Sri.Bathisha Kalam Pasha, Ernakulam V. The ACIT, Trivandrum

ITA 468/COCH/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4408 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 06-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SANTHAM BOSE
• Assessee Lawyers: P G JAYASANKAR
• Keywords: Condonation of delay
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM ITA NO. 468 /COCH/201 6 : ASST.YEAR 2011 - 2012 SRI.BATHISHA KALAM PASHA C/O.V.SURESH, ADVOCATE TC 82/4237, 1 ST FLOOR CRESCENT TOWER, VANCHIYOOR THIRUVANANTHAPURAM - PIN 695035 PAN : AEPPP4561G. VS. THE PR.COMMISSIONER OF INCOME - TAX THIRUVANANTHAPURAM (APPELLANT) (RESPONDENT) ITA NO. 469 /COCH/201 6 : ASST.YEAR 2011 - 2012 SRI.S.V.UNNIKRISHNAN NAIR C/O.V.SURESH, ADVOCATE TC 82/4237, 1 ST FLOOR CRESCENT TOWER, VANCHIYOOR THIRUVANANTHAPURAM - PIN 695035 PAN : ABQPN5965J. VS. THE PR.COMMISSIONER OF INCOME - TAX THIRUVANANTHAPURAM (APPELLANT) (RESPONDENT) APPELLANT S BY : SRI. P.G. JAYASANKAR , ADVOCATE RESPONDENT BY : SRI.A.SANTHAM BOSE, CIT - DR DATE OF HEARING : 19 .03.2018 DATE OF PRONOUNCEMENT : 22 .03.2018 O R D E R PER BENCH THESE APPEALS AT THE INSTANCE OF TWO ASSESSEES ARE DIRECTED AGAINST TWO ORDERS OF THE COMMISSIONER OF INCOME - ITA NO S . 468 & 469 / COCH /201 6 . SRI.BATHISHA KALAM PASHA & SRI.S.V.UNNIKRISHNAN NAIR . 2 TAX, PASSED U/S 263 OF THE INCOME - TAX ACT, 1961, BOTH DATED 14.03.2016. THE RELEVANT ASSESSMENT YEAR IS 2011 - 2012. 2. COMMON ISSUE IS RAISED IN THESE APPEALS, HENCE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. THERE IS A DELAY OF 128 DAYS IN FILING BOTH THE APPEALS. THE ASSESSEES HAVE FILED PETITION S FOR CONDONATION OF DELAY ALONG WITH AFFIDAVIT S , STATING THEREIN THE REASONS FOR DELAY IN FILING THESE APPEALS. ON PERUSAL OF THE REASONS STATED IN THE AFFIDAVIT S , WE HOLD THE DELAY OF 128 DAYS IN FILING THESE APP EALS CANNOT BE ATTRIBUTED TO ANY LATCHES ON THE PART OF THE ASSESSEES, HENCE WE PROCEEDED TO DISPOSE OF THE CASE ON MERITS. 4. THE SOLITARY ISSUE RAISED IN THESE APPEALS IS WHETHER THE CIT IS JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDERS PASSED U/S 14 3(3) OF THE I.T.ACT AND DIRECTING THE ASSESSING OFFICER TO DENY THE CLAIM OF EXEMPTION FOR MEDICAL ALLOWANCES, CONVEYANCE ALLOWANCES AND SUMPTUARY ALLOWANCES ETC. 5. THE BRIEF FACTS OF THE CASE ARE AS FOLLOW: - 5.1 THE ASSESSEES ARE OFFICERS IN THE STATE JUDICIAL SERVICES AND ARE FUNCTIONING AS DISTRICT JUDGES IN THE STATE OF KERALA. FOR THE ASSESSME NT YEAR 2011 - 2012, RETURNS OF I NCOME WAS FILED BY THE TWO ASSESSEES BY CLAIMING EXEMPTION FOR THE ITA NO S . 468 & 469 / COCH /201 6 . SRI.BATHISHA KALAM PASHA & SRI.S.V.UNNIKRISHNAN NAIR . 3 AMOUNT OF SUMPTUARY, CONVEYANCE AND MEDICAL ALLOWANCES. THE ASSESSMENTS WERE COMPLETED U/S 143(3) OF THE I.T.ACT, WHEREIN EXEMPTION CLAIMED UNDER SUMPTUARY, CONVEYANCE AND MEDICAL ALLOWANCES ETC. WERE ALLOWED BY THE ASSESSING OFFICER. SUBSEQUENTLY, THE CIT HAD ISSUED NOTICE U/ S 263 OF THE I.T. ACT FOR REVISING THE ASSESSMENT COMPLETED U/S 143(3) OF THE I.T. ACT. THE CIT HAD HELD THAT THE ALLOWANCES CLAIMED AS EXEMPTION ON THE BASIS OF THE RECOMMENDATION OF SHETTY COMMISSION REPORT AS APPROVED BY THE HONBLE SUPREME COURT WERE NO T EXEMPTED UNDER THE I.T.ACT AND HENCE THE ASSESSMENTS ARE TO BE REVISED. THE ASSESSEES HAD FILED WRITTEN OBJECTIONS AGAINST THE NOTICE ISSUED PROPOSING REVISION OF THE ASSESSMENT ORDERS. THE ASSESSEES HAD BROUGHT TO THE NOTICE OF THE CIT THE NATURE AND CH ARACTERISTICS OF THE CLAIM. THE CIT, HOWEVER, REJECTED THE OBJECTIONS RAISED BY THE ASSESSEES AND PASSED AN ORDER U/S 263 OF THE I.T.ACT SETTING ASIDE THE ASSESSMENT ORDERS AND DIRECTING THE A.O. TO DENY EXEMPTION CLAIMED FOR SUMPTUARY, CONVEYANCE AND MEDI CAL ALLOWANCES ETC. THE RELEVANT FINDING OF THE ADMINISTRATIVE CIT WHILE PASSING THE ORDER U/S 263 OF THE I.T.ACT IN THE CASE OF ITA NO.469 /COCH/2016, READS AS FOLLOW: - 4. I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEES A.R. AND ALSO THE OBSERVATIONS MADE BY THE HONBLE SUPREME COURT RELIED ON THIS REGARD. THE HONBLE SUPREME COURT AS QUOTED SUPRA HAS ORDERED THAT ITA NO S . 468 & 469 / COCH /201 6 . SRI.BATHISHA KALAM PASHA & SRI.S.V.UNNIKRISHNAN NAIR . 4 `SUBJECT TO THE VARIOUS MODIFICATIONS IN THIS JUDGMENT, ALL OTHER RECOMMENDATIONS OF THE SHETTY COMMISSION ARE ACCEPTED. WE ARE AWARE THAT IT WILL BECOME NECESSARY FOR SERVICE AND OTHER RULES TO BE AMENDED SO AS TO IMPLEMENT THIS JUDGMENT. THE HONBLE SUPREME COURTS DECISION IN THIS REGARD IS CRYSTAL CLEAR. THE COURT HAS DIRECTED THE STATE AND CENTRAL GOVERNMENTS TO IMPLEMENT THE SH ETTY COMMISSIONS RECOMMENDATIONS . 5. IN ORDER TO GIVE EFFECT TO THE SHETTY COMMISSION RECOMMENDATIONS, THE INCOME TAX ACT AND RELEVANT RULES OUGHT TO HAVE BEEN AMENDED. IN THE ABSENCE OF SUCH AN AMENDMENT, THE DIRECTION BY THE HON'BLE SUPREME COURT TO TH E CENTRAL GOVERNMENT WOULD NOT DIRECTLY RENDER THE SUMPTUARY ALLOWANCE, CONVEYANCE ALLOWANCE, SPECIAL ALLOWANCE ETC., TAX FREE. I FIND FROM THE RECORD THAT THERE ARE NO NOTIFICATIONS OR AMENDMENT IN THIS REGARD BY THE CENTRAL GOVERNMENT. THEREFORE, TILL SUCH TIME SUCH AMENDMENTS ARE MADE TO IMPLEMENT THE SHETT Y COMMISSION RECOMMENDATIONS , THE EXISTING: RULES WILL APPLY . IF THE ASSESSEE IS AGGRIEVED THAT THE SAID RECOMMENDATIONS HAVE NOT BEEN IMPLEMENTED BY THE APPROPRIATE AUTHORITY THEN HE OUGHT TO HAVE S OUGHT JUDICIAL REDRESS OF THE SAME RATHER THAN CLAIMING THESE ALLOWANCES AS TAX - FREE. 6. IN THE ABSENCE OF ANY AMENDMENT TO THE ACT OR THE RULES THERE TO, THE ADMISSION OF THE CLAIMS OF EXEMPTION MADE BY THE ASSESSEE AND ALLOWED BY THE ASSESSING OFFICER A RE ERRONEOUS AND PREJUDICIAL TO REVENUE. IT APPEARS THAT THE ASSESSING OFFICER MISTOOK THE DIRECTION OF THE HON'BLE SUPREME COURT TO IMPLEMENT THE SHETTY COMMISSION RECOMMENDATION AS IMPLEMENTATION PER SE. SUCH AN UNDERSTANDING IS ITA NO S . 468 & 469 / COCH /201 6 . SRI.BATHISHA KALAM PASHA & SRI.S.V.UNNIKRISHNAN NAIR . 5 NOT CORRECT AND IT LEADS TO AN INCORRECT APPLICATION OF LAW. IN VIEW OF THE FACTS DISCUSSED SUPRA, I SET ASIDE THE ORDER OF THE ASSESSING OFFICER MADE U/S143(3) ON 24.03.2014 WITH DIRECTION TO VERIFY THE CLAIMS OF EXEMPTION OF MEDICAL ALLOWANCE, CONVEYANCE ALLOWANCE, SUMPTUARY ALLOWANCE ETC. AND ALLOW AS PER PROVISIONS OF THE INCOME TAX ACT. THE A.O WILL GIVE THE ASSESSEE AN OPPORTUNITY FOR BEING HEARD BEFORE PASSING THE ORDER. 6. AGGRIEVED BY THE ORDERS PASSED U/S 263 OF THE I.T.ACT, THE ASSESSEES HAVE FILED PRESENT APPEALS B EFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEES SUBMITTED THAT THE SHETTY COMMISSION REPORT WHICH IS THE BASIS FOR PAYMENT OF SUMPTUARY, MEDICAL AND CONVEYANCE ALLOWANCES HAS BEEN APPROVED BY THE HONBLE APEX COURT IN THE CASE OF ALL INDIA JUDGES ASSOCIATION V. UNION OF INDIA AND OTHERS WRIT PETN. (CIVIL) 1022 OF 1989, D/ - 13.11.1991 [AIR 1992 SUPREME COURT 165] . IT WAS SUBMITTED THAT THE SUMPTUARY ALLOWANCES HAD BEEN SPECIFICALLY STATED BY THE HONBLE SUPREME COURT IS A PAYMENT MADE IN THE COURSE OF PERFORMANCE OF DUTY AND CANNOT BE CONSIDERED AS A PERK FOR BEING INCLUDED AS AN INCOME IN THE HANDS OF THE RECIPIENT. IT WAS STATED BY THE LEARNED COUNSEL THAT THIS IS A DECLARATION OF LAW BY THE HONBLE APEX COURT AND IN VIEW OF THE JUDGMENT OF THE HONBLE APEX COURT, SUMPTUARY ALLOWANCE RECEIVED BY THE ASSESSEES CANNOT BE CONSIDERED AS INCOME . ITA NO S . 468 & 469 / COCH /201 6 . SRI.BATHISHA KALAM PASHA & SRI.S.V.UNNIKRISHNAN NAIR . 6 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTED THE REVISIONARY ORDERS PASSED U/S 263 OF THE I.T.ACT. 8. WE HAVE HE ARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CIT WHILE PASSING THE ORDER U/S 263 OF THE I.T.ACT NOTED THAT THE ALLOWANCES CLAIMED AS EXEMPT ON THE BASIS OF RECOMMENDATION OF SHETTY COMMISSION REPORT, WHICH IS APPROVED BY THE HONBLE AP EX COURT, HAS NOT BEEN EXEMPT UNDER THE INCOME - TAX ACT. IT WAS FURTHER NOTICED BY THE CIT THAT THE ASSESSING OFFICER MISTOOK THE DIRECTION OF THE HONBLE APEX COURT TO IMPLEMENT THE SHETTY COMMISSION REPORT AS IMPLEMENTATION PER SE AND SUCH UNDERSTANDING O F THE A.O. IS NOT CORRECT AND IT LEADS TO INCORRECT APPLICATION OF LAW. 8.1 THE OXFORD ENGLISH DICTIONARY DEFINES SUMPTUARY MEANS AS A PRIVATE EXPENDITURE IN THE INTEREST OF THE STATE. THE SALIENT FEATURE ARISING FROM IT ARE (1) THE EXPENDITURE IS IN T HE PUBLIC INTEREST AND (2) IT IS SPENT BY AN INDIVIDUAL, GENERALLY A PUBLIC OFFICER, WITH DUE REGARD AND RESTRICTION KEEPING THE STATES INTEREST IN VIEW . THE SUMPTUARY ALLOWANCES PAID TO THE DISTRICT JUDGES WAS MADE PART OF THE SALARY AND THE ALLOWANCE FO LLOWING THE SHETTY COMMISSION RECOMMENDATION ON THE PAY AND ALLOWANCE WHICH WAS APPROVED BY THE HONBLE APEX COURT IN THE CASE OF ALL INDIA JUDGES ASSOCIATION V. UNION OF INDIA AND OTHERS (SUPRA) . ITA NO S . 468 & 469 / COCH /201 6 . SRI.BATHISHA KALAM PASHA & SRI.S.V.UNNIKRISHNAN NAIR . 7 8.3 THE DIVISION BENCH OF THE HONBLE HIGH COURT HAS CONFIRMED A LEARNED SINGLE JUDGE JUDGMENT WHEREIN, THE LEARNED JUDGE HAD REJECTED THE PLEA OF KERALA JUDICIAL OFFICERS ASSOCIATION THAT ACCEPTANCE OF RECOMMENDATION OF SHETTY COMMISSION REPORT BY THE HONBL E SUPREME COURT SHOULD BE CONSIDERED AS DECLARATION OF LAW. A COPY OF THE JUDGMENT OF HONBLE DIVISION BENCH IN W.A. NO.2069/15 (JUDGMENT DATED 03.03.2016) IS PLACED ON RECORD. THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT READS AS FOLLOW: - 4. HAVIN G BESTOWED OUR ANXIOUS CONSIDERATION, WE DO NOT FIND OUR WAY TO DISAGREE WITH THE FINDING RENDERED BY THE LEARNED SINGLE JUDGE FOLLOWING THE AFORE - NOTED PRECEDENTS. THE LEARNED SINGLE JUDGE, THEREFORE, RIGHTLY REFUSED TO ACCEPT THE CONTENTION OF THE ASSOCI ATION THAT THE ACCEPTANCE OF THE RECOMMENDATIONS OF THE SHETTY COMMISSION REPORT HAS TO BE CONSIDERED AS DECLARATION OF LAW BY THE HON'BLE SUPREME C OURT FOR THE PURPOSE OF ITS ENFORCEMENT. THOSE RECOMMENDATIONS ARE MATTERS WHICH MAY GENERATE ROOM FOR RELIE F IN CASES WHERE NO RULES HAVE BEEN FRAMED; IN WHICH EVENT, THE LEARNED SINGLE JUDGE HAS RIGHTLY FOUND THAT THE REMEDY DOES NOT LIE BEFORE THIS COURT. 5. FOR THE AFORESAID REASONS, WE ARE OF THE VIEW THAT THIS HAS WRIT APPEAL HAS TO FAIL. 6. BEFORE PARTING, WE MAY NOTE THAT AN ATTEMPT WAS MADE EVEN BY THE DIVISION BENCH DURING THE PENDENCY OF THIS APPEAL TO FIND OUT WHETHER THERE COULD BE A RE - LOOK AT THE ISSUE BY THE EXECUTIVE. THE ASSISTANT SOLICITOR GENERAL OF INDIA WAS REQUIRED TO BRING TH E ISSUE INVOLVED IN THE CASE TO THE NOTICE OF THE AUTHORITIES CONCERNED IN THE CENTRAL GOVERNMENT. 7. WE HAVE SEEN THE PROVISIONS OF THE INCOME TAX ACT AND THE LIMITED EXTENT OF POWER WHICH IS GIVEN THROUGH DELEGATION. WE THINK THAT THIS IS NOT A MATTER WHICH COULD SUCCEED THROUGH JUDICIAL REVIEW AT OUR HANDS. ITA NO S . 468 & 469 / COCH /201 6 . SRI.BATHISHA KALAM PASHA & SRI.S.V.UNNIKRISHNAN NAIR . 8 8.4 SINCE THE HONBLE HIGH COURT HAD HELD THAT ACCEPTANCE OF THE SHETTY COMMISSION REPORT BY THE HONBLE APEX COURT IS NOT A DECLARATION OF LAW AND SINCE THERE IS NO PROVISION UNDER THE INCOME - TA X ACT OR THE RULES, WHEREBY MEDICAL, CONVEYANCE AND SUMPTUARY ALLOWANCES ARE EXEMPT FROM TAXATION, WE HOLD THAT CIT IS JUSTIFIED IN INVOKING HIS REVISIONARY JURISDICTION U/S 263 OF THE I.T.ACT. IT IS ORDERED ACCORDINGLY. 9 . IN THE RESULT, THE APPEAL S FILED BY THE ASSESSEES ARE DISMISSED . ORDER PRONOUNCED ON THIS 22 ND DAY OF MARCH, 2018 . SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIA L MEMBER COCHIN ; DATED : 22 ND MARCH, 2018 . DEVDAS* COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, COCHIN 1. THE APPELLANT 2. THE RESPONDENT. 3. THE PR.CIT THIRUVANANTHAPURAM . 4 . DR, ITAT, COCHIN 5 . GUARD FILE.