Shri Divyesy R. Majithiya, RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Circle-4, RAJKOT-GUJARAT

ITA 19/RJT/2011

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0142 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-10-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 25-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: J C RANPURA
• Section: 143(3); 148; 139

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH: RAJKOT .. .. BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTA VA AM ITA NO. 19/RJT/2011 / ASSESSMENT YEAR 2002-03 DIVYESH R. MAJETHIYA V. ACIT D.O., LIC OF INDIA, CBO 1 CIRCLE-4 C A BUCH MARG, RAJKOT RAJKOT PAN : ACJPM6831A DATE OF HEARING: 01.10.2012 DATE OF PRONOUNCEMENT: 30.10.2012 FOR THE ASSESSEE: J C RANPURA, FCA FOR THE REVENUE: M K SINGH, DR / ORDER .. /D. K. SRIVASTAVA: APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) ON 25-10-20 10, ON THE FOLLOWING GROUNDS: 1. THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WI THOUT PREJUDICE TO ONE ANOTHER. 2. THE LEARNED CIT (A) ERRED ON FACTS AS ALSO IN L AW IN DISMISSING APPELLANTS GROUNDS OF APPEAL CHALLENGING THE AOS ACTION OF ISSUING OF NOTICE U/S.148. NOTICE U/S. 148 MAY KINDLY BE HELD ILLEGAL AND THE ORDER U/S 143(3) R.W.S.147 DATED 01.12.2009 BEING VOID-AB-INITIO, MA Y KINDLY BE CANCELLED. 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS EMPLOYED AS DEVELOPMENT OFFICER IN THE LIFE INSURANCE CORPORATION OF INDIA. HE FILED HIS O RIGINAL RETURN OF INCOME ON 08-08- 2005 PURSUANT TO WHICH ASSESSMENT WAS ORIGINALLY CO MPLETED U/S 143(3) ON 28-03- 2005 ASSESSING THE TOTAL INCOME OF ASSESSEE AT RS.4 ,75,339/- AFTER ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION @ 30% OUT OF IN CENTIVE BONUS. THE ASSESSING OFFICER SUBSEQUENTLY RE-OPENED THE AFORESAID ASSESS MENT BY HIS NOTICE DATED 24- 06-2008 U/S.147/148. ORDER OF RE-ASSESSMENT WAS PAS SED BY THE AO ON 01-12- 2009 U/S 143(3) R.W.S.147 ASSESSING THE TOTAL INCOM E OF THE ASSESSEE AT RS.6,17,195/- AFTER DISALLOWING THE CLAIM OF THE AS SESSEE FOR DEDUCTION @ 30% OUT OF INCENTIVE BONUS. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOW ANCE OF 30% OUT OF INCENTIVE BONUS FOLLOWING THE ORDER OF THE HONBLE SUPREME CO URT IN GURUDEV SINGH JAGGI V. CIT, SLP (C) NO.22350/2003. THOUGH THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER OF CIT (A) BEFORE US, THE ASSESSEE HAS NOT CH ALLENGED THE CORRECTNESS OF THE DECISION OF THE LD. CIT (A) IN CONFIRMING THE DISAL LOWANCE OF 30% OUT OF INCENTIVE BONUS. AS EVIDENT FROM THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE BEFORE US, THE 2 ITA 19/RJT/2011 ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) ONL Y TO THE EXTENT THE LD. CIT(A) HAS UPHELD THE VALIDITY OF INITIATION OF PROCEEDING S U/S.147/148. OUR JURISDICTION IS THEREFORE LIMITED TO EXAMINING THE VALIDITY OF NOTI CE ISSUED BY THE AO U/S.147/148 ON 24-06-2008 AND RESULTANTLY THE VALIDITY OF RE-ASSES SMENT ORDER WAS PASSED BY THE AO IN PURSUANCE THEREOF. 4. THE FACTS HAVING MATERIAL BEARING ON THE ISSUE A RE THAT ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT WAS COMPLETED ON 28-03 -2005 FOR ASSESSMENT YEAR UNDER APPEAL. NOTICE U/S 147/148 WAS ISSUED BY THE AO ON 24-06-2008 TO REOPEN THE ASSESSMENT ALREADY COMPLETED U/S.143(3) ON 28-0 3-2005. IT IS THUS QUITE EVIDENT THAT NOTICE U/S 147/148 WAS ISSUED AFTER EX PIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNDER APPEAL AND THEREFORE ITS VALIDITY HAS TO BE CONSIDERED WITH REFERENCE TO THE STATUTORY REQUIREMENTS LAID D OWN IN THE PROVISO TO SEC.147, WHICH READS AS UNDER :- PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSM ENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOU R YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECT ION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT, FOR THAT ASSESSMENT YEAR: 5. THE ASSESSING OFFICER HAS RECORDED FOLLOWING REA SONS WHILE ISSUING THE IMPUGNED NOTICE:- ON PERUSAL OF RECORD, IT HAS BEEN SEEN THAT ASSESS EE HAS CLAIMED INCENTIVE BONUS AT THE RATE OF 30% RS.140856/- OUT OF THE TO TAL BONUS RECEIVED BY HIM FROM HIS EMPLOYER, IN THE COMPUTATION OF TOTAL INCO ME ATTACHED WITH THE RETURN OF INCOME AND ALSO CLAIMED RS.24120/- AS FIX ED CONVEYANCE ALLOWANCE AND RS.169845/-AS ADDL. CONVEYANCE ALLOWA NCE OUT THE TOTAL CONVEYANCE ALLOWANCE RS.193965/-. THE SAME IS NOT TO BE ALLOWED AS DEDUCTION AS THE S AME IS PART OF THE SALARY AND THEREFORE, EXCEPT STANDARD DEDUCTION NO ANY EXP ENDITURE INCURRED BY THE ASSESSEE ALLOWABLE AS DEDUCTION FROM THE SALARY INC OME AS UNDER:- (I) INCENTIVE BONUS ;- THE M.P. HIGH COURT IN THE CASE OF SHRI GURUDEV SINGH JAGGI VS. CIT 92004) 267 ITR 763 (MP) HELD THAT DEDUCTION OF EXPENDITURE OUT OF INCENTIVE BONUS ISSUED BY THE DEVELOPMENT OFFICER OF LIC WAS NOT PERMISSIBLE. THE HON. SUPREME COURT HAS DISMISSED THE SPL. LEAVE PETITION NO.22350 OF 2003 (DT.17.11.03) FILED BY SHRI JAGGI AGAINST THE 3 ITA 19/RJT/2011 DECISION OF M.P. HIGH COURT. (II) FIXED CONVEYANCE 7 ADDN. CONVEYANCE ALLOWANCE :- AS PER SECTION 10(4)(I) OF THE ACT READ WITH MEANING O F CLAUSE (2) OF SECTION 17, THE CONVEYANCE ALLOWANCE IS NOT DEDUCTIBLE AS IT FO RM A PART OF SALARY AND NOT AID BY WAY OF REIMBURSEMENT OF EXPENDITURE INCURRED BY THE DEVELOPMENT OFFICER. IN VIEW OF THE ABOVE DISCUSSION, I HAVE REASON TO B ELIEVE THAT THE INCOME CHARGEABLE TO TAX TUNE TO THE AMOUNT OF RS.334821/- TO TAX HAS ESCAPED ASSESSMENT FOR A.Y. 02-03. 6. IN SUPPORT OF APPEAL, THE LD. AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE HAS FILED DETAILED SUBMISSIONS ACCORDING TO WHICH THE A SSESSEE HAD ALREADY DECLARED FULLY AND TRULY ALL FACTS MATERIAL TO THE COMPUTATI ON OF HIS TOTAL INCOME INCLUDING THE RECEIPT OF INCENTIVE BONUS BY HIM AT THE TIME OF OR IGINAL ASSESSMENT AND THEREFORE HIS CASE WAS NOT COVERED BY THE PROVISO TO SECTION 147. ACCORDING TO HIM, THE IMPUGNED NOTICE ISSUED BY THE AO WAS INVALID AND CO NSEQUENTLY THE ORDER OF REASSESSMENT PASSED BY THE AO WAS ALSO VOID AB-INIT O. 7. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDER PASSED BY THE CIT (A). 8. WE HAVE HEARD BOTH THE PARTIES. IT IS NOT IN DIS PUTE THAT THE IMPUGNED NOTICE WAS ISSUED BY THE AO AFTER EXPIRY OF FOUR YEARS FRO M THE END OF THE ASSESSMENT YEAR UNDER APPEAL AND THEREFORE THE STATUTORY REQUI REMENTS LAID DOWN IN THE PROVISO TO SECTION HAVE TO BE SATISFIED. IN TERMS OF THE PR OVISO TO SECTION 147, AN ASSESSMENT COMPLETED U/S 143(3) CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE, INTER ALIA, TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, FOR THAT ASSESSMENT YEAR. THE REASO NS RECORDED BY THE AO TO REOPEN THE ASSESSMENT COMPLETED U/S 143(3) DO NOT E VEN ALLEGE THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING F ULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AT THE STAGE OF ORIGINAL A SSESSMENT. THE IMPUGNED NOTICE ISSUED BY THE AO IS THEREFORE INVALID. 9. PERUSAL OF THE ORIGINAL ASSESSMENT ORDER SHOWS T HAT THE ASSESSEE HAD NOT ONLY DISCLOSED INCENTIVE BONUS IN HIS RETURN OF INC OME BUT THE AO HAD ALSO ALLOWED DEDUCTION @ 30% THEREOF AS CLAIMED BY THE ASSESSEE. THIS FACT ALSO ESTABLISHES THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESS EE AT THE STAGE OF ORIGINAL ASSESSMENT IN DISCLOSING FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ASSESSMENT. 10. IN VIEW OF THE FOREGOING, THE IMPUGNED NOTICE I SSUED BY THE AO U/S 147/148 IS HELD TO BE INVALID AND LIABLE TO BE IS QUASHED. ORDER OF REASSESSMENT PASSED IN 4 ITA 19/RJT/2011 PURSUANCE THEREOF IS ALSO CONSEQUENTLY LIABLE TO BE QUASHED. WE ORDER ACCORDINGLY. 11. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ! 30.10.2012 ORDER PRONOUNCED ON 30.10-2012 SD/- SD/- ( .. / T. K. SHARMA) ( .. () / D. K. SRIVASTAVA) ) /JUDICIAL MEMBER ) / ACCOUNTANT MEMBER /RAJKOT: 30-10-2012 NVA/- # / COPY OF ORDER FORWARDED TO:- 1.. / APPELLANT-SHRI DIVYESH R. MAJETHIYA, RAJKOT 2 01. / RESPONDENT- THE ASSISTANT COMMISSIONER OF INCOME -TAX, CIR-4, RAJKOT 3. 5 / CONCERNED CIT-II, RAJKOT 4. 57 / CIT (A)-III, RAJKOT 5. 9 0 , , / DR, ITAT, RAJKOT 6. / GUARD FILE / BY ORDER TRUE COPY. SENIOR PRIVA TE SECRETARY, ITAT, RAJKOT