without filing a revised return.
3. Appeal against the order of the Commissioner of Income Tax (Appeals).

Issue 1: Discrepancy in salary income disclosure and withholding tax claim
The appellant, a salaried employee, filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals), challenging the decision not to reduce the salary income by ?28,66,662 and not allowing the addition of withholding tax of ?31,707. The appellant inadvertently declared director's remuneration and withholding tax in US Dollar instead of Singapore Dollar. The Assessing Officer (AO) found the claim unacceptable as the income cannot be changed without filing a revised return. The CIT(A) upheld the AO's decision, leading to the appeal before the Tribunal.

Issue 2: Validity of reducing salary income without filing a revised return
During the hearing, the appellant explained the genuine mistake in including higher income and withholding tax in the return. The actual director's remuneration was lower than declared, and the appellant requested a reduction to assess the correct income. The Ld. DR objected, stating that relief cannot be claimed without filing a revised return. The Tribunal considered the submissions, noting the discrepancy in income disclosure and the genuine mistake made by the appellant due to oversight. The Tribunal granted the appellant an opportunity to substantiate the claim, directing the AO to reexamine the issue.

Issue 3: Appeal against the order of the Commissioner of Income Tax (Appeals)
The Tribunal, after considering the facts, circumstances, and judicial decisions, allowed the grounds of appeal for statistical purposes. The disputed issue was restored to the AO for further examination and decision. The appeal of the appellant was treated as allowed for statistical purposes, providing relief to the appellant in addressing the discrepancy in income disclosure and withholding tax claim.

This detailed analysis of the judgment highlights the key issues, arguments presented, decisions made by the authorities, and the final outcome in favor of the appellant for further examination by the Assessing Officer.