Dr. Aroti Ghosh, Allahabad V. ITO, Ward-1(1), Allahabad

ITA 37/ALLD/2022

AI Insights

The case involves Dr. Aroti Ghosh, who appealed against the dismissal of her rectification application under Section 154 of the Income Tax Act, 1961, concerning an assessment order that included long-term capital gains from the sale of shares, which she claimed were exempt under Section 10(38). The Income Tax Officer (ITO) initially dismissed her rectification request, citing pending appeals and lack of evidence. The Commissioner of Income Tax (Appeals) upheld this decision, leading Dr. Ghosh to file a second appeal with the Income Tax Appellate Tribunal (ITAT). The primary legal contention revolved around the appropriate appeal fee and the applicability of Section 253(6) of the Income Tax Act, 1961.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129081 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2023
• Appeal Filed By: Assessee
• Order Result: DismissedAllowed
• Bench Allotted: DB
• Next Hearing Date: 12-09-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Rectification of order; Principle of natural justice; Capital Gains
• Section: 147; 263; 154; 143(3); 250

Judgement Text

ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No.:37/Alld/2022 Assessment Year(s):,2008-09 Dr. Aroti Ghosh 16/12, FF-103, Block-A, Vinayak Le Grand Lal Bahadur Shastri Marg, Allahabad-211001, U.P. v. The Income Tax Officer Ward 1(1), Allahabad-211001, U.P. PAN:ACDPG1510E (Appellant) (Respondent) Appellant by: C.A. Shri. S.K. Jaiswal Respondent by: Shri A. K. Singh, Sr. DR Date of hearing: 18.01.2023 & 03.02.2023 Date of pronouncement: 21.02.2023 O R D E R PER Shri Ramit Kochar, Accountant Member: This appeal is filed by assessee against the appellate order dated 27.09.2022 passed by ld. Commissioner of Income-tax(Appeals), NFAC, New Delhi (DIN& Order No. ITBA/NFAC/S/250/2022-23/1045998109(1) )(hereinafter called “the CIT”) u/s 250 of the 1961 Act, which in turn has arisen from an rectification ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 2 order dated 04.08.2016 passed by ITO, Ward 1(1), Allahabad, U.P.(hereinafter called “the AO”) u/s. 154 of the 1961 Act. 2. The assessee has raised following Grounds of Appeal with Income Tax Appellate Tribunal, Allahabad Bench, Allahabad, U.P. (hereinafter called “ the tribunal”) in memo of appeal filed in ITA no. 37/Alld/2022 for assessment year 2008-09, which are reproduced as under:- “1. Because the learned Commissioner of Income Tax(Appeals) has erred in law and on facts in dismissing the appeal filed against order dated 04.08.2016 passed under section 154 of the Income Tax Act, 1961 on the ground that, the appellant has not accepted the assessment order and filed an appeal against the order sought to be rectified , therefore he cannot ask for rectification of assessment order , hence the AO has rightly dismissed the rectification request. 2. Because the learned Commissioner of Income Tax(Appeals) has failed to appreciate the facts that appellant has filed the petition for rectification of mistake borne out from the assessment order itself, the learned assessing officer has summarily rejected the application without considering the application without considering the merit of the application. 3. Because the order appealed against is contrary to the facts, law and principles of natural justice.” 3. This appeal filed by assessee was heard by Division Bench , Allahabad, U.P. in Open Court Proceedings through physical hearing mode, on 18 th January, 2023. While studying appeal file, it was observed that the assessee has deposited an appeal fee of Rs. 500/- which prima-facie appeared to be deficient appeal fee paid by the assessee while filing this appeal with tribunal, keeping in view provisions of Section 253(6) of the Income-tax Act, 1961(hereinafter called “the Act”) . On 18 th ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 3 January, 2023 itself , the matter was put for clarification and date of hearing in Open Court was fixed for 20 th January, 2023, to hear both the parties ,inter-alia, on the issue of deficient fee paid by the appellant while filing this appeal with tribunal , and also to give opportunity to the assessee to deposit the deficient appeal fee. 3b. On 20 th January, 2023 , when this matter came up for hearing before the Division Bench for hearing in Open Court on the issue of deficient appeal fee liable to be deposited u/s 253(6) for maintaining of this appeal filed by assessee with tribunal , the ld. Counsel for the assessee sought time to file reply, and matter was adjourned to 3 rd February, 2023. There was another deficiency wherein Form No. 35 was not filed by the assessee while filing this appeal with tribunal, and ld. Counsel for the assessee duly filed copy of Form No. 35 with tribunal , on 20.01.2023. 3c. The hearing took place before DB in open court proceedings through physical hearing mode on 03.02.2023 , when both the parties vehemently argued on the issue of appeal fee liable to be deposited for maintenance of this appeal before the tribunal keeping in view provisions of Section 253(6) of the 1961 Act. The ld. Counsel for the assessee vehemently argued that this appeal has arisen from the appellate order dated 27.09.2022 passed by ld. Commissioner of Income- tax(Appeals), NFAC, New Delhi u/s 250 of the 1961 Act, which in turn has arisen from an rectification order dated 04.08.2016 passed by AO u/s. 154 of the 1961 Act. The total income of the assessee was assessed by AO vide reassessment order dated 03.03.2016 passed u/s 143(3) read with Section 147 of the 1961 Act , wherein total income assessed was to the tune of Rs.50,73,010/-, out of which income assessed by AO as long term capital gains arising on transfer of equity shares chargeable to income-tax was Rs. 39,67,163/-. The assessee filed application for rectification of mistake apparent from record , dated 10.06.2016 u/s 154 of the 1961 Act before the AO, stating that income arising from transfer of equity shares is not liable to be ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 4 included in the total income of the assessee, as the same is exempt from income-tax u/s 10(38) of the 1961 Act. The said rectification application filed by the assessee u/s 154 was rejected by the AO, vide rectification order dated 04.08.2016 passed u/s 154 of the 1961 Act, by holding that the assessee’s appeal against reassessment order dated 30.03.2016 is pending with ld. CIT(A) and also that the assessee has not filed evidences to substantiate its rectification application. The assessee being aggrieved by the dismissal of its rectification application u/s 154 by the AO, filed first appeal with ld. CIT(A) , which also was dismissed by ld. CIT(A) on the grounds that the appeal filed by the assessee against the reassessment order dated 31.03.2016 passed by AO u/s 143(3) read with Section 147 is pending before ld. CIT(A). On the issue of deficient appeal fee, the ld. Counsel for the assessee has vehemently argued that since this appeal filed by the assessee with ITAT, Allahabad Bench,Allahabad, has arisen from dismissal of rectification application filed by the assessee u/s 154 of the 1961 Act, the appeal fee of Rs. 500/- was rightly paid by the assessee keeping in view provisions of Section 253(6)(d) of the 1961 Act. It was submitted that appeal arising from rectification order u/s 154 shall fall within residuary clause (d) of Sub-section (6) of Section 253. The ld. Counsel for the assessee also differentiated between the appeal filed by the assessee from dismissal of application filed by the assessee u/s 154 of the 1961 Act wherein it is claimed that appeal fee of Rs. 500/- shall be deposited under residuary clause (d) to Section 253(6), while in the case of invocation of Section 154 at the behest of the AO then in that case appeal fee shall be payable u/s 253(6)(a) to (c),keeping in view total income as computed and assessed by the AO. The ld. Counsel also referred to appeals arising out of orders passed u/s 263 of the 1961 Act, wherein Rs. 500/- appeal fee for filing appeal is paid under Section 253(1)(d) . While ld. Sr. DR seriously objected to the contentions of ld. Counsel for the assessee , and vehemently submitted that the application filed by the assessee in the instant case ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 5 u/s 154 with the AO impinges on computation of total income , wherein claim was made that long term capital gain arising on transfer of shares as computed by AO vide reassessment order dated 31.03.2016, to the tune of Rs. 39,67,163/- is not chargeable to income-tax keeping in view provisions of Section 10(38), while total income of the assessee was computed by the AO of the assessee to the tune of Rs. 50,73,010/- vide reassessment order dated 31.03.2016 passed u/s 143(3) read with Section 147 of the 1961 Act , and hence the case of the assessee will fall under Section 253(6)(c) of the 1961 Act as the fate of application u/s 154 filed in the instant case by the assessee has direct bearing on the computation of total income of the assesse , and hence, the appeal fee to be deposited by the assessee shall be Rs. 10,000/- while filing an appeal with tribunal , while in the instant case the assessee has only deposited an appeal fee of Rs. 500/- while filing this appeal with tribunal, and hence there is a deficiency of appeal fee to the tune of Rs. 9,500/- keeping in view provisions of Section 253(1)(c) , and prayers were made by ld. Sr. DR that this appeal should be either outrightly dismissed or otherwise the assessee be called upon to further deposit forthwith deficient appeal fee of Rs. 9,500/- . The ld. Counsel for the assessee submitted that if two views are possible , then view in favour of the assessee be followed. 4. we have heard both the parties on the issue of leviability of appeal fee payable under the provisions of Section 253(6) of the 1961 Act , while filing appeal with tribunal. It is observed that reassessment was framed by the AO vide assessment order dated 31.03.2016 passed u/s 143(3) read with Section 148(sic. 147) of the 1961 Act, computing total income of the assessee at Rs. 50,73,010/- against returned income of Rs. 5,82,850/- . The assessee filed appeal against the said assessment order dated 31.03.2016 with ld. CIT(A), which is claimed to be still pending with ld. CIT(A). While framing assessment order dated 31.03.2016, the AO , ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 6 inter-alia, brought to tax long term capital gains earned by the assessee on sale of shares to the tune of Rs. 39,67,163/- to income-tax, by holding as under: “As per the information obtained from the different institutions of share marketing, a huge amount has been invested by the assessee in purchase and sale of share with Kotak Securities. On the perusal of data vise transaction of equity and derivative segment, ledger statement and receipt & payment details received from Kotak Securities, it found that there is profit of Rs. 39,67,163/- in the head of long term capital gain on the sale and purchase of shares through Kotak Securities. The detail of transactions and income/loss from aforesaid Kotak Securities regarding long term capital gain are as under:- As per above table, the assessee was gainer amounting to Rs. 39,67,163.69 in the business of purchase and sale of shears during the F.Y. 2007-08. The aforesaid transaction and profit thereon has not been shown by the assessee in her ITR as well as computation of income chart etc. filed for A.Y. 2008-09. She has not shown such bank account in which the aforesaid transaction would be done. Therefore, Rs. 39,67,163/- is being added back to the income of the assessee as income of long term capital gain.” ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 7 The assessee filed an rectification application u/s 154 of the 1961 Act before the AO on 10.06.2016, contending that long term capital gains on transfer of shares to the tune of Rs. 39,67,163/- brought to income-tax by AO is not chargeable to tax being exempt from income-tax, keeping in view provisions of Section 10(38) of the 1961 Act. The said rectification application filed by the assessee with the AO is reproduced hereunder: ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 8 ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 9 ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 10 The said rectification application filed by the assessee with AO u/s 154, was dismissed by the AO vide order dated 04.08.2016 passed by the AO u/s 154 by holding that the first appeal filed by assessee with ld. CIT(A) against reassessment order dated 31.03.2016 passed by AO u/s 143(3) read with Section 147 is still pending with ld. CIT(A). The ld. AO also held on merits that the assessee has not filed any documentary evidence in support of her claim before the AO, and hence the application filed by the assessee u/s 154 stood dismissed by the AO. The rectification order dismissing rectification application as passed by the AO, is reproduced hereunder: “In this case, the assessee has filed an application u/s 154 of I.T. Act, 1961 stating therein that the income arising from transfer of equity shares are not liable to be included to the total income of the assessee and requested to rectify the order passed w/s 148/143(3) dated 31.03.2016. Aggrieved from the order passed u/s 143(3) of I.T. Act, 1961, the assessee filed an appeal before the C.I.T.(A) vide receipt no 000062 dated 26/04/2016 which is pending before the Learned CIT(A), Allahabad. It is not out of place to mention here that during the course of assessment proceeding and also at the time of filing of application u/s 154 of I.T. Act, 1961 no documentary evidence in respect of her claim has been filed/ produced before the undersigned. Therefore, the application filed u/s 154 is being rejected for want of verification.” The assesse being aggrieved by the dismissal of its rectification application by the AO , filed first appeal before ld. CIT(A) , which also stood dismissed by ld. CIT(A) vide appellate order dated 27.09.2022, by holding that the first appeal filed by the assessee with ld. CIT(A) against reassessment order dated 31.03.2016 passed by AO u/s 143(3) read with Section 147 is still pending with ld. CIT(A), by holding as under: “3. In this case return of income was filed on 30.09.2008 declaring total income of Rs.5,82,850/- . Assessment was completed u/s.143(3) r.w.s.147 dated ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 11 31.03.2016 on total income of Rs.50,73,010/- . Aggrieved with this order, appellant filed an appeal before CIT(A) and also filed a rectification application u/s.154 before the AO. The Assessing Officer rejected the application filed u/s 154 for want of verification. The appellant filed an appeal before CIT(A) against this order u/s, 154 The present appeal is against rejection of this rectification order. The issues emanate from order u/s 143(3) r.w.s.147, which is pending for consideration. The appellant has not accepted the assessment order passed by AO, therefore, appellant cannot take this ground and ask for rectification on the basis of assessment order. The AO has rightly dismissed the rectification request. 4. In the result the appeal is dismissed.” The assessee being aggrieved by appellate order dated 27.09.2022 passed by ld. CIT(A) , has filed an second appeal with tribunal. The assessee has deposited appeal fee of Rs. 500/- while filing this appeal with tribunal, and claim is made that this appeal filed with tribunal falls under residual clause (d) to Sub-section (6) to Section 253 of the 1961 Act and hence appeal fee of Rs. 500/- was rightly deposited by the assessee while filing the instant appeal with tribunal, while ld. Sr. DR has objected to the appeal fee of Rs. 500/- deposited by the assessee while filing this appeal, and it was submitted by ld. Sr. DR that the appeal fee as stipulated under Section 253(6)(c) amounting to Rs. 10,000/- is to be paid while filing this instant appeal with tribunal , keeping in view facts and circumstances of this appeal. Before, we proceed further, it will be relevant to reproduce the provision of Section 253(6) of the 1961 Act dealing with the appeal fee payable by tax-payer , while filing appeal with tribunal, which reads as under: “Appeals to the Appellate Tribunal. 253(1) **** **** **** **** **** **** **** **** ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 12 (6) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, in the case of an appeal made, on or after the 1st day of October, 1998, irrespective of the date of initiation of the assessment proceedings relating thereto, be accompanied by a fee of,— (a) where the total income of the assessee as computed by the Assessing Officer, in the case to which the appeal relates, is one hundred thousand rupees or less, five hundred rupees, (b) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, one thousand five hundred rupees, (c) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one per cent of the assessed income, subject to a maximum of ten thousand rupees, [(d) where the subject matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred rupees:] [Provided that no fee shall be payable in the case of an appeal referred to in sub-section (2), or, sub-section (2A) as it stood before its amendment by the Finance Act, 2016, or, a memorandum of cross objections referred to in sub-section (4).]” Thus, it could be seen that the appeal to be filed with tribunal has to be accompanied by an appeal fee under Section 253(6)(c), where the total income of the assessee as computed by the AO in the case to which the appeal relates is more than two hundred thousand rupees , one percent of the assessed income, subject to a maximum of ten thousand rupees. In the instant case, reassessment was framed by the AO u/s 143(3) read with Section 147 of the 1961 Act vide reassessment order dated 31.03.2016 , computing total income of the assessee at Rs. 50,73,010/- .The rectification application filed by assessee u/s 154 of the 1961 Act before AO sought relief by seeking to treat long term capital gains arising on sale of shares to the tune of Rs. 39,67,163.69 as being exempt from income-tax u/s 10(38) of the 1961 Act. Thus, the subject matter of the rectification application filed by the assessee directly relates to the subject matter of computation of total income of the assessee , and out come of this rectification application has direct bearing and nexus with the computation of total income of the assessee. Thus this rectification application filed by the assessee u/s 154 directly impinges upon the computation of total income of ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 13 the assessee. Assuming that the contentions of the assessee are accepted and consequently relief in part or full is granted either by the AO as sought in the rectification application filed u/s 154 or by the first appellate authority in an appeal filed by the assessee before ld. CIT(A) or even by us in this second appeal filed by the assessee , the total income of the assessee computed by the AO vide reassessment order u/s 147 read with Section 143(3) , would have reduced to the extent of relief granted by the aforesaid authorities. Thus, this rectification application filed by the assessee u/s 154 had a direct bearing on the computation of total income of the assessee as computed by the AO vide reassessment order passed u/s 143(3) read with Section 148, and hence the residual clause (d) of Section 253(6) shall not have any application, but rather Section 253(6)(a) to (c) of the 1961 Act have direct applicability as it deals with computation of total income of the assessee by the AO to which this appeal relates, and since total income computed by the AO was Rs. 50,73,010/- , Relevant Section under which appeal fee shall be payable will be Section 253(6)(c) , and hence appeal fee of Rs. 10000/- shall be payable by the assessee. It is altogether a different matter that rectification application filed by the assessee stood dismissed by the AO, for lack of evidences and also that appeal against assessment order passed u/s 143(3) read with Section 147 is still pending before ld. CIT(A) . Similarly, if we grant relief by allowing appeal in ITA No. 37/Alld/2022 , on merits, it will have direct bearing on computation of total income assessed by the AO to which this appeal relates, and consequently will impact on the liability of the assessee to pay income-tax and interest under the provisions of the 1961 Act. Thus, we hold that in the instant appeal filed by the assessee with tribunal, the appeal fee of Rs. 10,000/- shall be leviable u/s 253(6)(c) of the 1961 Act. We clarify that we have restricted our discussions and decision to the actual factual matrix of the case before us, and so far as other facts situations contended by the assessee, it is merely academic so far as this appeal is concerned ITA No. 37/Alld/2022 Assessment Year: 2008-09 Dr. Aroti Ghosh , Allahabad v. ITO, Ward 1(1), Allahabad 14 and hence not adjudicated by us. Thus, since now we have now held that an appeal fee of Rs. 10,000/- shall be payable by the assessee while filing this appeal with tribunal keeping in view provisions of Section 253(6)(c) of the 1961 Act , and the assessee has only deposited an appeal fee of Rs. 500/-, we direct assessee to deposit the differential appeal fee amount to Rs. 9,500/- on or before 6 th March , 2023 with Government Treasury , and file the paid challan with Registry latest by 09 th March, 2023, failing which appeal of the assessee shall stand dismissed . Registry is directed to serve copy of this order to both the parties . The Registry is directed to list this appeal for compliance , before Division Bench in Open Court, on 10 th March, 2022. We order accordingly. Order pronounced in Open Court on 21/02/2023 at Allahabad, U.P. dSd/- Sd/- Sd/- SdSd Sd/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21/02/2023 Copy forwarded to: 1. Appellant – Dr. Aroti Ghosh, 16/12, FF-103, Block-A, Vinyak Le Grand, Lal Bahadur Shastri Marg, Allahabad-211001, U.P. 2. Respondent –The ITO, Ward 1(1), 38, M G Road , Civil Lines, Allahabad-211001, U.P. 3. The CIT, Allahabad, U.P. 4. The ld. Sr. DR. ITAT, Allahabad, U.P. 5. The Guard File