Shri Dr.Virendra J.Patel, Baroda V. The Income tax Officer,Ward-2(6), Baroda

ITA 194/AHD/2012

• Counselvise Citation: 19420514 RSA 2012
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-08-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 23-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: J P SHAH
• Keywords: Question of law; Wrong claim; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO . 194 /AHD/20 1 2 A. Y. 1996 - 97 DR. VIRENDRA J. PATEL GADAPURA, GOTRI ROAD, BARODA - 390001 PAN : A CTPP2682G VS TH E INCOME - TAX OFFICER, WARD 2(6) , BARODA (APPELLANT) (RESPONDENT) REVENUE BY : S HRI DINESH SINGH , SR. D.R. , ASSESSEE(S) BY : SHRI J.P. SHAH, A.R. / DATE OF HEARING : 1 3 / 0 8 /201 5 / DATE OF PRONOUNCEMENT: 20 / 0 8 /201 5 / O R D E R PER S.S. GODARA , JUDICIAL MEMBER TH IS ASSESSEE S APPEAL FOR A.Y. 1996 - 97 , ARISES FROM ORDER OF CIT (A) - V , BARODA DATED 2 1.11 .2 01 1 IN APPEAL NO. CAB/(A)V - 580 / 09 - 10 , AFFIRMING PENALTY OF RS. 7,60,000/ - IN PROCEEDINGS U/S. 271(1)(C) OF THE INCOME TAX ACT , 1961, IN SHORT THE ACT . ITA NO. 194 /AHD/201 2 DR. VIRENDRA J. PATEL FOR A.Y. 1996 - 97 - 2 - 2. THE ASSESSEE - INDIVIDUAL IS HAVING SALARY, DIVIDENDS AND INTEREST INCOME IN THE RELEVANT PREVIOUS YEAR. HE RECEIVED SALARY FROM M/S. BAYER DIAGNOSTICS INDIA LTD AS ITS CHAIRMAN AND MANAGING DIRECTOR UP TO HIS RETIREMENT IN THE VERY CAPACITY ON 31 - 12 - 1995. THE SAID ASSESSEE COMPANY ENTERED INTO A RESTRICTIVE COVENANT AGREE MENT DATED 19 - 01 - 1994 REST R A IN ING HIM FROM TAKING UP ANY SUCH ASSI GNMENT UP T O 31/12/1998 IN LIE U OF RS. 19 LACS PAID IN LUMP SUM. THE ASSESSEE CLAIMED THIS SUM AS EXEMPT BEING IN THE NATURE OF A CAPITAL RECEIPT. HE WOULD PLA CE ON RECORD THE RELEVANT AGREEMENT WITH THE COMPANY AN D DENIED ANY MASTER - SERVANT SO AS TO ATTRACT SECTION 2(24)(III) R.W.S. 17(3) OF THE ACT. THE ASSESSING OFFICER IN COURSE O F A REGULAR ASSESSMENT FRAMED ON 27 - 03 - 1997 DISAGREED WITH ASSESSEE S RELIANCE PLACED ON A TRIBUNAL S DECISION KSS MANI VS. ITO 54 IT D 76 (MADRA S ) BY HOLDING THAT THE SAME DID NOT CONFIRM TO THE CORRECT LAW. AND DREW MUCH A LENGTHY DISCUSSION AS TO WHAT CONSTITUTED AN INCOME, ITS I NCLUSIVE INTERPRETATION AND TREATED THE ABOVE STATED CONSIDERATION OF RS. 19 LACS AS INCOME U/S. 2(24)(II) AS WELL AS SEC. 17(3) OF THE ACT. THIS LED TO THE IMPUGNED ADDITION B EING M ADE IN ASSESSEE S HANDS. P ENALTY PROCEEDINGS U/S. 271(1)(C) ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME U/S. 271(1)(C) OF THE ACT ALSO STOOD INITIATED . THE COMMISSIONER OF INCOME TAX(A) REVERSED THE ASSESSING OFFICER S ACTION IN ORDER DATED 22/05/1998. THE REVENUE CAME TO THE TRIBUNAL. A CO - ORDINATE BENCH IN ITA NO . 1756/AHD/98 DECIDED ON 11/11/2005 RESTORED THE ASSESSING OFFICER S FINDINGS. THE ASSE SEE FILED TAX APPEAL NO. 958/2006 IN THE HON BLE JURISDICTIONAL HIGH COURT. THE SAME IS STATED TO BE PENDING AS ON D A TE AFTER SUBSTANTIAL QUESTION OF LAW BEING FRAMED ON 16 - 07 - 2007. THE ASSESSEE INFORMS ITS NEXT LISTING DATE TO BE 29 - 09 - 2015. QUANTUM PRO CEEDINGS ACCORDINGLY ARE YET TO ATTAIN FINALITY . ITA NO. 194 /AHD/201 2 DR. VIRENDRA J. PATEL FOR A.Y. 1996 - 97 - 3 - 3. WE CAME TO PENALTY P ROCEEDINGS . THE ASSESSE DENIED TO HAVE EITHER CONCEALED OR FURNISHED INACCURATE PARTICU LARS OF INCOME QUA HIS NON - COMPE TE RECEIPT SUM OF RS. 19 LACS BY FILING A VERY ELABORATE REPLY. THE ASSESSING OFFICER REJECTED THE SAME IN PENALTY BY PLACING A HEAVY RELIANCE ON THE AFORESTATED CHRONOLOGY OF EVENTS AND IMPOSED THE IMPUGNED PENALTY OF RS. 7,60,000/ - UNDER CHALLENGE. THE CIT (A) ALSO AFFIRMS THE ASSESSING OFFICER S ACTION. 4 . WE HAV E HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILE. RELEVANT FACTS STATED HEREINABOVE ARE NOT REP EATED FOR THE SAKE OF BREVITY . THE ASESSEE S ONLY ARGUMENT IS THAT TREATMENT OF NON - COMP LETE SUM OF RS. 19 LACS AS A REVENUE RECEIPT WAS A DEB A TABLE ISS UE. EVEN THE TRIBUNAL S ORDER ( SUPRA ) HAD TAKEN A VIEW SUPPORTING HIS CLAIM. HE SUBMITS TO HAVE FILED ALL NECESSARY PARTICULARS ALONG WIT H COPY OF THE RELEVANT NON COMP ETE AGREEMENT IN ASSESSMENT PROCEEDINGS ITSEL F. THE REVENUE PORTRAYS IT AS A CASE OF S UBMITTING FALSE EXPLANATION U/S. 271(1)(C) EXPLANATION 1. IT IS EVIDENT THAT THE ASSESSEE S NOTES FRAMING PART OF HIS RETURN HAD DULY HIGHLIGHTED REASONS OF NOT TREATING THE IMPUGNED RS. 19 LACS RECEIPT AS INCOME BEING A CAPITAL RECEIPT. THE ASSESSING O FFICER AND THE TRIBUNAL REJECTED HIS EXPLANATION (SUPRA) NO ON FACT S ; BUT ON LAW ALSO . WE OBSERVE IN THIS FACTUAL BACKDROP THAT THIS INS TANCE IS THAT O F MERE SUBMISSION OF A WRONG CLAIM AND N OT OF A FALSE OR BOGUS ONE . WE R EITERATE THE HON BLE APEX COURT S DECISION IN CIT VS. RELIANCE PETRO - PRODUCTS 322 ITR 158 (SC) HOLDING THAT QUANTUM AND PENALTY PROCEEDINGS STAND ON DIFFERENT FOOTING S AND EACH AND EVERY ADDITION DOES NOT RESULT IN AUTOM ATIC IMPOSITION OF PENALTY. WE OBSERVE IN LIGHT THEREOF THAT THE A SSES SEE S CLAIM OF TREATING HIS NON COMPETE SUM OF RS. 19 LACS AS A CAPITAL RECEIPT IS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME U/S. 271(1)(C) OF THE ACT. THE IMPUGNED PENALTY OF RS. 7.60 LACS IS ACCORDINGLY DELETED. ITA NO. 194 /AHD/201 2 DR. VIRENDRA J. PATEL FOR A.Y. 1996 - 97 - 4 - 5 . THE A SSESSEE S APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 2 0TH AUGUST , 2015 AT AHMEDABAD. SD/ - SD/ - ( G.D. AGRAWAL ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 20 / 0 8 / 20 1 5 A.K. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD