Order passed by Assessing Officer in the name of the assessee without specifying that the income is chargeable to tax in the hands of the assessee as a representative assessee of a non-resident need to be quashed

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Order passed by Assessing Officer in the name of the assessee without specifying that the income is chargeable to tax in the hands of the assessee as a representative assessee of a non-resident need to be quashed

ITAT DELHI

MANISH TYAGI VERSUS ITO, WARD-1 (4) , GHAZIABAD

ITA No. 5548/Del/2015

Short Overview of the case:

Representative assessee u/s 160 or u/s 161
In the present case, the assessing officer has passed an order in the name of the assessee without specifying that the above income is chargeable to tax in the hands of the assessee as a representative assessee of a non-resident i.e. not passing a separate order but adding the income of the non-resident in the hands of the assessee is not in accordance with the provisions of Section 161
 Addition on account of long-term capital gain chargeable to tax on account of sale of property by non-resident
Addition holding assessee as an agent of the non-resident as he is holding a power of attorney and the property is sold by the assessee and the money is transferred to the non-resident owner
ITAT held that Provisions of Section 161 provides that every representative assessee as regards the income in respect of which he is a representative assessee shall be subject to the same duties, responsibilities and liabilities as if income is received by or accruing to or in favor of him beneficially and shall be liable to assessment in his own name in respect of that income but such assessment shall be deemed to be made upon him in his representative capacity only.
The tax subject to other provisions of the income tax act be levied upon and recovered from him in like manner and to the same extent as would be leviable upon and recoverable from the person represented by him.
Therefore, the assessing officer should have passed a separate assessment order from the income of the assessee with respect to the income of the non-resident holding the assessee as a representative of a non-resident.
In the present case, the assessing officer has passed an order in the name of the assessee without specifying that the above income is chargeable to tax in the hands of the assessee as a representative assessee of a non-resident i.e. not passing a separate order but adding the income of the non-resident in the hands of the assessee is not in accordance with the provisions of Section 161
 AO has also charged the tax in the hands of the assessee in the residential status of resident and not non-resident.
On this score, the addition made by the learned assessing officer of the income of the non-resident Under the head capital gain is required to be deleted.
Thus, ground number of the assessee is allowed

Another Issue: 

In view of the fact that to deposit in the bank account of the assessee, assessee has received ₹ 550,000 on sale of car and further ₹ 517,397/- available with the assessee is an opening cash on hand, further the assessee has also cash flow generated during the year of approximately ₹ 320,000 out of his professional income justifies the deposit of cash into the bank account of the assessee of ₹ 1,320,000. In view of above uncontroverted facts, we do not find any justification for addition of all the above sum of ₹ 7,70,000/- in the hands of the assessee. In view this ground No. 2 of the appeal of the assessee is allowed.

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