Sh. Gurcharan Singh, JE, Mohali V. Assistant Commissioner of Income tax, Amritsar

ITA 35/ASR/2003

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5799 (ITAT-AMRITSAR)
• Duration Of Justice: 8 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-12-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 22-01-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R C KHANNA
• Keywords: Salary income; Opportunity of being heard; Block assessment
• Section: 143(3); 6; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO. 35(ASR)/2003 ASSESSMENT YEAR:1998-99 PAN : S. GURCHARAN SINGH,J.E. VS. ASSTT.COMMR. OF INCOME -TAX, S/O S.INDER SINGH, RANGE-III, AMRITSAR. 563, PHASE-II, MOHALI. (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. R.C. KHANNA, CA DEPARTMENT BY: SH. TARSEM LAL,, DR ORDER PER MEHAR SINGH, AM, THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A), JAMMU WITH HQRS. AT AMRITSAR, DATED 9.10.2 002, PASSED UNDER SECTION 250(6) OF THE INCOME-TAX ACT, 1961 ( HEREIN AFTER REFERRED TO IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 1998-99, WHEREBY THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT ORDER OF THE LD. ASSESSING OFFICER IS ILLE GAL, ARBITRARY AND CONTRARY TO FACTS AND WORTHY CIT (A) HAS ERRED IN C ONFIRMING THE SAME. 2. THAT THE LD. A.O. HAS ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS.60,000/- AS INCOME FROM TIPPER WHICH DOES NOT BELONG TO ASSESSEE BUT TO HIS MOTHER AND WORTHY CI T (A) HAS ERRED IN CONFIRMING THE SAME. 2 3. THAT WITHOUT PREJUDICE TO MY CONTENTION THAT TH E TIPPER DOES NOT BELONG TO ME, IT IS SUBMITTED THAT THE INCOME T HEREFROM IS TO BE ASSESSED @ RS.2000/- P.M. U/S 44AE(2)(I). 4. THAT THE LD. A.O. HAS ERRED ON FACTS AND LAW IN ASSESSING THE SALARY INCOME AT RS.72197/- AS AGAINST ACTUAL TAXAB LE INCOME OF RS.31219 AND WORTHY CIT(A) HAS ERRED IN CONFIRMING THE SAME. 5. THAT THE APPELLANT PRAYS LEAVE TO ADD, AMEND OR WITHDRAW ANY GROUND OR NEW GROUND OF APPEAL BEFORE OR AT THE TI ME OF HEARING OF APPEAL. 2. GROUND NO.1, IN THE PRESENT APPEAL, AS FAIRLY CO NCEDED BY THE LD. COUNSEL FOR THE ASSESSEE, IS PURELY GENERAL IN NATU RE, HENCE, NEEDS NO ADJUDICATION. 3. AS REGARDS GROUND NO.2, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT INCOME FROM TIPPER DOES NOT BELONG TO THE ASSE SSEE BUT TO HIS MOTHER AND THE SAME HAS BEEN ASSESSED IN THE BLOCK ASSESSM ENT. THE BENCH RAISED A SPECIFIC QUERY WITH A VIEW TO ASCERTAINING THE VERA CITY OF THE CONTENTION OF THE LD. COUNSEL AND REQUESTED HIM TO PRODUCE THE RE QUISITE EVIDENCE TO SUPPORT HIS CONTENTION. A PERUSAL OF THE ASSESSMENT ORDER, DATED 18.03.2002, FOR THE ASSESSMENT YEAR 1998-99 PASSED UNDER SECTIO N 143(3) OF THE ACT, REVEALS THAT THE AO HAD MADE AN ADDITION OF RS.60,0 00/- IN RESPECT OF INCOME FROM TIPPER TO THE ASSESSEES INCOME. THE DA TE OF SEARCH AS CONTENDED BY THE LD. COUNSEL IS 9.10.1997 AND BROK EN PERIOD COMMENCING FROM 10.10.1997 TO 31.03.1998. CONSEQUENTLY, THE IN COME FROM TIPPER FOR THE REMAINING BLOCK PERIOD FROM 10.10.1997 TO 31.8 .1998 IS TO BE ASSESSED. IN THE PRESENT APPELLATE PROCEEDINGS, THE LD. COUNS EL FOR THE ASSESSEE MADE ANOTHER PLEA THAT TIPPER WAS SOLD, ADDUCING EVIDENC E AND FURNISHING DATE AND SALE CONSIDERATION OF THE TIPPER. IN VIEW OF TH IS, THE CLAIM WAS NOT SUPPORTED BY CORROBORATIVE EVIDENCE. FURTHER, IN TH E COURSE OF PRESENT 3 APPELLANT PROCEEDINGS, ITSELF, IT TRANSPIRED THAT T HE ISSUE NEEDS CERTAIN CLARIFICATION AT THE LEVEL OF THE ASSESSING OFFICER , CONSEQUENTLY, THE ISSUE IS RESTORED TO THE FILE OF THE A.O. FOR THE PURPOSE OF ASCERTAINING RELEVANT DETAILS ABOUT THE ASSESSABILITY OF INCOME FROM TIPPER IN TH E HANDS OF THE ASSESSEE OR IN THE HANDS OF ASSESSEES MOTHER, HAVING REGARD T O THE BLOCK ASSESSMENT AND OTHER RELEVANT DOCUMENTS AFTER AFFORDING PROPER AND REASONABLE OPPORTUNITY, IN ACCORDANCE WITH, THE PROVISIONS OF THE ACT. 5. THE LD. DR, DID NOT SERIOUSLY ARGUED THE MATTE R BUT SIMPLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING HEARD BOTH THE PARTIES, WE CONSIDER IT P ROPER TO RESTORE THE ISSUE, IN QUESTION, TO THE FILE OF THE ASSESSING O FFICER, AS IT REQUIRES CERTAIN CLARIFICATIONS, TO DECIDE THE SAME AFRESH AFTER AFF ORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 7. AS FAR AS GROUND NO.3 IS CONCERNED, IT IS EVIDEN T THAT IT IS LINKED TO GROUND NO.2. AS MENTIONED ABOVE, THE ISSUE INVOLV ED IN GROUND NO.2, HAS BEEN RESTORED TO THE FILE OF THE AO, FOR DECIDING T HE SAME AFRESH, IN ACCORDANCE WITH LAW, SO THE ALTERNATIVE CONTENTION RAISED BY THE ASSESSEE NEEDS NO SEPARATE ADJUDICATION. 8. IN GROUND NO. 4, THE LD. COUNSEL FOR THE ASSESSE E CONTENDED THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 72,197 AS AGAINST ACTUAL TAXABLE INCOME OF RS.31,219/-. THE BRIEF FACTS PERT AINING TO THIS GROUND ARE THAT RETURN OF INCOME FILED ON 13.10.1999, REVEALS THAT SALARY INCOME OF RS.31,219/- HAS BEEN DECLARED THEREIN. AS PER INFOR MATION OBTAINED FROM THE EMPLOYER, IT IS EVIDENT THAT THE SALARY WAS PAID FROM FROM SEPT., 1997 TO MARCH, 1998, AT RS.52,567/-. IN THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE SALARY FOR THIS PERIOD HAS BEEN PAID ALONGWITH THE ARREARS FROM 1.11.1993 TO 31.8.1997. IT WAS, FU RTHER, STATED THAT HE WAS NOT 4 IN A POSITION TO BIFURCATE THE FIGURE PERTAINING T O THE PERIOD FROM 1.4.1997 TO 31.8.1997. THE ASSESSEE DID NOT FILE DETAILS OF BIF URCATION, AS CALLED FOR BY THE AO. THEREFORE, THE ASSESSES CONTENTION WAS REJ ECTED BY THE AO AND SALARY FOR 5 MONTHS AMOUNTING TO RS.29,350/-, ON AC CRUAL BASIS WAS CONSIDERED. OUT OF THIS, A SUM OF RS.9720/- HAS BEE N ASSESSED IN THE BLOCK ASSESSMENT. AS SUCH, THIS AMOUNT IS BEING REDUCED IN ORDER TO MEET THE ENDS OF JUSTICE. CONSEQUENTLY, THE ADDITION IN INCOME OF RS.19,630/- IS ATTACHED. THE FINDINGS OF THE LD. CIT(A), ON THE ISSUE, IN DI SPUTE, ARE REPRODUCED HEREUNDER: 4.2. I HAVE CONSIDERED THE APPELLANTS CONTENTION IN THE BACKGROUND OF FACTS ON RECORD AND THE REASONS GIVEN BY THE AO IN THE ASSTT. ORDER. THE ISSUE INVOLVED HERE IS WHETHER THE APPELLANTS SALARY INCOME FOR THE ASSESSMENT YEAR 1998-99 HAS TO BE ASSESSED IN T HE YEAR UNDER CONSIDERATION OR IT HAS TO BE ASSESSED IN THE ASST. YEAR 2001-02. IT APPEARS THAT IN THIS CASE, THE APPELLANT HAS RECEIV ED HIS SALARIES BELATEDLY IN THE FORM OF ARREARS FOR THE PART OF TH E YEAR FILLING IN THE ASST. YEAR 1998-99. THE A.O. HAS SOUGHT TO ASSESS T HE SAID INCOME ON ACCRUAL BASIS. WHILE THE APPELLANTS CONTENTION IS THAT IT HAS TO BE ASSESSED IN THE YEAR IN WHICH IT HAS BEEN RECEIVED. IN THIS CONTEXT, REFERENCE TO THE PROVISIONS OF SEC. 15 OF I.T.ACT, 1961 SHOWS THAT SALARY INCOME IS TAXABLE ON DUE BASIS WHETHER IT IS PAID OR NOT AND IN RESPECT OF ADVANCE SALARY PAID TO AN EMPLOYEE, IT I S TAXABLE IN HIS HANDS, ALTHOUGH, IT MAY NOT HAVE BECOME DUE AT THE TIME OF SUCH PAYMENT AND IN A CASE OF ARREARS ALLOWED TO AN EMPL OYEE, IT IS TAXABLE IN THE YEAR THESE ARE PAID IF IT IS NOT CHARGED TO TAX IN THE EARLIER PREVIOUS YEAR. IN THE PRESENT CASE, SINCE THE APPEL LANT HAS CONFIRMED THAT IT HAS RECEIVED THE SALARY IN ARREARS, AS PER THE PROVISIONS OF SEC. 15, THE A.O. WAS JUSTIFIED IN TAXING THE SAID AMOU NT ON DUE BASIS IN THE YEAR UNDER CONSIDERATION. HOWEVER, THE AO IS DI RECTED TO VERIFY THE APPELLANTS CONTENTION REGARDING ITS CLAIM THAT IN THE RETURN FILED FOR THE ASSTT. YEAR 2001-02, IT HAS INCLUDED THE AR REARS RECEIVED BY IT PERTAINING TO ASSTT. YEAR 1998-99. IT IS OBVIOUS TH AT IF THE APPELLANTS SALARY INCOME FOR PART OF THE RELEVANT ASSTT. YEAR IS ASSESSED IN ASSTT. YEAR 1998-99, THE SAME INCOME COULD NOT BE ASSESS ED SECOND TIME IN THE ASSTT. YEAR 2001-02. IN OTHER WORDS, THE A.O. I S FREE TO TAX THE 5 APPELLANTS SALARY INCOME EVEN IF IT HAS BEEN RECEI VED LATER IN ARREARS IN THE ASSTT. YEAR 1998-99. HOWEVER, IN THAT CASE, THE INCOME DECLARED BY THE APPELLANT IN THE ASSTT. YEAR 2001-02 WILL HA VE TO BE BROUGHT INTO ALIGNMENT WITH THE INCOME ALREADY DECLARED AND ASSE SSED IN ASSTT. YEAR 1998-99 AND IN CASE THE APPELLANTS CONTENTION THAT IT HAS DECLARED THE INCOME OF ASSTT. YEAR 1998-99 IN THE R ETURN OF INCOME FOR THE ASSTT. YEAR 2001-02 IS FOUND TO BE TRUE. IN THE SAID FINDINGS, THE LD. CIT(A), HAS DIRECTED THE AO EXAMINED THE ENTIRE ISSUE IN DETAIL. IN CASE, APPELLANTS CONTEN TION THAT IT HAS DECLARED INCOME FOR THE ASSESSMENT YEAR 1998-99 IN THE RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2001-02 IS FOUND TO BE TRUE, THE AC TION MAY BE TAKEN ACCORDINGLY. 9. HAVING REGARD TO THE FACT SITUATION OF THE PRESE NT CASE, THE RELEVANT PROVISIONS OF SECTION 15 OF THE ACT AND SUBMISSIONS MADE BY THE RIVAL PARTIES IN THIS CASE, WE FIND THAT THE FINDINGS OF THE CIT( A), DO NOT SUFFER FROM ANY INFIRMITY AND THE SAME ARE UPHELD. ACCORDINGLY, THI S GROUND OF APPEAL IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 8TH JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 8TH JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:S. GURCHARAN SINGH,JE, MOHAL, 2. THE ACIT-R-III, ASR 3. THE CIT(A), ASR 4. THE CIT,ASR 5. THE SR DR,ASR 6 TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.