2023 (4) TMI 62 - AT - Income Tax

Revision u/s 263 - Relief u/s 90 read with Rule 128 - As per CIT AO has not examined the tax credit vis- -vis sub-rule 8 of Rule 128 and Form No. 67 also not considered - PCIT directed the AO to deny the relief as Form No. 67 was not filed as required under Rule 128(8) - HELD THAT - As AO has made a detailed enquiry before concluding the assessment under section 143(3) - in so far as relief claimed as per Form No. 67 r.w. Rule 128(8) is concerned, the AO has not examined. It is also a fact that the AO has not followed the Notification No. 9 dated 19.09.2017 issued by the CBDT. Ths the order passed by AO cannot be said that no enquiry was made, in fact, detailed enquiry was made. However, no enquiry was made in respect of Form No. 67 vis- -vis rule 128(8). It cannot be said that the assessment order was totally erroneous and prejudicial to the interest of Revenue. Instead of setting aside the order passed under section 143(3) of the Act and directing the AO to determine the quantum of relief that could be availed under sections 90/91 of the Act and deny relief as Form 67 was not filed as required under Rule 128(8) , PCIT should have been directed the AO to call for the details and decide the issue in accordance with law. PCIT was not correct to direct the AO to deny the relief claimed as per Form No. 67 on the ground that Form No. 67 was not filed in time is not correct. Therefore, we hereby modify the order passed by the ld. PCIT and direct the Assessing Officer to redo the assessment in accordance with law by affording reasonable opportunity of being heard to the assessee without influence of the order passed by the ld. PCIT - Appeal filed by the assessee is partly allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Merits of the case regarding the assessment order and foreign tax credit claim.

Summary:

1. Condonation of Delay:
The appeal filed by the assessee was delayed by 284 days. The assessee requested condonation of delay, attributing it to the advice of their Chartered Accountant (CA), Mrs. K. Rajalakshmi, who misunderstood the order of the Principal Commissioner of Income Tax (PCIT) as merely setting aside the assessment for verification without requiring an appeal. Both the assessee and the CA filed affidavits supporting this claim. The Tribunal, referencing the case of Vijay Vishin Meghani v. DCIT [2017] 398 ITR 250 (Bom) and other relevant judgments, condoned the delay, finding sufficient cause and admitting the appeal for adjudication.

2. Merits of the Case:
The original assessment was completed under section 143(3) of the Income Tax Act, 1961, allowing the assessee's claim for foreign tax credit of Rs. 1,20,93,788 under section 90. The PCIT, upon review, found that Form No. 67 required for claiming the credit was not filed by the due date as per Rule 128(8) and issued a show-cause notice. The PCIT concluded that the assessment order was erroneous and prejudicial to the interests of Revenue, directing the Assessing Officer (AO) to deny the relief due to non-compliance with the filing requirement.

The Tribunal noted that the AO had made detailed inquiries during the assessment but had not specifically examined the compliance with Form No. 67 and Rule 128(8). The Tribunal found that while the AO's order was not entirely erroneous, it lacked specific inquiry into the Form No. 67 compliance. Therefore, the Tribunal modified the PCIT's order, directing the AO to redo the assessment in accordance with the law, providing the assessee a reasonable opportunity to be heard, without being influenced by the PCIT's directive to deny the relief outright.

Conclusion:
The appeal was partly allowed for statistical purposes, with the Tribunal directing a reassessment by the AO to properly examine the foreign tax credit claim in compliance with relevant rules and notifications. The order was pronounced on 31st March 2023 at Chennai.