|Question And Answer|
|Answered by:||Advocate Shashi Ashok Bekal|
|Tags:||DTAA, India, pension, Reassessment notice, USA|
|Date:||February 16, 2022|
I received a 148 notice dated March 31,2021 about “escaped income” in my 2015-16 ay return from AO Chennai who asked me to send copy of tax return, which I promptly did.
A notice under 147 was sent dated 30-9-2021 by AO decribing the nature of income (USA social security income).
I replied promptly that this “income is NOT taxable in India per DTAA article 20(2) and USA can tax this pension.
No reply from AO and then on DEc 1,2021 I get two notices. The same notice u/s 147 on social security income which has escaped assessment and also dated Dec 1,2021 notice under 142(1) asking bank statements for 2015-16 ay, proofs for various expenses,deductions 80G,80C,80 QQB,80D etc etc. I promptly replied with all details.
The same reply sent to AO in Oct 2021 was sent reg the 147 notice as substance of notice was same.Also explained that the SS income particulars were given in the FSI section of my return, which they did not bother to read.THey thought it was anasset and said that the income is not shown in the FA section of the return.
No further information from the dept.
Any views,legal or technical comments ..HOW CAN AN EXEMPT INCOME IN INDIA ESCAPE ASSESSMENT? NO ONE FROM THE DEPT HAS BOTHERED TO CHECK IF THE INCOME WAS TAXABLE IN INDIA, NATURE OF INCOME ETC.
Any suggestions for the assessee?
As we understand, the Ld. Assessing Officer has already proceeded to assessment as the assessee has not objected to the “reasons recorded” for reassessment.
It is advisable to comply with the Notices issued under section 142(1) of the Income-tax Act, 1961, to avoid any non-compliance.
A detailed explanation with supporting documents may be furnished explaining how the said income is not taxable in India.
Some of the judicial pronouncements in support of the assessee are as under:
The Hon’ble Madras High Court in the case CIT v. Rajamani Raman  258 ITR 710 (Mad) (HC) held that in view of articles 18(3) and 18(5), pension received by assessee from University of Malaysia had to be construed as pension received from ‘Government, which was taxable in terms of article 18(3) in Malaysia by Government of Malaysia, and thus could not be assessed as salary under the Act.
Article 18 of the Model Tax Treaty corresponds to Article 20 of the India-USA DTAA.
Therefore, the case law should be applicable to the case of the assessee.