MILAN TANVIR CHOKSHI, MUM V. CIT (A)-51, MUM

ITA 22/MUM/2023

AI Insights

The case revolves around the appeal by Milan Tanvir Chokshi against the order of the Commissioner of Income Tax (Appeals)-51, Mumbai, which upheld the re-opening of his income tax assessment for AY 2014-15. The primary contention was the validity of the notice issued under section 148 of the Income Tax Act, which the assessee argued was barred by limitation and based on incorrect facts. The AO had re-opened the assessment citing undisclosed income from the surrender of an LIC policy, treating it as income from other sources and not as a capital asset. The Tribunal, after examining the facts and the legal provisions, concluded that the AO's actions were not justified, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300114 (ITAT-undefined)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Next Hearing Date: 09-03-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 03-01-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 147; 148; 2(14); 234B; 143(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM आयकरअपीलसं/I.T.A. No.22/Mum/2023 (निर्धारणवर्ा /Assessment Year: 2014-15) Milan Tanvir Chokshi EE 5011/12/13, Bharat diamond Bourse, Bandra Kurla Complex, Bandra (East) Mumbai- 400 051 बिधम / Vs. CIT(A)-51. 6 th Floor, Aaykar Bhavan, Maharishi Karve Road, Churchgate, Mumbai-400 020 स्थधयीलेखधसं/.जीआइआरसं/.PAN/GIR No. : AAAPC4709L (अपीलार्थी /Appellant) .. (प्रत्यर्थी /Respondent) सुनवाईकीतारीख /Date of Hearing: 10/03/2023 घोषणाकीतारीख /Date of Pronouncement: 12/05/2023 आदेश / ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-51, Mumbai (herein after “CIT(A)”), dated 18.11.2022 for AY 2015-16. The grounds of appeal raised by the assessee are as under: 1. In law and as per the facts and circumstances of the appellants case, the Hon'ble CIT(A) erred in upholding the validity of issue of notice u/s 148 even though the same is barred by limitation. Thus, any order passed as a consequence of the said notice deserves to be quashed, being void ab-initio Assessee by: Shri Reepal G. Tralshawala Revenue by: Shri Anil Gupta ITA No. 22/Mum/2023 A.Y. 2014-15 Milan Tanvir Chokshi 2 2. In law and as per the facts and circumstances of the appellants case, the Hon'ble CIT(A) erred in confirming the action of Id. A.0. of treating the accretion in the value of the policy received on surrender to the tune of Rs. 5,49,989/-as income from other sources'. Thus, the addition made on such misinterpretation is unjust/unreasonable and thus deserves to be deleted. 3. In law and as per the facts and circumstances of the appellants case, the Hon'ble CIT(A) erred in not treating the Unit Linked Market Plus Policy of LIC as a 'capital asset' within the meaning of section 2(14) by ignoring numerous judicial pronouncements in this regard and consequently erred in not allowing indexation benefit and consequential long term capital loss to the tune of Rs. 5.02,034/- on the surrender of such policy. Thus, the disallowance made on such misinterpretation of facts is bad in law and thus the same deserves to be deleted 4. In law and in the facts & circumstances of the appellants case, the Hon'ble CIT(A) erred in upholding the charging of interest w/s 234B & 234C of the Income Tax Act, 1961. 5. In law and in the facts & circumstances of the appellants case. the the hon'ble CIT(A) has erred in confirming initiation of penalty us 271 (1)(c) of the Income Tax Act, 1961. 6. The appellant craves leave to add, amend, alter or modify theground or grounds of appeal on or before the hearing 2. At the outset, the Ld. AR of the assessee pointing out the legal issue (Ground No.1) assailed the action of the AO to have re-opened the assessment for AY 2014-15 without satisfying the condition precedent as prescribed under section 147 of the Income Tax Act(herein after “the Act”). ITA No. 22/Mum/2023 A.Y. 2014-15 Milan Tanvir Chokshi 3 3. Brief facts are that the assessee had filed his return of income on 29.09.2014 declaring total income of Rs. 12,37,920/-.The same was processed u/s 143(1) of the Act. Later the case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 of the Act dated 22.03.2021. Pursuant thereto, the assessee requested for copy of the reasons recorded by AO before re-opening its assessment, which was furnished to the assessee and which reads as under: - 1. Brief details of the assessee: The assessee is an Individual 2. Brief details of the information collected/received by the AO: Information has been received from ITO (I&CI). Unit 1(3). Mumbai about assessee that assessee has surrendered an LIC pension policy during FY 2013-14 and has received surrendered value of Rs 18,60,343/-, Single premium payment of Rs 13 lakhs was made towards this policy by assessee in 2006-07. During enquiry proceedings by the ITO in this regard, assessee submitted that he has not claimed benefit under Chapter VIA in respect of the policy on the payment of premium. Assessee also submitted that he treated the policy as debt fund and claimed Long Term Capital Loss of Rs 502034/- (after indexation benefit). Later, the ITO shared the information with this office that tax treatment of pension policy as capital asset is incorrect. It was also shared that as per section 80CCC (2) "(2) Where any amount standing to the credit of the assessee in a fund, referred to in sub-section (1) in respect of which a deduction has been allowed under sub-section (1), together with the interest or bonus accrued or credited to the assessee's account, if any, is received by the assessee or his nominee (a) on account of the surrender of the annuity ITA No. 22/Mum/2023 A.Y. 2014-15 Milan Tanvir Chokshi 4 plan whether in whole or in part, in any previous year, or(b) as pension received from the annuity plan, an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in that previous year in which such withdrawal is made or, as the case may be, pension is received, and shall accordingly be chargeable to tax as income of that previous year." It was also shared that in absence of complete submission, accretion value of Rs 5,60,343/- is chargeable to tax as income of assessee during FY 2013-14. Moreover, it was also stated that if it is found that assessee has claimed benefit under Chapter VI against premium payment, then entire surrender value shall be chargeable to tax in hands of assessee, 3. Analysis of information collected/received: On perusal of facts mentioned above and provisions of the Income Tax Act, 1961. prima facie it is clear that the assessee's treatment of pension policy as capital asset is incorrect. Capital assets are transferrable whereas pension policy is not transferrable. Moreover, ITR of assessee has been perused. It is reflected in ITR that assessee has claimed Long Term Capital Loss of Rs 502034 during the year under consideration. Considering entirety of facts, it is clear that accretion value of Rs. 5,60,343/- is liable to tax in hands of assessee during FY 2013-14. Further, in case it is found that if assessee has claimed benefit under Chapter VI against premium payment, then entire surrender value ie. Rs 18,60,343/- shall be chargeable to tax in hands of assessee. 4. Enquiries made by the AO as sequel to information collected/received: As mentioned above. ITA No. 22/Mum/2023 A.Y. 2014-15 Milan Tanvir Chokshi 5 5. Basis of forming reasons to believe and details of escapement of Income. From analysis of the above facts, have reason to believe that assessee failed to disclose fully and truly all material facts necessary for his assessment of income which resulted into understatement of his income by Rs.5,60,343/ 4. According to the Ld. AR, before the aforesaid reasons were recorded and notice u/s 148 of the Act dated 22.03.2021 was issued by AO, there was a full fledged inquiry conducted in year 2018 by the ITO (I&CI), Unit (1)3, Mumbai which fact is discernible from perusal of page no. 17- 18 of the paper book, wherein, the ITO (I&CI), Unit (1)3, Mumbai had asked assessee the following queries on this issue which reads as under; Regarding policy no. 902905122 of Shri Milan Tanvir Choksi mumbai.ito.icil.3