2023 (7) TMI 1041 - AT - Income Tax

Long Term Capital Gains on the sale of property - assessment in the hand of assessee or his wife - double taxation - HELD THAT - Since the assessee has brought on record that the assessee s wife has paid the relevant tax in her return of income it shows that even though by mistake the assessee has remitted the relevant tax on this transaction - income was not declared by the original person and paid the relevant tax by the proper person. We are of the view that the same transaction cannot be charged to tax twice. Therefore, we are directing the AO who is aware of the fact that assessee has declared the relevant transaction in the hands of the assessee s wife, therefore we direct the AO to intimate AO ITO Ward 16(2)(4) of the assessee s wife to revise the assessment in case assessment has been already completed or initiate the proceeding of re-assessment and reject the capital gain declared by her in her return of income and initiate the refund along with interest till this date and as soon as the refund is initiated the present Assessing Officer may initiate the recovery of demand arising out of the assessment in the present case. The issue has to be dealt only by the tax authorities and the credit in the hands of the assessee s wife has to be refunded are adjusted against the demand raised in the hands of the assessee. The method by which it has to be carried out left to the tax authorities without there being any burden on the assessee. Since the assessee has paid the due tax on this transaction. The legislature intention is not to tax twice on the same transaction. Therefore, we partly allowed the grounds of appeal raised by the assessee. Accordingly, Ground No. 1 to 4 are partly allowed Reopening of assessment u/s. 148 - We observe that the submissions of the assessee and the grounds of appeal raised by the assessee are not proper considering the fact that the return of income filed by the assessee is defective, therefore the finding given by the Ld. DRP, in our view, are proper on record. Accordingly, Ground No. 3 raised by the assessee is dismissed.

Summary

Issues involved:
The judgment involves issues related to the reassessment of income tax for the assessment year 2013-14, specifically concerning the declaration of capital gains on the sale of properties, the authority to sign objections before the DRP, the concept of double taxation, and the proper assessment of income in the hands of the right person.

Reassessment of Income Tax:
The appeal was filed against the order of the Learned Commissioner of Income Tax for the assessment year 2013-14. The Assessing Officer observed that the assessee had sold two properties during the relevant year but had not declared one of the transactions in the return of income. This led to the issuance of notice under section 148 of the Income-tax Act, 1961. The Assessing Officer subsequently made additions in the assessment order, which the assessee contested before the DRP. The DRP dismissed the grounds raised by the assessee, leading to the appeal before the ITAT.

Signing Objections before DRP:
The assessee had raised objections before the DRP, but the DRP noted that the objections were signed by the authorized representative and not by the assessee. The DRP also rejected the submissions made by the assessee regarding the tax implications and relied on judicial pronouncements to support its decision. The DRP emphasized the importance of levying tax on the right person liable for the tax, as highlighted in relevant case laws.

Double Taxation and Proper Assessment:
During the appeal, it was revealed that the capital gain income from the property sale was mistakenly declared in the return of the assessee's wife instead of the assessee. Both the assessee and his wife were Non-Resident Indians (NRIs) and fell under the same tax bracket. The ITAT observed that while the tax had been paid by the wife, the income had to be assessed in the hands of the assessee, the rightful owner. The ITAT directed the Assessing Officer to rectify the assessment by having the wife revise her return and refund any excess tax paid, ensuring no double taxation occurred.

Conclusion:
The ITAT partly allowed the grounds of appeal raised by the assessee, directing the Assessing Officer to handle the adjustment and refund process without burdening the assessee. The ITAT emphasized that the intention was not to tax the same transaction twice and dismissed certain grounds of appeal related to defective filing of the return. The appeal by the assessee was partly allowed, ensuring proper assessment and avoiding double taxation, with the direction to the tax authorities to handle the adjustments appropriately.