The concept of Agent u/s 163 makes it possible to assess and recover tax on income of NR which is subject to tax in India. For the sake of ensuring justice to any person who might be brought within the preview of Section 163 of the Income Tax Act, opportunity of being heard is provided to such person for explaining why he should not be treated as an agent of the NR concerned.
Once a person is considered to be an agent of NR under section 163, he is subject to the same duties, responsibilities, and liabilities as if income is received by or accruing to or in favour of him beneficially and is liable to assessment in his own name but such assessment should be deemed to be made upon him in representative capacity.
If the assessment order is passed by AO without specifically mentioning that the income is chargeable in the hands of the agent as a representative assessee of NR i.e. no separate order is passed but there is mere addition of the income of non-resident in the hands of the assessee, then the same will be in violation of Section 161(1) which reads as “ 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 the income were income received by or accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of that income, but any such assessment shall be deemed to be ade upon him in his representative capacity only, and the tax shall, subject to the other provisions contained in this chapter, be levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him“.
Hence, an agent under Section 163, if assessed in individual capacity in relation to NR’s income, then the same will not be sustained.
