Sonam Topgay Bhutia, Gangtok V. DCIT, Circle - 2, Siliguri, Siliguri

ITA 331/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59583 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 24-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 24-02-2011
• Court: TRIBUNAL
• Department Lawyers: S K ROY LD DR
• Assessee Lawyers: SUBASH AGARWAL LD
• Keywords: Retrospective amendment; Benefit of exemption
• Section: 10

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA () . ., !' !' !' !' #. $!%&#, BEFORE SRI S.V MEHROTRA, AM & SRI N.VIJAYKUMARAN , JM '' / I.T.A NO. 331/KOL/2011 (#) !*+/ ASSESSMENT YEAR : 2004-05 SONAM TOPGAY BHUTIA VS. D.C.I.T, CIRCLE-2, SI LIGURI PAN: AFBPT 2820F PAN : AABCT 6471A (-. /APPELLANT ) (/0-./ RESPONDENT ) -. / FOR THE APPELLANT : 1 / SHRI SUBASH AGARWAL, LD.AR /0-. / FOR THE RESPONDENT : 1 / SHRI S.K. ROY, LD.DR &#!2 3 4 /DATE OF HEARING : 31-01-02-2012 5* 3 4 /DATE OF PRONOUNCEMENT : 31-01-2012 6 / ORDER . ., SHRI S.V MEHROTRA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS), SILIGURI DATED 20/10/2010 FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEF FACTS ARE THAT THE ASSESSEE, INDIVIDUAL, IN THE RELEVANT ASSESSMENT YEAR, CARRIED ON THE BUSINESS AS CONTRACTOR. HE HAD FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.2,40,580/-. SUBSEQUENTLY, THE CASE WAS REOPENED AND THE NOTICE U/S.148 OF THE I.T.ACT, 1961 WAS ISSUED. THE ASSESSMENT U/S. 143(3)/147 OF THE I.T. ACT, 1961 WA S COMPLETED AT A TOTAL INCOME OF RS.10,70,820/-. 3. BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS), IT WAS SUBMITTED THAT THE ASSESSEE WAS ENGAGED AS CONTRACTOR IN THE STATE OF SIKKIM. ALL T HE CONTRACT WORKS WERE EXECUTED FOR CENTRAL PUBLIC WORKS DEPTT.[ CPWD], GANGTOK. THE RETURN FOR THE A SSESSMENT YEAR 2004-05 WAS FILED ON 28-10-2004. IT WAS FURTHER POINTED OUT THAT DURING THE PENDENCY OF APPEAL, SECTION 10(26AAA) WAS INSERTED IN THE INCOME-TAX ACT, 1961 BY THE FINANCE ACT, 2008 W.E.F . 01-04-1990 BY WHICH ALL THE INDIVIDUALS BEING SIKKIMES WERE NOT LIABLE TO PAY INCOME-TAX UNDER T HE PROVISIONS OF THE INCOME-TAX ACT, 1961 ON THE INCOME ARISING TO HIM A) FROM ANY SOURCE IN THE STA TE OF SIKKIM AND B) BY WAY OF DIVIDEND OR INTERES T ON SECURITIES. IT WAS FURTHER POINTED OUT THAT THE ASS ESSEE WAS A SIKKIMES AS PER EXPLANATION (III) TO SECTION 10(26AAA) . FURTHER, IT WAS POINTED OUT THAT SINCE THE INCOME ACCRUED TO THE ASSESSEE IN THE STATE OF SIKKIM AS ALL THE CONTRACT WORKS WERE EXECUTED THER EIN, IN VIEW OF SECTION 10(26AAA), WAS NOT ITA NO.331/KOL/2011-A-SVM 2 LIABLE TO PAY ANY TAX ON HIS INCOME. THE LEARNED CO MMISSIONER OF INCOME-TAX (APPEALS), HOWEVER, CONFIRMED THE AOS ACTION OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD.AR AND ALSO PERUSED THE ASSESSMENT ORDER. APPARENTLY, THERE IS NO DISPUTE T HAT THE INCOME OF THE ASSESSEE WAS ACCRUED IN SIKKIM AND THE ASSESSEE IS A SIKKIM SUBJECT. BUT AT THE TIME OF ASSESSMENT, THE ASSESSEE NEVER RAISED SUCH ISSUE BE FORE THE LD.AO. THIS LATER DEVELOPMENT WAS NOT BEFORE THE AO. NOW, THE ASSESSE E CLAIMED THE BENEFIT OF SEC. 10(26AAA) ON THE BASIS OF INSERTION OF THIS SE CTION BY THE INCOME-TAX ACT, 1961 BY THE FINANCE ACT, 2008 W.E.F 01-04-1990. TO GET THE OBJECT OF THIS SECTION RETROSPECTIVELY, THE ASSESSEE SHOULD HAVE A PPROACHED BEFORE THE AO OR BEFORE THE CIT. THE CIT(A) CAN ONLY DECIDE THE IS SUES ARISING OUT OF THE ASSESSMENT ORDER OF THE AO. SINCE NO BENEFIT WAS CL AIMED BEFORE THE AO OF THIS AMENDMENT AND THE AO DID NOT DENY THE SAME AND THE AO HAD NOT SCOPE TO DENY THE EFFECT OF THAT AMENDMENT, THE ASSESSEE CANNOT C LAIM THE SAME FROM THE CIT(A). AS SUCH, THERE IS NO ISSUE BEFORE THE CIT(A ) TO DECIDE. AS NO ARGUMENT WAS MADE ON MERIT, THE ACTION OF THE LD.AO STANDS CONFIRMED. 4. BEING AGGRIEVED BY THE SAID ORDER OF THE LEARNE D COMMISSIONER OF INCOME-TAX (APPEALS), NOW THE ASSESSEE IS IN APPEAL BEFORE US AND INTER-ALIA, HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE O RDER PASSED BY THE AO. 2. THAT THE LD. C.I.T. (A) ERRED IN DENYING THE BE NEFIT OF SECTION 10 (26AAA) INSERTED BY THE FINANCE ACT, 2008 W.E.F. 01 .04.1990 TO THE APPELLANT THOUGH HE ADMITTED THAT THE APPELLANT FULFILLED ALL THE CONDITIONS LAID DOWN IN THE SAID SECTION. 3. THAT THE LD. CIT. (A) ERRED IN REJECTING THE ADD ITIONAL GROUND TAKEN BY THE APPELLANT TO TREAT THE RETURNED INCOME AS NIL AGAIN ST THE RETURNED INCOME OF RS. 2,40,580/- IN VIEW OF SECTION 10 (26AAA) AS THE TOT AL INCOME IS EXEMPT. 4. THAT WITHOUT BEING PREJUDICED TO GROUND NO. 2 & 3, THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 7,30,243/- BEING THE ALLEGED CONCEALMENT OF CONTRACT RECEIPT INSTEAD OF CONFIRMING THE PROFIT E LEMENT THEREON AS PER GROUND NO. 3 TAKEN IN THE MEMORANDUM OF APPEAL FILED BEFOR E HIM. 5. THAT AS THE ORDER OF THE LD. C.I.T.(A) IS DEVOID OF MERIT, AND BAD IN LAW, THE SAME SHOULD BE QUASHED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 6. THAT THE APPELLANT CRAVES YOUR LD. PERMISSION TO ADD, AMEND AND MODIFY THE ABOVE GROUNDS ON OR BEFORE THE DATE OF HEARING OF T HE APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. COMMISSIONER OF INCOME-TAX (APPEALS). HE FURTHER RE LIED ON VARIOUS DECISIONS/CASE LAWS INCLUDING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. MAYUR FOUNDATION [274 ITR 562 (GUJ), WHEREIN IT HAS BEEN HELD AS UNDER :- ITA NO.331/KOL/2011-A-SVM 3 APPLYING THE AFORESAID PRINCIPLE, CAN IT BE STATED THAT WHEN THE MATTER IS PENDING BEFORE THE TRIBUNAL BY WAY OF AN APPEAL, TH E ASSESSMENT PROCEEDING IS PENDING ? THE ANSWER HAS TO BE IN THE AFFIRMATIVE. THE ASSESSING AUTHORITY IS EMPOWERED AND IS DUTY BOUND, TO PASS AN ORDER GIVIN G EFFECT TO THE ORDER OF THE TRIBUNAL FOR THE PURPOSES OF ASSESSING THE TAX LIAB ILITY OF THE ASSESSEE FOR THE ASSESSMENT YEAR WHICH WAS UNDER CONSIDERATION BEFOR E THE TRIBUNAL. IN THESE CIRCUMSTANCES, IT CANNOT BE CONTENDED ON BEHALF OF THE REVENUE THAT THE ASSESSMENT PROCEEDINGS COME TO AN END WHEN THE ASSESSMENT ORDE R IS FRAMED. THE CONTENTION ON BEHALF OF THE REVENUE TO EQUATE THE ASSESSMENT ORDE R WITH ASSESSMENT PROCEEDING IS BASED ON A FALLACIOUS PREMISE. 6. THE LD.DR HAS RELIED ON THE ORDERS OF THE AUTHO RITIES BELOW. 7, WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD OF THE CASE. FROM THE OBSERVATIONS OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS), IT IS EVIDENT THAT THE ASSESSEE FULF ILLS ALL THE CONDITIONS AS LAID DOWN IN SECTION 10(26AA A) OF THE I.T.ACT61. ADMITTEDLY, ON THE DATE OF FI LING OF RETURN SECTION 10(26AAA) WAS NOT IN THE INCOME- TAX ACT, 1961. BY THE FINANCE ACT 2008 THIS SECTION WAS INSERTED W.E.F 1-4-90. THE APPEAL WAS FILED BEF ORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON 1-2-2007 AND DECIDED ON 28-02-2010. TH US, DURING THE PENDENCY OF THE APPEAL SECTION 10(26AAA) WAS INSERTED WITH RETROSPECTIVE EFFECT FR OM 1-4-90, WHICH COVERED THE ASSESSMENT YEAR 2004- 05. THUS, ASSESSEE WAS ELIGIBLE FOR GETTING EXEMPT ION U/S. 10(26AAA). THE ONLY OBJECTION OF THE LEARN ED COMMISSIONER OF INCOME-TAX (APPEALS) WAS THAT THE A SSESSEE SHOULD HAVE APPROACHED THE ASSESSING OFFICER BECAUSE THE ISSUE DID NOT ARISE OUT OF THE ASSESSMENT ORDER. HOWEVER, IN OUR OPINION SINCE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS C O - TERMINOUS POWERS WITH THE ASSESSING OFFICER, HE SHOULD HAVE ALLOWED THE BENEFIT OF EXEMPTION U/ S. 10(26AAA) OF THE INCOME-TAX ACT 1961, WHICH WAS IMPOSSIBLE FOR ASSESSEE TO CLAIM IN RETURN. FUR THER, HONBLE GUJARAT HIGH COURT IN THE CASE OF MAY UR FOUNDATION (SUPRA) HAS HELD THAT ASSESSMENT PROCEED INGS DO NOT COME TO AN END WITH THE PASSING OF ASSESSMENT ORDER. APPELLATE PROCEEDINGS ARE PART OF ASSESSMENT PROCEEDINGS. DETERMINATION OF CORRECT INCOME IS THE SOLE OBJECTIVE OF ASSESSMENT PROCEEDI NGS, AND, THEREFORE, A LEGAL CLAIM CAN ALWAYS BE ENTERTAINED IN APPELLATE PROCEEDINGS. PITTED AGAIN ST THE CAUSE OF SUBSTANTIAL JUSTICE VIS--VIS TECHN ICAL CONSIDERATIONS, THE CAUSE OF SUBSTANTIAL JUSTICE SH OULD PREVAIL IT IS TRUE THAT SCOPE OF APPELLATE JURISDICTION IS CONFINED TO THE ISSUES ARISING OU T OF IMPUGNED ORDER, BUT IF A LEGAL ISSUE COMES INT O OPERATION AT APPELLATE PROCEEDINGS STAGE ONLY, FO R WHICH NO FRESH SCRUTINY OF FACTS IS REQUIRED, TH EN THE LEGAL CLAIM CAN BE ENTERTAINED BY APPELLATE AUTHORI TY PARTICULARLY, WHEN HE HAS CO- TERMINOUS POWERS W ITH THE AUTHORITY PASSING THE IMPUGNED ORDER. ACCORDING LY, WE SET ASIDE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND ALLOW THE GROUND NO.2 RAISED BY THE ASSESSEE. ITA NO.331/KOL/2011-A-SVM 4 8. THE OTHER GROUNDS RAISED BY THE ASSESSEE BEFORE US ARE ON MERIT AND, THEREFORE, NEED NO ADJUDICATION AS THE ENTIRE INCOME EARNED BY ASSESSE E WAS EXEMPT FROM TAX. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. 6 & 7 &# 8 9 4 31/01//2012 ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/2012 SD/- SD/- [ #. $!%&# , ] [ . . , ] (N.VIJAYKUMARAN, JUDICIAL MEMBER (S.V. MEHROTRA, ACCOUNTAN T MEMBER ) (4) DATED : 31-01--2012 *PP !:; (#<% (=! /SR.P.S. 6 3 /(($ >$*?- COPY OF THE ORDER FORWARDED TO: 1. -. /APPELLANT- SONAM TOPGAY BHUTIA DEORALI SCHOOL RO AD, GANGTOK. 2 /0-. / RESPONDENT : M/S. DCIT, CIR-2, AAYKAR BHAWAN, MA TIGARA, SILIGURI. 3. (6#/ THE CIT, 4. (6# ()/ THE CIT(A), KOLKATA. 5. !(8 /(#/ DR, KOLKATA BENCHES, KOLKATA 0$ /(/ TRUE COPY , 6#&/ BY ORDER , '% /ASSTT. REGISTRAR