AO should Guide NR on Voluntary Compliance in India; Foreign-earned Salary not Taxed: ITAT

Case Details: Pappu Singh Rajpurohit v. Assessing Officer - [2023] 151 taxmann.com 518 (Jaipur-Trib.)

Judiciary and Counsel Details

• • Sandeep Gosain, Judicial Member & Rathod Kamlesh Jayantbhai, Accountant Member
  • Om Prakash Rajpurohit & Rajat Mohan, CA’s for the Appellant.
  • Smt. Runi Pal, Addl. CIT for the Respondent.

Facts of the Case

The assessee was a tax resident of Kenya. During the year under consideration, he earned salary income from his employer in Kenya. He had filed his return of income and inadvertently declared and offered to tax said salary income as taxable in India along with foreign tax credit w.r.t. taxes paid in Kenya.

Later, assessee filed rectification application under section 154. However, Assessing Officer (AO) rejected the rectification application and raised tax demand and interest.

On appeal, the CIT(A) upheld the order of AO. The matter reached before the Tribunal.

ITAT Held

The Tribunal held that the assessee was a non-resident Indian earning income as salary from Kenya. He had inadvertently shown the income of salary earned out of India while filing the ITR. AO has not disputed that the assessee was a non-resident Indian earning income from salary sourced and earned from Kenya.

It is also not disputed that the assessee, on bona fide belief, wrongly showed on salary income which was charged to tax inadvertently, for which he has requested the Assessing Officer to rectify the order as per provisions of section 154.

AO dismissed the rectification application filed by the assessee on the ground that the assessee had not disputed the adjustment made under section 143(1). It is noted that it would be too technical for non-resident Indian to go into the intricacy of Indian income tax once the assessee has fairly moved an application under section 154.

Assessing Officer should have guided the non-resident and passed the order on merits. AO must guide the assessee who is complying voluntarily based on the e-mail addressed to him, and it should not be the AO’s intention to tax the income which is not chargeable to tax in India.

Thus, AO was to be directed to call for the details of the salary from the assessee and determine the fact as to whether, considering the facts and circumstances of the case, the salary income is chargeable to tax in India or not.