SHREE AJAYBIR SINGH BAKSHI, MUMBAI V. D.C.I.T.-14(1)(1), MUMBAI

ITA 2753/MUM/2022

AI Insights

The case revolves around the dispute concerning the addition of Rs 3,27,600 to the income of the assessee, Shree Ajaybir Singh Bakshi, which was claimed as exempt income under section 10(10AA) of the Income Tax Act, 1961. The assessee, upon retirement from M/s. Vodafone India Services Pvt. Ltd., received this amount as leave encashment, which was duly reflected as exempt in Form-16. However, CPC Bangalore, in its intimation under section 143(1), added this amount to the taxable income without proper justification. The CIT (Appeals) partially granted relief but upheld the addition of Rs 3,27,600, leading the assessee to appeal before the ITAT. The ITAT found the actions of CPC Bangalore and the CIT (Appeals) to be legally untenable and allowed the appeal of the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123115 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 26-10-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURINDER MEHTA
• Keywords: Rectification of order; Salary income; Earning of tax free income
• Section: 154; 10(10AA); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 2753/Mum/2022 (A.Y. 2017-18) Shree Ajaybir Singh Bakshi 7, Sunset Heights, 59, Pali Hill Road, Bandra (W), Mumbai-400 050 PAN: AEPPB3685M ...... Appellant Vs. DCIT-14(1) (1), Aayakar Bhavan, M. K. Road, Mumbai-400 020 ..... Respondent Assessee by : Shri Surinder Mehta Respondent by : Shri Manoj Kumar Sinha, Sr. AR Date of hearing : 19/01/2023 Date of pronouncement : 21/03/2023 ORDER PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of National Faceless Appeal Centre; Delhi (for short ‘NFAC”) dated 26.08.2022 u/s. 154 of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2017-18. The assessee has raised the following grounds of appeal: 2 ITA No. 2753/Mum/2022 SHREE AJAYBIR SINGH BAKSHI “1. a) that the CIT (Appeals) has erred in not granting deduction while computing the income from salary for the following amounts claimed by the appellant- Leave Encashment on termination of services 3, 00,000/- Exempt Allowances 27,600/- Total 3, 27,600/- b) That during the year under consideration the appellant retired from M/s. Vodafone India Services Pvt. Ltd. and Form-16 in respect of salaries was duly filed with the CIT (Appeals) and in the same the above exempt allowances are correctly shown. c) That in view of the said exempt allowances having been shown in Form-16 by the employer of the appellant, the addition made by the CPC, Bangalore, in respect of the same was totally bad in law and should have been cancelled by the C1T (Appeals). d) That as per Notification No. SO 588(E), dated 31.05.2002, issued by the Government, the limit for deduction u/s 10(10AA) is Rs 3, 00,000/- and the leave encashment amount received by the appellant is Rs. 3, 00,000/- and as such no addition was called for. c) That the CIT (Appeals) in Para 7.4. Has erred in holding that the grant of deductions of Rs.3, 27,600/- can be established by long drawn process of reasoning and is not a mistake apparent from record. The CIT (Appeals) has erred in overlooking the fact that he is passing order in respect of appeal filed before him and he is not passing a rectification order. In appeal the CIT (Appeals) has full power to examine and decide everything. f) That the CIT (Appeals) in spite of having all the documents before him has erred in not deciding the same. The disallowance made of Rs.3, 27,600/- may be cancelled.” 2. Brief facts of the case are that assessee filed his return of income on 10-07- 2017 declaring total income at Rs 1,35,24,200/-. This figure of Rs. 1,35,24,200/- 3 ITA No. 2753/Mum/2022 SHREE AJAYBIR SINGH BAKSHI consist of salary income amounting to Rs 1,11,78,081/-, income from other sources Rs 30,13,983/- and loss on account of some business venture amounting to Rs (-) 5,07,872). An intimation u/s 143(1) were issued to the assessee in which salary income was taken as Rs 1,15,05,681/-( overlooking the deductions claimed of Rs 3 lakhs as leave encashment and Rs 27,600/- as exempt allowance) both these figures were duly reflected in form 16 issued by the employer under the head exempted income. 3. Assessee filed application under section 154 on 05-04-2019 for allowing deduction of Rs3, 27,600/- from salaries as exempt income. The AO passed order u/s. 154 on 25-06-2019 calculating salary income at Rs 1,40,44,932/-. Against this order passed u/s. 154, assessee preferred an appeal before the Ld. CIT (A). The Ld. CIT (A) in his order deleted the addition of Rs 25, 39,251/- on the ground that the same has already been disclosed under the head “income from other sources” so the same is not sustainable as double taxation is being done. Still, did not delete addition of Rs 3, 27,600/-. 4. Assessee being further aggrieved approached ITAT on this issue. We have gone through the order passed by CPC Bangalore u/s 154, order of the Ld. CIT (A) and submissions of the assessee. We observed that initial order passed by CPC Bangalore u/s. 143(1) itself was bad in law. Nevertheless, assessee filed an application u/s. 154 against this intimation and the way it was disposed by the CPC is like extra judicial jurisdiction assumed by CPC Bangalore, without giving any cogent reason and notice to the assessee. CPC Bangalore sustained addition of Rs 3,27,600/- which is actually exempt income and made further addition of Rs 4 ITA No. 2753/Mum/2022 SHREE AJAYBIR SINGH BAKSHI 25,39,251/- without giving any reason through notice to the assessee. This action of CPC Bangalore can be declared null and void on this count itself. Anyhow assessee preferred an appeal before the Ld. CIT(A) where he got partial relief against the addition of Rs 25,39,251/- and claim of assessee for Rs 3,27,600/- was rejected by the Ld. CIT(A) also on the ground that this can’t be covered u/s. 154 as the same is not falling in the category “mistake apparent from record”. As per Ld. CIT (A) the mistake should be an obvious and patent mistake and not something which can be established by long process of reasoning on points on which there may be conceivably two opinions. 5. The action of CPC-Bangalore while adding back amount of Rs 3,27,600/- is like assuming extra judicial jurisdiction and a clear violation of the provisions of sec 143(1)(a). It is pertinent to mention here that provisions of sec. 154 and 143(1) (a) runs parallel for different purposes but scope of both the provisions are identical. It is astonishing to read the observation of Ld. CIT (A) on the scope of sec. 154 wherein he commented upon sec. 154 which is identical to sec. 143(1). He conveniently ignored the provisions of section 143(1) (a) which is similar to sec. 154. If as per him on the given set of facts no relief can be given to the assessee u/s 154, then how the same can be considered against the assessee u/s. 143(1) by CPC Bangalore. 6. We found the order of CPC Bangalore is absurd in law while passing the order u/s. 154 in terms of jurisdiction as well as on merits of the case. We have referred sec 10(10AA) as well as notification no. S.O.588 (E), dated 31-05-2002 which confirms the contentions of the assessee on merits also. We found the 5 ITA No. 2753/Mum/2022 SHREE AJAYBIR SINGH BAKSHI order of Ld. CIT (A) as perverse while disallowing the claim of the assessee u/s. 154. In above terms appeal of the assessee is allowed and AO is directed to delete the addition of Rs 3, 27,600/-. 7. In the result, appeal of assessee is allowed. Order pronounced in the open court on 21 st day of March, 2023. Sd/- Sd/- (AMIT SHUKLA) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, दिन ांक/Dated: 21/03/2023 Mahesh R. Sonavane Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकर आयुक्त CIT 4. दवभ गीय प्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्ड फ इल/Guard file. BY ORDER, //True Copy// (Dy. /Asstt. Registrar) ITAT, Mumbai