ITAT Delhi confirms reassessment against non-filer salaried assessee for AY 2017-18

Background and case overview

The Delhi Bench of the Income Tax Appellate Tribunal in the case of Sumantra Mukherjee Vs Circle – 3(1) examined an appeal arising from a reassessment completed under Section 147 read with Section 144 of the Income Tax Act 1961 for Assessment Year 2017-18.

The dispute primarily revolved around:

  • Non-filing of return of income by a salaried assessee
  • Validity of reassessment proceedings
  • Additions made towards salary, income from house property and income from other sources
  • Denial of deduction under Section 80TTA
  • Grant of credit for TDS appearing in Form 26AS

The assessee, a salaried individual, had not filed any return of income for the relevant assessment year. On the basis of information available with the department, including Form 16 and Form 26AS, the case was reopened and assessment was framed ex parte under the Faceless Assessment Scheme.

Facts leading to reassessment

Non-filing of return and issue of notices

  • The assessee was earning income from salary, with tax deducted at source by the employer.
  • For A.Y. 2017-18, the assessee did not file a return of income.
  • Reassessment proceedings were triggered under Section 147.
  • A notice under Section 148 was issued and served upon the assessee through email.
  • Subsequent statutory notices under Section 142(1) were also issued by the Assessing Officer (AO).
  • These Section 142(1) notices, however, went substantially unanswered, with the assessee only responding to two show-cause notices but not fully cooperating in the assessment process.
  • No return of income was filed even during the reassessment proceedings.

Income identified by the Assessing Officer

Based on information available from departmental records and third-party data, the AO detected the following income for the year under consideration:

  1. Salary income

    • Salary as per Form 16 issued by the employer: ₹52,15,953
    • TDS on salary: ₹14,31,480, as reflected in Form 26AS

  2. Interest income on bank deposits

    • Interest as per bank statement: ₹40,993
    • TDS on interest: ₹1,100.82, also appearing in Form 26AS

  3. Income from house property

    • The assessee owned a vacant flat in Hyderabad.
    • The AO computed a notional income from house property at ₹1,59,600 and added it as income from house property.

  4. TDS credit discrepancy

    • TDS aggregating to ₹14,32,580 was reflected in Form 26AS.
    • The AO, however, did not grant full credit of this TDS amount while completing the assessment.

Completion of assessment

The assessment was finalized under Sections 147/144/144B as part of the Faceless Assessment Scheme. Given the repeated non-compliance and lack of a filed return, the AO proceeded to:

  • Assess the salary and interest income as per the information available
  • Add deemed rental income from the Hyderabad property
  • Decline certain deductions, including under Section 80TTA
  • Not allow full TDS credit, despite its presence in Form 26AS

Aggrieved by the assessment order dated 27.03.2022, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals)/NFAC, Delhi [CIT(A)].

Order of the CIT(A)/NFAC

Partial relief granted

The CIT(A), after reviewing the assessment records and departmental data, accepted that the assessee was entitled to full credit of TDS as appearing in the system. Accordingly: