Muralikrishna Vaddi Vs ACIT/DCIT (ITAT Visakhapatnam)
ITAT find that the Form 67 was not filed by the tax consultant of the assessee due to oversight and pleaded that mistake may be considered as technical mistake and there was a reasonable cause. We find no merit in the submissions made by the assessee’s representative that the above reason mentioned by the assessee in its written submissions is reasonable. The assessee has realized the filing of Form 67 only after the scrutiny proceedings were initiated by the AO. We also note that Form 67 has been filed with a delay of more than two years without any valid and reasonable cause.
From the plain reading of Rule 128(9) of the IT Rules, it is clear that the statement in Form-67 shall be furnished on or before the due date specified for furnishing the return of income under sub-section(1) of section 139 of the Act. Therefore, we are of the considered view that since the word “shall” has been used in the Rule 128(9) that it is mandatory in nature and not directory as claimed by the Ld. AR.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal filed by the assessee against the order of the Ld. CIT(A), NFAC, Delhi vide DIN & Order No. ITBA/NFAC/S/250/2021-22/1036689053(1), dated 01/11/2021 passed U/s. 143(3) r.w.s 250(6) of the Act for the AY 2018-19.
2. Brief facts of the case are that the assessee is a salaried employee, who has filed his return of income on 27/03/2019 admitting total income of Rs.1,68,47,360/-. The assessee claimed foreign tax credit of Rs. 37,63,898/- while filing the return of income but has not filed Form-67 as prescribed U/s. 128(9) of the IT Rules, 1961. The case was selected for limited scrutiny on the issue of allowing relief U/s. 90/91 of the Act. Accordingly, statutory notices u/s. 143(2) and 142(1) were issued on the assessee. The assessee furnished the replies through the assessee’s representative as required by the AO and also filed Form 67 dated 10/02/2021 for the AY 2018-19. The AO considering the submissions of the assessee, invoked the provisions of Rule 128(9) of the IT Rules, 1962 and disallowed the foreign tax credit amounting to Rs. 37,63,898/- for non-filing of From 67 before the due date of filing of the return U/s. 139(1) of the Act. Aggrieved by the order of the Ld. AO the assessee filed an appeal before the NFAC. The Ld. CIT(A), NFAC confirmed the order of the Ld. AO and dismissed the appeal. Aggrieved by the order of the Ld. CIT(A), NFAC the assessee is in appeal before us.
3. The assessee has raised the following grounds of appeal:
“1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case.
2. The Ld. CIT(A) ought to have appreciated that Rule 128(9) of the IT Rules does not provide for disallowance of FTC ion the case of delay in filing of Form 67.
3. The ld. CIT(A) ought to have appreciated that filing of Form 67 is not mandatory but directory.
4. The Ld. CIT(A), NFAC is wrong in upholding the order of the AO and ought to have appreciated that the provisions of DTAA override the provisions of the Act to the extent they are beneficial to the assessee.
5. The Ld. CIT(A) ought to have given an opportunity before concluding the appeal proceedings, under the facts and circumstances of the case.
6. The Ld. Authorities below ought to have allowed the claim of the appellant when form 67 was filed at the time of assessment proceedings, under the facts and circumstances of the case.
7. The Appellant craves leave to add, amend and / or alter the stands as the occasion may warrant.”
4. The only issue with respect to the grounds raised by the assessee is regarding non-filing of Form 67 and consequential denial of foreign tax credit by invoking the Rule 128(9) of the IT Rules. The Ld. AR submitted that filing of Form 67 is not mandatory but only a directory and hence delay in filing Form 67 is not a valid ground for denial of foreign tax credit as claimed by the assessee in the return of income filed by the assessee. The Ld. AR relied on the Bangalore Bench of the Tribunal in the case of M/s. 42 Hertz Software India Pvt Ltd vs. ACIT in ITA No. 29/Bang/2021, dated 7/3/2022. The ld. AR also submitted that Form 67 was filed before the completion of scrutiny assessment. Per contra, the Ld. DR supported the orders of the Ld. Revenue Authorities and stated that Form 67 is mandatory in nature to claim any foreign tax credit under Rule 128(9) of the IT Rules, 1962. The Ld. DR pleaded that the order of the Ld. Revenue Authorities be upheld.
5. We have considered the rival contentions and the orders of the authorities below. Based on the written submissions made by the assessee’s representative, we find that the Form 67 was not filed by the tax consultant of the assessee due to oversight and pleaded that mistake may be considered as technical mistake and there was a reasonable cause. We find no merit in the submissions made by the assessee’s representative that the above reason mentioned by the assessee in its written submissions is reasonable. The assessee has realized the filing of Form 67 only after the scrutiny proceedings were initiated by the AO. We also note that Form 67 has been filed with a delay of more than two years without any valid and reasonable cause. We also extract herein below Rule 128(9) of the IT Rules, 1962 for reference:
“128 (9) The statement in Form No.67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under subsection (1) of section 139, in the manner specified for furnishing such return of income.”
6. From the plain reading of Rule 128(9) of the IT Rules, it is clear that the statement in Form-67 shall be furnished on or before the due date specified for furnishing the return of income under sub-section(1) of section 139 of the Act. Therefore, we are of the considered view that since the word “shall” has been used in the Rule 128(9) that it is mandatory in nature and not directory as claimed by the Ld. AR. We therefore find no infirmity in the order of the Ld. CIT(A), NFAC and hence no interference is required.
7. In the result, appeal filed by the assessee is dismissed.
Pronounced in the open Court on the 14th June, 2022.
