2024 (1) TMI 486 - AT - Income Tax

Determining the salary income from the ESOPs exercised - addition on account of salary without considering and appreciating Form 16 issued by the Employer - HELD THAT - No addition is called for on this account and that the Assessing Officer has erred in not following the directions of the ld. DRP in true spirit and erroneously determining the salary income from the ESOPs exercised.

Summary

Issues involved:
The issues involved in the judgment are the validity of the order passed by the Assessing Officer u/s 147 r.w.s. 144C(13) of the Income Tax Act, 1961, and the addition of Rs. 19,96,331/- on account of salary without considering Form 16 issued by the Employer.

Validity of the Order by Assessing Officer:
The assessee, employed by M/s Coca Cola India Pvt. Ltd. & M/s Coca Cola India Inc., declared income of Rs. 5,01,34,895/-. The Assessing Officer proposed an addition of Rs. 19,96,331/- against the disclosed salary income of Rs. 29,51,169/- due to a bank entry of Rs. 49,27,500/- in the HSBC account. The assessee objected before the ld. DRP, providing explanations regarding the nature of the bank entry and submitting Form 16 issued by the employer.

Addition of Salary Amount:
The assessee clarified that the bank entry of Rs. 49,27,500/- was an inter-bank transfer, not salary income, as mistakenly interpreted earlier. Form 16 issued by Coca Cola India Inc. was submitted as primary evidence of salary income amounting to Rs. 29,31,169/-. The ld. DRP directed the AO to verify the contentions made by the assessee without conducting any fresh inquiry, based on the available records.

Appeal before ITAT:
The assessee appealed before ITAT, where the ld. AR reiterated arguments made before the ld. DRP, while the ld. DR relied on the AO's order. After hearing both parties and examining the material, ITAT held that no addition was warranted, as the AO erred in not following the directions of the ld. DRP, and allowed the appeal of the assessee.

Conclusion:
The ITAT ruled in favor of the assessee, concluding that no addition was justified based on the available evidence and directions from the ld. DRP. The appeal was allowed, and the order was pronounced in the Open Court on 28/12/2023.