Rajendra Prasad, Dehradun V. ACIT, Dehradun

ITA 2961/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3784 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 22-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Reasonable cause; TDS
• Section: 10(14)

Judgement Text

ITA NO. 2961/DEL/2009 A.Y. 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2961/DEL/2009 A.Y. : 2005-06 SH. RAJENDRA PRASAD JOSHI, VS. ADDL. COMMISS IONER OF INCOME TAX, 67/6, D.L. ROAD, RANGE-I, DEHRADUN DEHRADUN (PAN: AFJPJ1381B) [APPELLANT] (RESPONDENT) ASSESSEE BY : SH. ASHWANI TANEJA, CA & SH. TARUN K UMAR, ADV. DEPARTMENT BY : SH. H.K. LAL, SR. DR PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONERS OF INCOME TAX (APPEALS) DATED 24.2.20 09 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED READ AS UNDER:- (I) THAT LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)-1, DEHRADUN WAS ERRED IN LAW BY ALLOWING ONLY PART OF ADDITIONAL CONVEYANCE ALLOWANCE; (II) THAT THE LEARNED C.I.T.(A)-1, DEHRADUN WAS UN JUSTIFIED FOR NOT PROVIDING THE REMAND REPORT OF THE LD. ASSESSING OF FICER FOR COUNTER COMMENTS AS SHE HAS HIDDEN THE REASONABLE CAUSE OF NOT PRODUCING THE COMPLETE BILLS/VOUCHERS. 3. THE ASSESSEE IN THIS CASE IS A DEVELOPMENT OFFIC ER IN LIC. THE ASSESSEE HAD SHOWN SALARY FROM LIC AMOUNTING TO RS. 19,59,169.77 AND HAD CLAIMED ADDITIONAL ITA NO. 2961/DEL/2009 A.Y. 2005-06 2 CONVEYANCE ALLOWANCE RS. 510766/- AS DEDUCTION. TH E ASSESSING OFFICER ASKED AS TO WHY THE ADDITIONAL CONVEYANCE ALLOWANCE CLAIMED BY HIM AS EXEMPT U/S 10(14) OF THE IT ACT SHOULD NOT BE DISALLOWED. THE ASSE SSEE RESPONDED THAT THE CONVEYANCE ALLOWANCE WAS PAID BY THE EMPLOYER LIF E INSURANCE CORPORATION OF INDIA TO MEET THE EXPENSES AS DEVELOPMENT OFFICER. ASSESSEE FURTHER GAVE SUBMISSIONS ON THE ISSUE. FROM THE SUBMISSIONS ASSE SSING OFFICER DEDUCED THAT IT IS CLEAR THAT THE ASSESSEE DO NOT NEED TO PROD UCE BILLS TO CLAIM AS ADDITIONAL CONVEYANCE ALLOWANCE AS IT IS BASED ON THE PERFORMA NCE OF DEVELOPMENT OFFICER DURING THE APPRAISAL PERIOD. THEREFORE, AS CLAIMED BY THE ASSESSEE, IT IS NOT REIMBURSEMENT OF EXPENDITURE. ASSESSING OFFICER F URTHER REFERRED CERTAIN COURT DECISIONS AND OBSERVED AS UNDER:- THE HONBLE MADRAS HIGH COURT HAS OBSERVED AS IN THE CASE OF C.I.T. VS. P. ARANGASWAMY 155 CTR 88 (MAD.) IN THIS REGARD:- THIS COURT IN THE CASE OF C.I.T. V. E. A. RAJENDRA N [1999] 235 ITR 514, HAS HELD THAT IN THE ABSENCE OF ANY NOTIFICATION I SSUED BY THE CENTRAL GOVERNMENT UNDER SECTION 10(14)(I) GRANTING EXEMPTI ON THE INCENTIVE BONUS AND ADDITIONAL CONVEYANCE ALLOWANCE ARE LIABL E TO BE ASSESSED TO TAX AS SALARY. THIS COURT ALSO HELD THAT SUCH BONUS AND THE ADDITIONAL ALLOWANCE ARE PART OF THE SALARY OF THE EMPLOYEE HAVING REGARD TO THE TERMS USED IN SECTIONS 16 AND 17 OF T HE INCOME TAX ACT, 1961. A VIEW SIMILAR TO THE ONE TAKEN BY THIS COURT HAS BEEN TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF K.A. CHOUD ARY VS. C.I.T. [1990] 183 ITR 29, BY THE RAJASTHAN HIGH COURT IN T HE CASE OF C.I.T. VS. SHIV RAJ BHATIA [1997] 227 ITR 7, AS ALSO BY A F ULL BENCH OF THE KARNATAKA HIGH COURT IN THE CASE OF C.I.T. VS. M.D . PATIL [1998][ 229 ITR 71. IN VIEW OF CLEAR OBSERVATIONS OF THE HONBLE MADRA S HIGH COURT IN THE ABOVE CASE AND THE CASES REFERRED TO THEREIN , THE ACA IS NOT ITA NO. 2961/DEL/2009 A.Y. 2005-06 3 EXEMPT FROM TAX AND THE AMOUNT CLAIMED AS DEDUCTION BY THE ASSESSEE AS WELL AS THE AMOUNT EXEMPTED BY THE PERS ON RESPONSIBLE FOR TDS IS LIABLE TO BE TAXED. IF ANY EXPENDITURE IS INCURRED BY THE ASSESSEE TOWARDS OFFICIAL DUTIES IT IS COVERED BY C ONVEYANCE ALLOWANCE WHICH HAS ALREADY BEEN EXEMPTED AND HAS N OT BEEN TAKEN INTO ACCOUNT FOR COMPUTING TAXABLE INCOME. THIS FA CT HAS BEEN CLARIFIED BY THE PERSON RESPONSIBLE FOR TDS THAT TH E ASSESSEE HAS BEEN ALLOWED CONVEYANCE ALLOWANCE @ RS. 2,010/- PER MONT H DURING THE RELEVANT PERIOD WHICH HAS BEEN TREATED TOTALLY AS EXEMPT. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS ERRED IN RELYING UPON T HE RULINGS AND HAS COMPLETELY IGNORED THE AMENDMENT TO THE INCOME TAX RULES, 1962 INSERTING THEREIN RULE 2BB(C) W.E.F. 01.07.95 AND THEREFORE, THE CASE LA WS WERE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSEE ALSO FURNISHED A COPY OF THE CERTIFICATE FROM LIC TO THE EFFECT THAT RS. 5,10,766/- WAS PAID TO THE ASSESSEE AS ADDITIONAL CONVEYANCE ALLOWANCE AND WAS INCURRED BY HIM IN THE PERFORMANCE OF HIS DUTIES. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHE R OBSERVED THAT SINCE THE ASSESSING OFFICER HAD AN INDEPENDENT DUTY TO VERIF Y THE EXPENDITURE IN TERMS OF PROVISION OF RULE 2BB, SHE WAS AFFORDED AN OPPORT UNITY TO CARRY OUT THE VERIFICATION. ASSESSING OFFICER RESPONDED AS UNDE R:- AS PER YOUR DIRECTIONS A NOTICE WAS ISSUED TO SHRI RAJENDRA PD. JOSHI TO VERIFY THE CLAIM OF EXPENDITURE INCURRED. THE C OUNSEL OF THE ASSESSEE SHRI S.K. AHUJA, ADVOCATE ATTENDED AND PRODUCED THE VOUCH ERS ON 19.02.2009. AS PER THE LIST FILED BY THE ASSESSEES COUNSEL T OTAL EXPENSES INCURRED BY THE ASSESSEE AMOUNTED TO RS. 5,44,982/- BUT OUT OF THE SAID AMOUNT ONLY VOUCHERS AMOUNTING TO RS. 2,09,578/- HAVE BEEN PROD UCED BEFORE ME. IN VIEW OF THE ABOVE IT IS SUBMITTED THAT EXPENSES TO THE TUNE OF RS. 2,09,578/- HAVE BEEN VERIFIED BY ME. ITA NO. 2961/DEL/2009 A.Y. 2005-06 4 5. FROM THE ABOVE, LD. COMMISSIONER OF INCOME TAX ( APPEALS) HELD THAT THE BALANCE OF RS.( 544982 - 209578) WILL CONSTITUTE A TAXABLE INCOME. 6. AGAINST THE ABOVE THE ASSESSEE IS IN APPEAL BE FORE US. 7. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN RELYING UPON THE ASSESSING OFFICER S REMAND REPORT WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. IT WAS FURTHER CLAIMED THAT IN THE PROCEEDINGS ASSESSING OFFICER HAS GIVEN A VERY SHOR T PERIOD FOR THE ASSESSEE TO PRODUCE THE NECESSARY VOUCHERS. THE LD. AUTHORI SED REPRESENTATIVE FURTHER SUBMITTED A CATENA OF CASE LAWS FOR THE PROPOSITION THAT EXPENDITURE INCURRED IN CONNECTION WITH ADDITIONAL CONVEYANCE ALLOWANCE AR E ADJUSTABLE FROM THE SAME. 7.1 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. ADMITTEDLY, THE ISSUE BEFORE US IS THE ALLOWANCE O F EXPENDITURE IN RESPECT OF ADDITIONAL CONVEYANCE ALLOWANCE RECEIVED. THE TOTAL ADDITIONAL CONVEYANCE ALLOWANCE RECEIVED AMOUNTED TO RS. 510766/-. IN THE REMAND PROCEEDINGS THE ASSESSING OFFICER HAS SUBMITTED THAT AS PER THE L IST OF THE ASSESSEES COUNSEL THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE AMOUNTED TO RS. 544982/-, BUT OUT OF THE SAME AMOUNT ONLY VOUCHERS AMOUNTING TO RS. 2095 78/- HAVE BEEN PRODUCED. IN THIS REGARD, ASSESSEES CONTENTION IS THAT LD. C OMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CONFRONTED THE REMAND REPORT TO T HE ASSESSEE AND RELIED UPON THE SAME BEHIND THE BACK OF THE ASSESSEE. THOUGH E XAMINATION AND VERIFICATION OF VOUCHERS IS A FACTUAL MATTER, WE ALSO FIND THAT THE ASSESSING OFFICER HAS GIVEN A ITA NO. 2961/DEL/2009 A.Y. 2005-06 5 VERY SHORT TIME TO THE ASSESSEE TO PRODUCE THE NECE SSARY VOUCHERS. UNDER THE CIRCUMSTANCES, INTEREST OF JUSTICE DEMANDS THAT THE MATTER SHOULD BE REMITTED TO THE FILES OF THE ASSESSING OFFICER TO ENABLE THE A SSESSEE TO PRODUCE THE NECESSARY VOUCHERS. ACCORDINGLY, THE ISSUE STANDS REMITTED T O THE FILES OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE NECESSARY VOUCHERS THAT WILL BE PRODUCED BY THE ASSESSEE AND DECIDE THE ISSUE ACCOR DINGLY. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUN ITY OF BEING HEARD. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17/06/2010 UP ON CONCLUSION OF HEARING. SD/- SD/- [A.D. JAIN ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 17/06/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES