Shri Punit Dinesh Bhatt, Baroda V. The Dy.CIT, Circle-7, Baroda

ITA 2142/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8210 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 234B

Judgement Text

ITA NOS. 2141 & 2142/AHD/2014 SHRI PUNIT DINESH BHATT VS. DCIT ASSESSMENT YEAR: 2007-08 & 2009-10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM] ITA NOS. 2141 & 2142/AHD/2014 ASSESSMENT YEAR: 2007-08 & 2009-10 SHRI PUNIT DINESH BHATT ..................A PPELLANT 30, DAULAT SOCIETY, NEAR UTKARSH SCHOOL, GADPURA VILLAGE, RC CIRCLE BARODA-390 007 [PAN : AAPPB 0841 C] VS. DY. COMMISSIONER OF INCOME-TAX ............................RESPONDENT CIRCLE 7, BARODA APPEARANCES BY: BHAVIN MARFATIA FOR THE APPELLANT MUDIT NAGPAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 25.10.2017 DATE OF PRONOUNCING THE ORDER : 27.10.2017 O R D E R PER PRAMOD KUMAR AM: 1. BY WAY OF THESE TWO APPEALS, THE ASSESSEE APPELL ANT HAS CHALLENGED THE CORRECTNESS OF THE SEPARATE ORDER OF EVEN DATED 07. 05.2014 PASSED BY THE CIT(A)-V, BARODA IN THE MATTER OF ASSESSMENT UNDER SECTION 14 3(3) R.W.S. 147 OF THE INCOME- TAX ACT, 1961, FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10. 2. THE GRIEVANCES RAISED BY THE ASSESSEE IN BOTH TH E ASSESSMENT YEARS ARE AS FOLLOWS:- AY 2007-08 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -V, BARODA ['THE CIT(A)'] ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, BARODA ('THE AO') IN MAKING A DISALLOWANCE OF DEDUCTION CLAIMED AMOUNTING TO RS. 4,55,897/- BEING 30% OF THE AMOUNT OF INCENTIVE BONUS. 2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN C ONFIRMING THE ACTION OF AO IN HOLDING THAT ENTIRE AMOUNT OF RS. 4,55,897/- IS TAXABLE. 3. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN C ONFIRMING THE ACTION OF AO IN CHARGING INTEREST U/S 234B OF THE INCOME TAX ACT , 1961. ITA NOS. 2141 & 2142/AHD/2014 SHRI PUNIT DINESH BHATT VS. DCIT ASSESSMENT YEAR: 2007-08 & 2009-10 PAGE 2 OF 4 4. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN C ONFIRMING THE ACTION OF AO IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. AY 2009-10 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -V, BARODA ['THE CIT(A)'] ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, BARODA ('THE AO') IN MAKING A DISALLOWANCE OF DEDUCTION CLAIMED AMOUNTING TO RS. 3,04,492/- BEING 30% OF THE AMOUNT OF INCENTIVE BONUS. 2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN C ONFIRMING THE ACTION OF AO IN HOLDING THAT ENTIRE AMOUNT OF RS. 3,04,492/- IS TAXABLE. 3. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN C ONFIRMING THE ACTION OF AO IN CHARGING INTEREST U/S 234B OF THE INCOME TAX ACT , 1961. 4. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN C ONFIRMING THE ACTION OF AO IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 4. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE AB OVE GRIEVANCES IN BOTH ASSESSMENT YEARS UNDER CONSIDERATION ARE COVERED, I N FAVOUR OF THE ASSESSEE, BY THE DECISION DATED 24.10.2017 OF THE CO-ORDINATE BE NCH OF THIS TRIBUNAL IN A GROUP CASES (SHRI NARENDRASINH D VALA & 4 OTHERS) FOR THE ASSESSMENT YEARS 2006-07 TO 2008-09, WHEREIN THE TRIBUNAL HAS, INTER ALIA, OBSE RVED AS FOLLOWS:- 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. SOLE GRIEVANCE IN ALL THESE SET OF APPEALS IS A GAINST THE DISALLOWANCE OF EXPENSES CLAIMED BY THE ASSESSEE AGAINST THE INCENT IVE BONUS RECEIVED FROM LIC OF INDIA FOR WORKING AS A DEVELOPMENT OFFICER. FROM THE PERUSAL OF THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF SHRI D HARMENDRASINH G. GOHIL (SUPRA), WE FIND THAT VERY SAME ISSUE OF DISALLOWAN CE OF EXPENSE AGAINST INCENTIVE BONUS RECEIVED FROM LIC CAME UP BEFORE TH E TRIBUNAL AND ISSUE WAS DECIDED IN THE FAVOUR OF ASSESSEE OBSERVING AS FOLL OWS: '8. WE NOW COME TO ASSESSEE'S SECOND SUBSTANTIVE GR OUND CHALLENGING CORRECTNESS OF DISALLOWANCE OF EXPENSES CLAIMED OF RS. 2.34,145/- FROM HIS INCENTIVE BONUS. THERE IS NO DI SPUTE THAT {HE LIC HAS ISSUED A CLARIFICATION WAY BACK W.E.F. 01.04.19 89 ENTITLING DEVELOPMENT OFFICERS FOR REIMBURSEMENT TO THE EXTEN T OF 30% OF THE INCENTIVE BONUS GRANTED TO THEM. HON'BLE JURISDICTI ONAL HIGH COURT'S FORMER JUDGMENT ALSO CAPS THE SAME @30%. LEARNED DE PARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDS THAT THE ASSESSE E 'S EXPENDITURE IN QUESTION IS MUCH LESS THAN THE ONE IN HAND. MR. POPAT STRONGLY REBUT THE SAME BY REFERRING TO ASSESSEE'S REPLY DATED 30. 12.2013 AT PAGE 6 OF ASSESSMENT ORDER CLAIMING THE ACTUAL EXPENDITURE TO BE MUCH MORE THAN THE ONE IN QUESTION. WE FIND THAT THE SAME HAS NOWHERE BEEN ITA NOS. 2141 & 2142/AHD/2014 SHRI PUNIT DINESH BHATT VS. DCIT ASSESSMENT YEAR: 2007-08 & 2009-10 PAGE 3 OF 4 CONTROVERTED IN ASSESSMENT ORDER. THE REVENUE'S ARG UMENT REGARDING QUANTIFICATION STANDS REJECTED. 9. WE PROCEED FURTHER TO NOTICE THAT HON'BLE JURISD ICTIONAL HIGH COURT'S TWO DECISIONS GO CONTRARY TO HON'BLE MADHYA PRADESH HIGH COURT'S JUDGMENT AS WELL AS SIMILAR OTHER PRECEDENTS. THE R EVENUE VEHEMENTLY CONTENDS THAT HON'BLE APEX COURT'S DECIS ION (SUPRA) MAKES IT VERY CLEAR THAT HON 'BLE JURISDICTIONAL HIGH COU RT'S JUDGMENT IN CASE OF KIRANBHAI H SHELAT (SUPRA) IS WRONG. THERE IS NO DI SPUTE ABOUT THIS FACTUAL POSITION. IT HOWEVER EMERGES THAT HON'BLE J URISDICTIONAL HIGH COURT'S LATTER DECISION IN NITHINBHAI'S CASE (SUPRA ) TAKES DUE NOTE THEREOF IN ALLOWING ASSESSEE'S IDENTICAL CLAIM ONCE AGAIN AT PAGE 4. WE THUS ASSUME THAT THEIR LORDSHIPS HAVE VERY WELL CON SIDERED HON 'BLE APEX COURT'S DECISION BEFORE ARRIVING AT THE VERY C ONCLUSION IN ASSESSEE 'S FAVOUR. WE ACCORDINGLY ALLOW ASSESSEE 'S CLAIM O F EXPENSES IN QUESTION OF RS.2.34,145/- AGAINST HIS INCENTIVE BON US RECEIVED FROM LIC. THIS SECOND SUBSTANTIVE GROUND THEREFORE SUCCE EDS IN ALL THREE APPEALS AS WE HAVE ALREADY CLARIFIED THAT THERE IS NO DISTINCTION EXCEPT THAT OF THE RELEVANT FIGURES INVOLVED THEREIN. ' 6.1 WE FURTHER FIND THAT IN ANOTHER DECISION OF TRIBUNAL IN CASE OF SHRI NARENDRASINH D. VALA (SUPRA) CO-ORDINATE BENCH DELETED THE IMPUGNED DISALLOWANCE RELATING TO EXPENSES CLAIMED FOR EARNING INCENTIVE BONUS BY OBSERVING AS FOLLOWS; '3. WE ADVERT TO FIRST COMMON ISSUES IN ALL THESE A PPEALS RELATING TO VALIDITY OF REOPENING. BOTH THESE ASSESSEES ARE ADM ITTEDLY EMPLOYED AS DEVELOPMENT OFFICERS IN THE LIFE INSURANCE CORPO RATION OF INDIA. THEY HAD CLAIMED THE ABOVE EXPENSES COMING TO 30% O F THE INCENTIVE BONUS RECEIVED FROM THE ABOVE CORPORATION ALONGWITH CONVEYANCE ALLOWANCES. THE ASSESSING OFFICER INITIATED REOPENI NG IN THEIR CASES ON THE GROUND THAT HON 'BLE APEX COURT'S DECISION IN G URUDEV SINGH JAGGI VS. CIT SLP (CIVIL) NO. 22350 OF 2003 DECIDED ON 17 .11.2003 (ARISING FROM HON'BLE U.P. HIGH COURT'S DECISION IN ITA NO.5 6/2000 DATED 09.05.2003) HAD OBSERVED THAT HON'BLE JURISDICTIONA L HIGH COURT'S DECISIONS IN CIT VS. KIRANBHAI PI SHE I AT (1999) 2 35 ITR 635 (GUJ) WAS WRONG. HE THEREAFTER FRAMED IMPUGNED CONSEQUENT IAL RE- ASSESSMENT ON 27.01.2015 IN FORMER ASSESSEE 'S CASE AND ON 30.01.2015 IN LATTER ASSESSEE 'S CASES: RESPECTIVEL Y. THE C1T(A) UPHOLDS THE SAME IN HIS ORDERS UNDER CHALLENGE EXCE PT TO THE EXTENT (HAT HE HAS RESTRICTED CONVEYANCE EXPENDITURE DISAL LOWANCE (SUPRA) TO 50%. 4. BOTH THE LEARNED REPRESENTATIVES REFER TO THE CA SE FILE CONTAINING A CO-ORDINATE BENCH ORDER IN LATTER ASSESSEE BASE FOR ASSESSMENT YEARS 2006-07 TO 2008-09 ITA NOS. 2771 TO 2773/AHD/2014 D ECIDED ON 19,05.2017 INTER ALIA UPHOLDING VALIDITY OF REOPENI NG BASED ON HON'BLE APEX COURT'S DECISION HEREINABOVE. IT QUOTES HON'BL E APEX COURT'S YET ANOTHER JUDGMENT IN RAYMOND WOOLLEN MILLS LTD. VS. ITO (1999) 236 ITR 34 (SC) SETTLING THE LAW THAT A REOPENING CAN B E RESORTED TO ON THE BASIS OF A MERE PRIMA FACIE MATERIAL WHEREIN ITS CO RRECTNESS AND SUFFICIENCY IS NOT TO BE CONSIDERED AT THRESHOLD ST AGE. THERE IS NO ITA NOS. 2141 & 2142/AHD/2014 SHRI PUNIT DINESH BHATT VS. DCIT ASSESSMENT YEAR: 2007-08 & 2009-10 PAGE 4 OF 4 DISTINCTION ON FACTS BEING POINTED OUT AT EITHER PA RTY'S BEHEST. WE THEREFORE UPHOLD THE REOPENING (S) UNDER CHALLENGE IN ALL FOUR CASES. 5. WE NOW ADVERT TO THE SECOND ISSUE OF ALLOW ABILI TY OF EXPENDITURE AGAINST INCENTIVE BONUS RECEIVED FROM THE LIFE INSU RANCE CORPORATION OF INDIA. LEARNED DEPARTMENTAL REPRESENTATIVE PLACE S A VERY STRONG RELIANCE ON HON'BLE APEX COURT'S DECISION (SUPRA). WE HOWEVER NOTICE THAT THE ABOVE CO-ORDINATE BENCH HAS QUOTED HON 'BL E JURISDICTIONAL HIGH COURT'S DECISION IN CIT VS. NITINBHAI T BHUPATANI T AX APPEAL NO. 1005/2005 DECIDED ON 08.02.2006 I.E. POST FACTO HON 'BLE APEX COURT'S DECISION. IT HAS ACCORDINGLY ACCEPTED ASSESSEE 'S C LAIM AFTER REFERRING TO HON 'BLE JURISDICTIONAL HIGH COURT'S LATTER JUDG MENT. THERE IS NO OTHER DISTINCTION ON FACTS COMING FROM THE REVENUE SIDE A PART FROM THE ABOVE LEGAL PLEA. WE THEREFORE FOLLOW CONSISTENCY IN VIEW OF LIC'S CLARIFICATION W.E.F. 01.04.1989 ENTITLING ITS DEVELOPMENT OFFICER S FOR REIMBURSEMENT TO THE EXTENT OF 30%. WE ACCORDINGLY DIRECT THE ASS ESSING OFFICER TO DELETE THE IMPUGNED DISALLOWANCE IN ALL FOUR INSTAN CES BEFORE US. ' 6.2 FROM PERUSAL OF THE ABOVE DECISIONS OF THE TRIB UNAL, WE FIND THAT THE FACTS INVOLVED IN THE INSTANT APPEALS ARE SIMILAR TO THE FACTS ADJUDICATED BY THE TRIBUNAL IN THE DECISION REFERRED ABOVE. WE, THEREF ORE, RESPECTFULLY FOLLOWING THE DECISIONS OF CO-ORDINATE BENCH, DELETE THE IMPU GNED DISALLOWANCE MADE BY THE ASSESSING OFFICER. THUS, THE ORDERS OF BOTH THE LOWER AUTHORITIES ARE SET ASIDE AND THE IMPUGNED DISALLOWANCE IS DELETED. 5. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE M ATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH. RESPECTFULLY FOLLOWING TH E SAME, WE UPHOLD THE GRIEVANCES OF THE ASSESSEE AND ALLOW BOTH APPEALS FILED BY THE ASSESSEE FOR AYS 2007-08 AND 2009-10. 6. IN THE RESULT, THE APPEALS ARE ALLOWED. PRONOU NCED IN THE OPEN COURT TODAY ON THE 27 TH DAY OF OCTOBER, 2017. SD/- SD/- RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 27 TH DAY OF OCTOBER, 2017 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD