Sushil Kumar Das, Howrah V. ITO, Ward - 22(4), Kolkata, Kolkata

ITA 193/KOL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6648 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 29-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2011
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANIK
• Assessee Lawyers: M D SHAH
• Keywords: Capital receipt
• Section: 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND ! ! ! ! , '# SHRI AKBER BASHA, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 193/KOL/2011 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) SHRI SUSHIL KUMAR DAS (PAN: AHUPD 9799 A) - % - - VERSUS - . (-.*+/ RESPONDENT ) THE I.T.O., WARD- 22(4),KOLKATA *+ / 0 '/ FOR THE APPELLANT: SHRI M.D.SHAH -.*+ / 0 '/ FOR THE RESPONDENT: SHRI A.K.PRAMANIK '! / ORDER ( (( ( ! ! ! !) )) ), , , , '# PER SHRI AKBER BASHA, AM THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 31.08.2010 OF THE CIT (A)-XIV, KOLKATA PERTAINING TO ASSESSMENT YEAR 2005 -06. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AR E AS UNDER:- 1. FOR THE LD. CIT(A) ERRED IN LAW IN HOLDING THAT IN YOUR PETITIONERS CASE THERE WAS NO NEED FOR FURNISHING REASONS FOR REOPEN ING OF THE CASE IN SPITE OF THE APPELLANTS SPECIFIC REQUEST TO THAT EFFECT. 2. FOR THAT THE COMPENSATORY NON-STATUTORY INTEREST RECEIVED BY THE APPELLANT IN TERMS OF THE ORDER OF THE HONBLE CALCUTTA HIGH COU RT WAS A CAPITAL RECEIPT IN NATURE AND THE AUTHORITIES BELOW SHOULD HAVE NOT IM POSED TAX ON SUCH CAPITAL RECEIPT. 3. FOR THAT THE OFFICERS OF THE DEPARTMENT SHOULD N OT HAVE TAKEN ADVANTAGE OF APPELLANTS IGNORANCE AND THE CBDTS CIRCULAR NO.14 (XL-35) DATED 11.04.1955 IS BINDING ON THE ASSESSING OFFICER. 4. FOR THAT WITHOUT PREJUDICE TO GROUND NO.2 ABOVE, THE APPELLANTS CLAIM OF SPLITTING UP INTEREST SHOULD HAVE BEEN ALLOWED FOLL OWING RATIO OF THE APEX 2 COURTS DECISION IN THE CASE OF CIT VS T.N.K.GOVIND ARAJAN CHETTY [165 ITR 232 )SC)]. 5. FOR THAT IN ANY EVENT, AS THE REASON FOR REOPENI NG OF THE CASE WAS NEVER COMMUNICATED, THE PROCEEDINGS WERE VOID AND BAD IN LAW AND THEREFORE A NULLITY AND THE ORDERS PASSED BY THE AUTHORITIES BE LOW ARE LIABLE TO BE SET ASIDE. 6. FOR THAT MERELY BECAUSE THE APPELLANT WRONGLY S HOWN CAPITAL RECEIPT AS TAXABLE INCOME IN HIS RETURN, CAPITAL RECEIPT CANNO T BE SUBJECTED TO TAX BY THE AUTHORITIES TAKING ADVANTAGE OF IGNORANCE OF THE AP PELLANT. 3. THERE IS A DELAY OF 1 DAY IN FILING OF THE APP EAL BY THE ASSESSEE FOR WHICH THE ASSESSEE HAS FILED A CONDONATION PETITION EXPLA INING THE REASONS FOR SUCH DELAY. AFTER CONSIDERING THE SUBMISSIONS BY THE ASSESSEE, THE DELAY IS CONDONED. GROUND NOS. 1 AND 5 RAISED BY THE ASSESSEE IN THIS APPEAL ARE NOT PRESSED. THE REMAINING GROUNDS RAISED BY THE ASSESSEE IS RELATING TO WHETH ER THE INTEREST OF RS.3,29,101/- RECEIVED BY THE ASSESSEE AS PER THE ORDER OF THE HO NBLE CALCUTTA HIGH COURT IS A CAPITAL RECEIPT, TREATING IT AS COMPENSATORY IN NAT URE, WHICH WOULD NOT FORM A PART OF HIS INCOME OR NOT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL, RETIRED AS SCHOOL TEACHER FROM SHANPUR NETAJI SUBHAS HIGH S CHOOL ON 31 ST JULY, 1998. THE ASSESSEE RECEIVED AN AMOUNT OF RS.10,92,796/- INCLU SIVE OF INTEREST OF RS.3,29,508/- BY VIRTUE OF WRIT PETITION DATED NO.2928 WEST BENGA L. THE ASSESSEE DID NOT FILE ANY RETURN UNDER SECTION 139(1) TILL 31 ST MARCH, 2006. SINCE THE ASSESSEE RECEIVED RS.10,092,796/- WHICH IS INCLUSIVE OF INTEREST AND TDS WAS MADE AGAINST THIS PAYMENT. THE ASSESSING OFFICER NOTICED THAT THE INC OME HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2005-06. UNDER THE CIRCUMSTANCES TH E ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE FILED RE TURN OF INCOME SHOWING INCOME OF RS.6,19,392/- ALONG WITH STATEMENT OF TAXABLE INCOM E OF DIFFERENT YEARS AND THE ASSESSEE ALSO CLAIMED FOR RELIEF UNDER SECTION 89(1 ) OFT EH ACT. IN THE ASSESSMENT PROCEEDINGS AFTER GIVING OPPORTUNITY TO THE ASSESSE E TO ATTEND THE HEARING THE ASSESSING OFFICER RE-COMPUTED THE TAXABLE INCOME AT RS.8,86,5 00/- RESTRICTING THE RELIEF UNDER SECTION 89(1) OF THE ACT AT RS.65,817/-. THE ASSESS EE WAS UNDER IMPRESSION THAT THE INTEREST RECEIVED AS PER THE ORDER OF THE HIGH COUR T WAS TAXABLE HENCE THE ASSESSEE OFFERED TO TAX A SUM OF RS.2,53,730/-. THE ASSESSEE LATER LEARNT FROM OTHER SOURCES THAT 3 THE INTEREST RECEIVED AS A RESULT OF THE ORDER OF T HE HONBLE HIGH COURT IS A NON STATUTORY INTEREST AND IN THE FORM OF DAMAGE/COMPEN SATION AND HENCE THE SAME WAS NOT LIABLE TO TAX. ACCORDINGLY THE ASSESSEE FILED A PPEAL BEFORE THE CIT (A). IN SUPPORT OF HIS CONTENTION, HE RELIED ON THE ORDERS OF THE H ONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O CIT VS CHARANJIT JAWA REPORTED IN 142 TAXMAN 101 AND IT IS PRAYED THAT THE AO MAY BE DIRECTED NOT TAX THE INTE REST OF RS.2,53,730/- WHICH WAS NOT TAXABLE BUT UNDER WRONG NOTION OF LAW THE SAME WAS OFFERED TO TAX. THE CIT (A) HOWEVER REJECTED THE SAME BY MERELY STATING THAT TH E ASSESSEE HAS OFFERED THE INCOME IN HIS RETURN AND THE SAME CANNOT BE REDUCED AT THE APPELLATE STAGE. HENCE AGGRIEVED BY THE ORDER OF THE CIT (A) THE ASSESSEE IS IN APPE AL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT (A) SIMPLY REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND TH AT THE INCOME AHS BEEN DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME AND HENCE THE SAME CANNOT BE REDUCED IN THE APPELLATE PROCEEDINGS. IT IS SUBMITTED THAT THE POW ERS OF THE CIT (A) IS COTERMINOUS WITH THE POWERS OF THE ASSESSING OFFICER. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWING JUDGEMENTS: A) CIT VS KANPUR COAL SYNDICATE [1964] REPORTED IN 53 ITR 225 (SC) B) JUTE CORPORATION OF INDIA LTD REPORTED AS 187 ITR 6 88 5.1. IT IS ALSO SUBMITTED THAT IT IS A WELL SETTLE D LAW THAT NO TAX CAN BE IMPOSED WITHOUT THE AUTHORITY OF LAW IF A TAX CANNO T BE IMPOSED, THE SAME CANNOT BE COLLECTED MERELY BECAUSE THE ASSESSEE HAS PAID THE SAME. IT IS SUBMITTED THAT IT IS UNCONSTITUTIONAL TO COLLECT TAX WITHOUT AUTHORITY O F LAW. HE REFERRED TO THE ARTICLE 265 WHICH STATES THAT NO TAX CAN BE LEVIED OR COLLECTE D EXCEPT BY THE AUTHORITY OF LAW. MERELY BECAUSE THE ASSESSEE UNDER WRONG UNDERSTANDI NG OF LAW OFFERS AMOUNT TO TAX, THE SAME WILL NOT BE A REASON TO TAX THE SAID AMOUN T UNLESS IT IS LAWFUL TO TAX THE SAME. FOR THIS PROPOSITION HE RELIED ON THE FOLLOWING CAS E LAWS:- I) CALCUTTA HIGH COURT IN BHASKAR MITTER, 73 TAXMAN 43 7 (CAL.) II) CALCUTTA HIGH COURT IN MAYANK PODDAR (HUF), 130 TAX MAN 500 (CAL.) 4 III) CALCUTTA HIGH COURT IN SAIL DSP VR EMPLOYEES ASSOCI ATION 1998, 262 ITR 638 (CAL) HENCE IT IS THEREFORE SUBMITTED THAT THE RECEIPT CA N BE SUBJECT TO TAX ONLY IF THE SAME IS CHARGEABLE TO TAX AS PER LAW NOT ONLY BECAUSE THE A SSESSEE UNDER WRONG UNDERSTANDING. HENCE THE INTEREST OF RS.2,53,730/- WAS NON STATUTO RY ONLY AND IN THE FORM OF A DAMAGE/COMPENSATION AND AS SUCH THE INTEREST IS NOT LIABLE TO TAX. IN VIEW OF THE ABOVE, HE PRAYED THAT THE AO MAY BE DIRECTED TO EXC LUDE THE SUM OF RS.2,53,730/- AS TAXABLE TO THE ASSESSEE. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT AN AMOUNT OF INTEREST OF RS.2,53,730/- WAS ALR EADY INCLUDED BY THE ASSESSEE HIMSELF AND HE FILED THE RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 SINCE THIS INCOME IS SHOWN IN THE RETURN BY HIMSELF IT CANNOT BE REDUCED AT THE APPELLATE STAGE HENCE, IT IS SUBMITTED THE ORDER OF THE CIT(A) IS T O BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE MOOT QUESTION ARISING OUT OF THIS AP PEAL IS WHETHER THE INCOME DETERMINED BY THE ASSESSING OFFICER ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE CAN BE A FIGURE LOWER THAN THE INCOME RETURNED BY THE A SSESSEE. IT IS A WELL SETTLED THAT THE PRINCIPLE FOR DETERMINING THE TAXABLE INCOME OF THE ASSESSEE UNDER THE INCOME TAX ACT SHOULD BE WITHIN THE PURVIEW OF THE LAW IN FORC E. IF THE TAXABLE INCOME DETERMINED BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH SUCH PRINCIPLE IT IS OPEN TO THE ASSESSEE TO CONTEND THE SAME BEFORE THE HIGHER AUTH ORITIES TO FOLLOW THE CORRECT APPLICATION OF LAW TO DETERMINE THE ACTUAL TAXABLE INCOME OF THE ASSESSEE. IN OUR CONSIDERED VIEW, THE LOWER AUTHORITIES, NOT EXPECTE D, TO SAY THAT MERELY BECAUSE THE ASSESSEE HAS RETURNED INCOME WHICH IS HIGHER THAN T HE INCOME DETERMINED IN ACCORDANCE WITH LEGAL PRINCIPLES SUCH RETURNED INCO ME CAN BE TREATED AS LAWFULLY ASSESSED. AN ASSESSEE IS LIABLE TO PAY TAX ONLY UPO N THE TAXABLE INCOME. THE LAW IMPOSED BY THE ASSESSING OFFICER TO ASSESS THE INCO ME ACCORDING TO LAW AND DETERMINED THE TAX PAYABLE THEREON. IN DOING SO, TH E ASSESSING OFFICER CANNOT ASSESS THE INCOME OF THE ASSESSEE AN AMOUNT WHICH IS NOT T AXABLE AS PER LAW THOUGH SHOWN BY 5 THE ASSESSEE IN THE RETURN. IT IS ALWAYS OPEN TO TH E ASSESSEE TO TAKE A PLEA THAT THE TAXABLE INCOME THOUGH SHOWN AS INCOME IS NOT TAXABL E UNDER LAW BEFORE THE HIGHER AUTHORITIES. THE CIT (A) WITHOUT GOING INTO THE MER IT OF THE CASE HELD THAT THE CIT (A) IS NOT HAVING ANY POWER TO REDUCE THE TAXABLE INCOM E OF THE ASSESSEE AT THE APPELLATE STAGE, WHICH IS NOT CORRECT. IN THE CASE OF CIT VS. CHARANJIT JAWA (SUPRA) RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTS TH E VIEWS THAT THE INTEREST RECEIVED AS A RESULT OF THE ORDER OF THE HONBLE HIGH COURT WAS NOT A STATUTORY INTEREST AND WAS IN THE FORM OF DAMAGE/COMPENSATION AND THE SAME WAS NO T LIABLE TO TAX. IN VIEW OF THE ABOVE, AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO ON PERUSAL OF THE CASE LAWS RELIED UPON BY BOTH THE PARTIES WE HOLD THAT THE INTEREST OF RS.2,53,730/- RECEIVED BY THE ASSESSEE AS PER THE O RDER OF THE HONBLE HIGH COURT WAS NOT TAXABLE AND THE SAME IS A CAPITAL RECEIPT. WE ALSO TAKE SUPPORT FROM THE CIRCULAR ISSUED BY THE CBDT VIDE CIRCULAR NO.14 (XL-35) DATE D 11.04.1955 WHICH HAS DIRECTED THE OFFICERS NOT TO TAKE ADVANTAGE OF THE IGNORANCE OF THE ASSESSEE. THE APPELLATE AUTHORITIES HAS POWERS TO ADMIT POINTS OF LAW AND ADMIT CLAIM FOR EXEMPTION BASED ON MATERIALS ON RECORD AS PER THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (19 98) REPORTED IN 229 ITR 383 (SC). IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TREAT THE AFORESAID RECEIPT OF RS.2,53,730/- AS CAPITAL RECEIPT WHICH WAS RECEIVED BY HIM AS PER THE ORDER OF THE HONBLE HIGH COURT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 13.05.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER ! ! ! !, ,, , '# '# '# '# , AKBER BASHA, ACCOUNTANT MEMBER. ( (( (1# 1# 1# 1#) )) ) DATE:13.05.2011. R.G.(.P.S.) 6 '! / -2 3'2'4- COPY OF THE ORDER FORWARDED TO: 1. SHRI SUSHIL KUMAR DAS, V ROAD, SHANPUR PANCHNANTA LA, DASNAGAR, HOWRAH. 2 THE I.T.O., WARD-22(4), KOLKATA 3. THE CIT, 4. THE CIT(A)-XIV, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA .2 -/ TRUE COPY, '!%:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES