Shri Thakker Paresh Harilal, Bhavnagar V. The Income Tax Officer, Ward-1(3), Bhavnagar

ITA 1378/AHD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8483 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice; Question of law; Tangible material; Corroborative evidences; Non passing of speaking order
• Section: 10(14); 147

Judgement Text

, *,L *,L*,L *,L- -- -,E ,E,E ,E- -- -LH* LH*LH* LH* IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , EKUHK EKUHK EKUHK EKUHK CKSJM CKSJM CKSJM CKSJM , BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER I. I.T.A. NO.1376/AHD/2016 FOR A.Y. 2006-07 II. I.T.A. NO.1377/AHD/2016 FOR A.Y. 2007-08 III. I.T.A. NO.1378/AHD/2016 FOR A.Y. 2009-10 SHRI THAKKER PARESH HARILAL PLOT NO.1528/A, NIDHI RUPANI, BEHIND THEOSOPHICAL HALL, OPP. K.S.M. SPORT GROUND GHOGHACIRCLE, BHAVNAGAR 364 001 / VS. INCOME TAX OFFICER, WARD 1(3), BHAVNAGAR. ./ ./ PAN/GIR NO. : ABGPT 0381 C ( !' / APPELLANT ) .. ( #' / RESPONDENT ) !' $ / APPELLANT BY : SHRI P. B. PARMAR (ADV.) #' % $ / RESPONDENT BY : SHRI MAHESH JIWADE SR. D.R. & '( % )* / DATE OF HEARING 05/09/2017 +,-. % )* / DATE OF PRONOUNCEMENT 18/09/2017 / / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THESE ARE THREE APPEALS BY THE ASSESSEE AGAINST THE SEPARATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHME DABAD, IDENTICALLY DATED 15/12/2015 FOR THE ASSESSMENT YEA R (AY) 2006-07, 2007-08 & 2009-10 RESPECTIVELY. ITA NOS. 1376, 1377 & 1378/AHD/2016 SHRI THAKKER PARESH HARILAL VS. ITO ASST.YEAR 2006-07, 2007-08 & 2009-10 - 2 - 2. SINCE THE ISSUE INVOLVED IS COMMON IN ALL THE AP PEALS, ALL THREE APPEALS ARE DISPOSED OFF BY A COMMON AND CONSOLIDAT ED ORDER, FOR THE SAKE OF CONVENIENCE, THE CASE FOR A.Y. 2006-07 IS T AKEN FOR DISCUSSION IN DETAIL AND THE FOLLOWING GROUNDS OF APPEAL HAS TAKE N BY THE ASSESSEE: I. (A) THE LD CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E IMPUGNED ORDER PASSED BY THE LD ASSESSING OFFICER AND UPHOLD ING HIS ACTION TAKEN U/S.147 OF THE INCOME TAX ACT, 1961. (B) THAT THERE BEING NO FRESH TANGIBLE MATERIAL WIT H LD. A.O. FOR ISSUE OF NOTICE, CONDITIONS OF SECTION 147 WERE NOT FULFILLED, THE IMPUGNED ORDER CONFIRMING THE ACTION OF THE LD ASSE SSING OFFICER IN ISSUING NOTICE U/S.148 OF THE ACT AND RE -OPENING OF THE ASSESSMENT U/S.147 WAS LEGALLY UNSUSTAINABLE. II. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - VI ERRED IN LAW AND ON FACTS IN NOT ACCEPTING OUR CLAIM THAT NOTICE U/S.147 OF THE ACT IS INVALID, VOID AB INITIO HENCE ASSESSM ENT FRAMED PURSUANCE TO SUCH INVALID NOTICE SHOULD BE QUASHED. III. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - VI ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE RATIO LAID DOWN BY HON. SUPREME COURT IN THE CASE OF KUNHAYAMMED & ORS. VS. STATE OF KERALA & ANR. AIR 2000 SC 2587 REGARDING EFFECT OF NON SPEAKING ORDER WHILE DISMISSING SLP AND THUS ERRED IN CONSIDERING THE EFFECT OF NON SPEAKING ORDER IN THE SLP CASE OF GUREDEV SINGH JAGGI VS. CIT (2003). IV. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - VI ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE RATIO LAID DOWN BY DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC VS. CIT 308 ITR 38 (DEL) WHICH HAS BEEN FOLLOWED BY DELHI ITAT IN THE CASE OF BALWANT RAI WADHWA VS. ITO WHICH HELD THAT SUPPLYIN G REASON RECORDED FOR REOPENING AFTER THE SIX YEARS STIPULAT ED IN S.149 IS BAD IN LAW. ITA NOS. 1376, 1377 & 1378/AHD/2016 SHRI THAKKER PARESH HARILAL VS. ITO ASST.YEAR 2006-07, 2007-08 & 2009-10 - 3 - V. THE LEARNED CIT(A)-VI ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE RATIO LAID DOWN BY DELHI HIGH COURT I N THE CASE OF COMMISSIONER OF INCOME TAX VS. ORIENT CRAFT LTD.(20 13) 354 ITR 536, MOHAN GUPTA VS. CIT-XI IN W.P.(C) 7660/201 2 DECIDED ON 28/01/2014, MADHUKAR KHOSILA VS. ASSISTA NT COMMISSIONER OF INCOME TAX W.P.(C) 1320/2014, C.M. NO.2744/2014 & 2745/2014, IN THE CASE OF PR. CIT-09 VS. TUPPERWARE INDIA P. LTD. PRONOUNCED ON 10/08/2015 A ND ALSO BY HON. ANDHRA PRADESH HIGH COURT IN SIRPUR PAPER MILL S LTD. VS. ITO [1978] 114 ITR 404 (AP), BY CALCUTTA HIGH COURT IN THE CASE CENTURY ENKA LTD. VS. ITO [1983] 143 ITR 629 ( CAL.) MUMBAI HIGH COURT IN THE CASE OF BALKRISHNA HIRALAL WANI, (WRIT PETITION NO.191/2010 ETC. WHERE IT WAS CONSIS TENTLY HELD THAT EVEN IN THE CASE OF INTIMATION U/S.143(1), NO NOTICE U/S.147 CAN BE ISSUED IN ABSENCE OF FRESH TANGIBLE MATERIAL . VI. THE LD. CIT(A)-VI ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE DECISION OF JURISDICTIONAL HON. GUJARAT HIGH COURT IN TAX APPEAL NOS.641 & 642 OF 2007 IN THE CASE OF SHRI MU KESHBHAI B DESAI, P.V. ASHAR DEVELOPMENT OFFICER VS. B.C. GOEL , AS REPORTED AT (2014) 44 TAXMANN.COM 435 AND IN THE CA SE OF CIT VS. NITINBHAI BHUPTANI IN TAX APPEAL NO.1005 OF 200 5 AS WELL AS THE DECISION OF JURISDICTION HON. AHMEDABAD ITAT IN THE CASE OF ITA NO.1717/AHD/2006 FOR THE A.YS 2002-03 & 2003-04 AND IN THE CASE OF ACIT, VAPI VS. JAYSUKH RATILAL PATEL IN ITA NO.4162/AHD/2007 DECIDED ON 15/10/2010 WHERE IT WAS HELD THAT LIC DO IS ELIGIBLE FOR CLAIMING DEDUCTION AGAINST I NCENTIVE BONUS. VII. THE LD. CIT(A)-VI ERRED IN LAW AND ON FACTS IN HOLD ING THAT THE DECISIONS OF HON. SUPREME COURT DISMISSING SLP IN T HE CASE OF SLP(CIVIL) 22350 IN THE CASE OF GUREDEV SINGH JAGGI VS. CIT(2003) CARRY MORE WEIGHT THAN THE ORDER DISMISSI NG SLP OF REVENUE IN THE CASE OF CIT VS. NITTINBHAI BHUPTANI IN SLP (CIVIL) 1518 OF 2007 RENUMBERED AS 3842 OF 2007 ON 16 TH JULY 2007 AGAINST THE ORDER OF HON. GUJARAT HIGH COURT A LLOWING EXPENSES AGAINST THE INCOME OF INCENTIVE BONUS TO L IC DEVELOPMENT OFFICER. ITA NOS. 1376, 1377 & 1378/AHD/2016 SHRI THAKKER PARESH HARILAL VS. ITO ASST.YEAR 2006-07, 2007-08 & 2009-10 - 4 - VIII. THE LD. CIT(A)-VI ERRED IN LAW AND IN FACTS IN CONF IRMING THE DISALLOWANCE OF EXPENSES OF RS.1,33,399/- OUT INCEN TIVE BONUS OF RS.4,44,664/- IGNORING THE VARIOUS DECISIONS OF JUR ISDICTIONAL HONORABLE GUJARAT HIGH COURT INCLUDING DECISION IN THECASE OF MUKESHBHAI DESAI, P. V. ASHAR, NITINBHAI BHUPTANI E TC. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, THE ASSESSEE IS A DEVELOPMENT OFFIC ER IN LIFE INSURANCE CORPORATION OF INDIA. HE HAS FILED HIS RE TURN OF INCOME FOR A.Y.2009-10 DECLARING TOTAL INCOME AT RS.6,98,025/- . 2.2 ON VERIFICATION OF RETURN OF INCOME FOR THE A.Y . 2009-10 ALONG WITH COMPUTATION OF INCOME, IT WAS OBSERVED THAT AS SESSEE HAD CLAIMED WRONG DEDUCTION ON THE BASIS OF LUMP SUM EXPENSES O F RS.1,69,419/- BEING 30% OF INCENTIVE BONUS AND CONVEYANCE ALLOWA NCE OF RS.41,662/- AS EXPENSES, AGGREGATING AMOUNT OF RS.2,11,081/- BE ING PART OF SALARY WHICH STANDS DISALLOWED IN VIEW OF THE DECISION OF HONBLE APEX COURT HELD IN THE SLP(CIVIL) 22350 OF 2003 OF GURDEV SING H JAGGI VS. COMMISSIONER OF INCOME TAX. 2.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE DID NOT SUBMIT ANY DOCUMENTARY EVIDENCE IN SUPPORT OF CLAIM ED DEDUCTION OF RS.41,662/- ON ACCOUNT OF CONVEYANCE ALLOWANCE U/S. 10(14) OF THE I.T. ACT AGAINST THE INCOME CHARGEABLE UNDER THE HEAD SA LARIES. ACCORDINGLY, VIDE NOTICE DATED 19/01/2015 THE ASSESSEE HAS SHOW- CAUSE THAT DUE TO FAILURE TO FURNISH ANY SUPPORTING EVIDENCES OF EXPE NSE LIKE PETROL BILL, OR ITA NOS. 1376, 1377 & 1378/AHD/2016 SHRI THAKKER PARESH HARILAL VS. ITO ASST.YEAR 2006-07, 2007-08 & 2009-10 - 5 - HIRE VEHICLE OR ANY SUPPORTING OF TRAVELLING MODE, WHY THE CLAIM FOR DEDUCTION OF RS.41,662/- ON ACCOUNT OF CONVEYANCE A LLOWANCE AND ADDED BACK TO THE TOTAL INCOME. 2.4 IN RESPONSE TO THE AFORESAID SHOW-CAUSE NOTICE THE ASSESSEE HAS SUBMITTED PETROL BILLS AND VOUCHER OF AMOUNT OF RS. 38,063/-, INSURANCE PREMIUM RECEIPT OF RS.5,661/-, GARAGE BILLS OF RS.6 ,200/-, CLEANING OF CAR BILLS OF RS.4,700/- AND DRIVER SALARY VOUCHER 22,76 1/-. THE BILLS AND VOUCHERS SUBMITTED TO THE ASSESSEE W ERE CONSIDERED HOWEVER IT WAS NOT ACCEPTABLE TO THE AO ON THE ACCO UNT OF SUBMITTED FABRICATED VOUCHERS AND BILLS PREPARED IN SINGLE SI TTING. THE GENUINENESS OF THESE VOUCHER AND BILLS FURNISHED WAS IN QUESTIO N. THE ASSESSEE FAILED TO PROVE THE AUTHENTICITY OF THESE VOUCHER AND BILL S AND THERE SO EXPENSES CLAIMED. HOWEVER LOOKING TO THE NATURE OF THE DUTIE S OF THE DEVELOPMENT OFFICER OF LIC, THE CONVEYANCE EXPENSES ARE RESTRIC TED TO THE AMOUNT OF RS.20,831/- CLAIMED BY THE ASSESSEE. SINCE THE ASSE SSEE FAILED TO PROVE THE QUANTUM OF EXPENSES AND AO DISALLOWED THE CLAIM OF RS.20,831/-. 2.5 ON VERIFICATION OF COMPUTATION OF INCOME SUBMIT TED ALONG WITH THE RETURN OF INCOME FAILED U/S.139(1) OF THE ACT, IT I S NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF OTHER DEDUCTION OF RS.1,72,019/- FROM THE INCENTIVE BONUS EARNED OF RS .7,22,796/- ON ACCOUNT OF EXPENSES TO EARN INCENTIVE BONUS. ITA NOS. 1376, 1377 & 1378/AHD/2016 SHRI THAKKER PARESH HARILAL VS. ITO ASST.YEAR 2006-07, 2007-08 & 2009-10 - 6 - IN THIS REGARD, A SHOW-CAUSE NOTICE WAS SERVED TO THE ASSESSEE AND SAME WAS NOT ACCEPTABLE TO THE LEARNED AO. HENCE, R S.1,72,019/- WAS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A) WHO PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. 4. NOW APPELLANTS APPEAL IS BEFORE US. 5. LEARNED AR HAS NOT PRESSED GROUND NO.1, 2, 3 & 4 . 5.2 REGARDING GROUND NO.5, ISSUE IS BEFORE US, WHET HER DEVELOPMENT OFFICER OF LIC IS ELIGIBLE FOR CLAIMING DEDUCTION A GAINST INCENTIVE BONUS OR LAW. LEARNED AR CITED A JUDGMENT OF JURISDICTION AL HIGH COURT IN TAX APPEAL NO.1005 OF 2005 IN THE MATTER OF CIT-II VS. NITINBHAI T. BHUPATANI. IN THIS CASE, ISSUE ALLOWED IN FAVOUR OF THE ASSESSEE BY STATING THAT CONVEYANCE ALLOWANCE AND OTHER ADDITIONAL CON VEYANCE ALLOWANCE ARE PAID TO THE DEVELOPMENT OFFICER FOR MEETING THE ACTUAL EXPENDITURE INCURRED BY THE DEVELOPMENT OFFICERS AND DISCHARGE THEIR DUTIES AS PER LAW AND NORMS SET OUT IN THE CIRCULAR ISSUED BY THE LIC. THEREAFTER, WHAT SHOULD BE THE PROPORTION OF THE AMOUNT WHICH SHOULD BE ALLOWED, CANNOT BE FORM SUBSTANTIAL QUESTION OF LAW. IT IS NECESSARY TO TAKE NOTE OF THE FACT THAT EVEN THOUGH THE ISSUE OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLO WANCE WAS NOT THERE BEFORE THIS COURT IN CIT VS. KIRANBHAI H. SHE LAT (SUPRA), THE ITA NOS. 1376, 1377 & 1378/AHD/2016 SHRI THAKKER PARESH HARILAL VS. ITO ASST.YEAR 2006-07, 2007-08 & 2009-10 - 7 - PRINCIPLE ENUNCIATED IN THE SAID DECISION WOULD EQU ALLY GOVERN THE ALLOWANCE OR OTHERWISE OF THE SAID ITEM OF EXPENDIT URE. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DI SMISSED. 5.3 LEARNED AR ALSO CITED A JUDGMENT OF OUR COORDIN ATING BENCH IN ITA NO.2771 TO 2773/AHD/2014. SIMILAR MATTER CAME B EFORE THE COORDINATE BENCH FOR THE CONSIDERATION. IN THIS CAS E ALSO MATTER WAS DECIDED IN FAVOUR OF THE APPELLANT HOLDING THAT WE THUS ASSUME THAT THEIR LORDSHIPS HAVE VERY WELL CONSIDERED HONBLE APEX CO URTS DECISION BEFORE ARRIVING AT THE VERY CONCLUSION IN ASSESSEES FAVOU R. WE ACCORDINGLY ALLOW ASSESSEES CLAIM OF EXPENSES IN QUESTION OF R S.2,34,145/- AGAINST THE INCENTIVE BONUS RECEIVED FROM LIC. 6. RESPECTFU LLY, FOLLOWING THE JURISDICTIONAL HIGH COURT JUDGMENT, IN WHICH HONBL E HIGH COURT HAS HELD THAT DEVELOPMENT OFFICER OF THE LIC HAS TO CON TACT TO ITS CUSTOMER TO FETCH POLICIES AND TO CALCULATE PREMIUM ON BEHALF O F THE LIC. IN OUR CONSIDERED OPINION, RESPECTFULLY FOLLOWING THE ABOV E SAID JUDGMENT, WE DECIDE THIS MATTER IN FAVOUR OF THE ASSESSEE AND AL LOW THE EXPENDITURE AGAINST THE INCOME OF INCENTIVE BONUS. 6. SO FAR APPEAL NOS. 1376 & 1377/AHD/2016 FOR ASST . YEARS 2006- 07 & 2007-08 RESPECTIVELY ARE CONCERNED. FACTS ARE COMMON, ONLY FIGURES ARE DIFFERENT AND LEARNED CIT HAS ALSO PASS ED THE COMMON ORDER. THEREFORE, ALL THE APPEALS ARE ALLOWED. ITA NOS. 1376, 1377 & 1378/AHD/2016 SHRI THAKKER PARESH HARILAL VS. ITO ASST.YEAR 2006-07, 2007-08 & 2009-10 - 8 - 7. IN THE RESULT, ALL THE THREE APPEAL OF THE ASSESSEE ARE ALLOWED. THIS O RDER PRONOUNCED IN OPEN COURT ON 18 / 09 /201 7 SD/- SD/- EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EGKOHJ EGKOHJ EGKOHJ EGKOHJ IZLKN IZLKN IZLKN IZLKN YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ( MANISH BORAD ) (MAHAVIR PRASA D) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/09/2017 PRITI YADAV, SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) ( !) / THE CIT(A)-VI, AHMEDABAD. 5. 678 )'12 , !* 12. , 0 / DR, ITAT, AHMEDABAD 6. 89 :( / GUARD FILE. # $ / BY ORDER, #6!) ) //TRUE COPY// %/$ &' ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 12/09/2017 (DICTATION-PAD 6 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15/09/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 18/09/2017 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER