2021 (6) TMI 706 - AT - Income Tax

Reopening of assessment u/s 147 - Accrual of salary income in India - Addition on account of stamp duty - assessee submitted that when a citizen of India leaves the country for employment and stays outside India for 182 days or more, he becomes a non-resident and income received from services rendered outside India cannot accrue or arise or deemed to accrue or arise in India and cannot be taxed in India - HELD THAT - No substance in the argument of the ld. Counsel. The AO has made addition being the stamp duty incurred for purchase of the above property. Therefore, it cannot be said that no addition has been made on account of reasons for which the case was reopened. The ld.CIT(A) while deciding the issue has given justifiable reasons while upholding the validity of the reassessment proceedings. The ld. Counsel for the assessee also could not controvert the findings/reasonings given by the CIT(A) on this issue. Accordingly, the order of the CIT(A) upholding the validity of the reassessment proceedings is upheld. Addition of salary - Since the assessee, in the instant case, had stayed outside India for more than 182 days and had received salary from a foreign employer outside India for services rendered outside India, therefore, respectfully following the decision of VDESH KUMAR VERSUS DCIT, CIRCLE-1, GHAZIABAD 2018 (8) TMI 58 - ITAT DELHI set aside the order of the CIT(A) and direct the AO to delete the addition. Addition on account of stamp duty - The same also is liable to be deleted under the facts and circumstances of the case. Admittedly, the AO has not made any addition on account of purchase of immovable property meaning thereby he has accepted the source of that huge amount. Amount towards the stamp duty is concerned, a perusal of the assessment order shows that the amount was paid by Mrs. Vandana Bhardwaj as per the ledger account of M/s Landcraft Developers Pvt. Ltd. which was reproduced by the AO in the body of the assessment order. Therefore, when the money was paid by Mrs. Vandana Bhardwaj, there was no reason for making the addition in the hands of the assessee. CIT(A) had not given any cogent reason as to why 50% shall be added in the hands of the assessee when the payment was admittedly made by Mrs. Vandana Bhardwaj, a fact brought on record by the AO himself. In any case, if the order of the CIT(A) is accepted, then, 50% of the investment in the property also should be borne by the wife of the assessee, Mrs. Vandna Bhardwaj. Thus, the finding of the CIT(A) becomes contradictory. Since the AO himself has given a finding that Mrs. Vandana Bhardwaj had made the cash payment on 03.12.2010 as per the records maintained by M/s Landcraft Developers Pvt. Ltd., therefore, I do not find any reason to sustain 50% addition in the hands of the assessee. We set aside the order of the CIT(A) on this issue and direct the AO to delete the addition. Appeal filed by the assessee is partly allowed.

Summary

Issues Involved:
1. Validity of Reassessment Proceedings
2. Taxability of Salary Income Earned Abroad
3. Addition on Account of Stamp Duty Payment

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings:
The assessee challenged the validity of the reassessment proceedings initiated by the Assessing Officer (AO) under section 147 of the Income Tax Act (IT Act). The AO reopened the assessment based on information that the assessee had purchased an immovable property amounting to ?49,97,152/- during the financial year 2010-11. The AO issued a notice under section 148 on 31.03.2018. The assessee argued that since no addition was made on the basis of the reasons recorded for reopening the assessment, the AO lost jurisdiction to assess income under other heads. The Tribunal, however, upheld the validity of the reassessment proceedings, noting that the AO had made an addition of ?3,50,000/- on account of stamp duty for the purchase of the property, which was related to the reason for reopening the assessment. The Tribunal found no substance in the argument that the reassessment proceedings should be invalidated.

2. Taxability of Salary Income Earned Abroad:
The AO included ?19,25,067/- as salary income earned by the assessee from a foreign employer, arguing that the assessee was a resident in India and the income was taxable in India. The assessee contended that he was a non-resident during the relevant financial year, having stayed outside India for more than 187 days, and therefore, the salary income earned abroad was not taxable in India. The Tribunal referred to section 6 of the IT Act and various judicial precedents, concluding that the assessee was a non-resident since he stayed outside India for more than 182 days. The Tribunal held that the salary income earned abroad and received outside India was not taxable in India, setting aside the addition made by the AO and upheld by the CIT(A).

3. Addition on Account of Stamp Duty Payment:
The AO made an addition of ?3,50,000/- as unexplained investment under section 69A of the IT Act, related to stamp duty for the purchase of the property. The CIT(A) reduced this addition to ?1,75,000/-, noting that the property was jointly owned by the assessee and his wife, and thus, the investment should be shared equally. The assessee argued that the stamp duty was paid by his wife, Mrs. Vandana Bhardwaj, as evidenced by the records of M/s Landcraft Developers Pvt. Ltd. The Tribunal agreed with the assessee, noting that the payment was indeed made by Mrs. Vandana Bhardwaj and there was no reason to attribute 50% of the payment to the assessee. The Tribunal directed the AO to delete the addition, finding the CIT(A)'s decision contradictory.

Conclusion:
The Tribunal partly allowed the appeal filed by the assessee. It upheld the validity of the reassessment proceedings but directed the deletion of the addition related to the salary income earned abroad and the stamp duty payment. The decision was pronounced in the open court on 14.06.2021.