JIMMY F. BILIMORIA, MUMBAI V. ITO 26(2), MUMBAI

ITA 6063/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84540 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 16-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Recovery proceedings; Salary income; Period of limitation; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUM BAI .. , , BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 6063/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) JIMMY F. BILIMORIA 3 RD FLOOR, SLEATER HOUSE, SLEATER ROAD, GRAND ROAD, MUMBAI-400 007 / VS. ITO-26(2)-4, ROOM NO. 610, 6 TH FLOOR, K. G. MITTAL AYURVEDIC HOSPITAL BLDG., CHARNI ROAD, MUMBAI-400 002 ./ ./PAN/GIR NO. AEKPB 1973 R ( /APPELLANT ) : ( !' / RESPONDENT ) # $ / APPELLANT BY : SHRI KIRIT SHETH !' # $ / RESPONDENT BY : SHRI AKHILENDRA YADAV % &'( # )* / DATE OF HEARING : 16.12.2014 +,- # )* / DATE OF PRONOUNCEMENT : 18.12.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-28, MUMBAI (CIT(A) FOR SH ORT) DATED 30.07.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S. 147 R/W S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR TH E ASSESSMENT YEAR (A.Y.) 2009-10 VIDE ORDER DATED 26.12.2011. 2 ITA NO. 6063/MUM/2012 (A.Y. 2009-10) JIMMY F. BILIMORIA VS. ITO 2. THE ONLY ISSUE ARISING IN THIS APPEAL IS THE MAINTAINABILITY OF T HE IMPUGNED ASSESSMENT, ASSESSING THE SUM OF RS.18 LACS RECEIVE D BY THE ASSESSEE FROM HIS EX- EMPLOYER, M/S. KUWAIT AIRWAYS CORPORATION. THE ASSE SSEES PRINCIPAL CHALLENGE IS QUA THE VALIDITY OF THE ASSESSMENT; THE LD. AUTHORIZED REPRESENTATIVE (A.R.), THE ASSESSEES COUNSEL, CONCEDING BEFORE US THAT THE SAID SUM, REC EIVED FROM AN EX-EMPLOYER, IS TAXABLE AS SALARY, FURTHER LIMITING HIS PRAYER FOR A DIRECT ION TO BE ALLOWED CREDIT FOR THE TAX DEDUCTED AT SOURCE THEREON, I.E., U/S.192 OF THE AC T. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE ASSESSEES CASE IS THAT THE RETURN OF INCOM E IN THE INSTANT CASE, FILED ON 14.07.2010, IS A VALID RETURN U/S. 139(4). THAT BEI NG SO, THE REVENUE, IF IT WANTED TO REPUDIATE THE SAME, FOLLOWING THE VERIFICATION PROC EDURE UNDER THE ACT, WAS REQUIRED TO SERVE UPON HIM NOTICE U/S.143(2) OF THE ACT, THE TI ME LIMIT FOR WHICH IS AVAILABLE UP TO 30.09.2011 . THE ASSESSING OFFICER (A.O.) ISSUED INSTEAD A NOT ICE U/S.148 ON 14.03.2011 . THE SAME IS NOT PERMISSIBLE IN-AS-MUCH AS THE TIME FOR THE ISSUE OF NOTICE U/S. 143(2) WAS AVAILABLE, AND FOR WHICH PROPOSITION RELIANCE IS PL ACED ON THE DECISIONS IN THE CASE OF CIT VS. RAJENDRA G. SHAH [2001] 247 ITR 772 (BOM), BESIDES BY THE TRIBUNAL IN THE CASE OF EENADU RELIEF FUND VS. DY. DIT(E) (IN ITA NO. 434/HYD/2010 DATED 13.01.2011), FOLLOWING A THIRD MEMBER DECISION IN THE CASE OF SUPER SPINNING MILLS LTD. VS. ADDL. CIT [2010] 3 ITR 258 (CHENNAI)(TM). FURTHER ON, THE A.O ., IN ISSUING NOTICE U/S.148, TAKES NOTE OF THE INFORMATION WHICH STANDS ALREADY COMMUN ICATED BY THE ASSESSEE PER HIS RETURN OF INCOME, I.E., BY WAY OF A NOTE TO THE COMPUTATIO N OF INCOME, ENCLOSED ALONG WITH, CLEARLY STATING THAT THE ASSESSEE IS DURING THE REL EVANT PREVIOUS YEAR IN RECEIPT OF RS.18 LACS FROM M/S. KUWAIT AIRWAYS CORPORATION BY WAY OF RETIREMENT DUES. THE REVENUE, ON THE OTHER HAND, RELYING ON THE DECISIONS IN THE CAS E OF CIT VS. JORA SINGH [2013] 215 TAXMAN 424 (ALL.); CIT VS. SMT. SHAKUNTALA DEVI [2009] 318 ITR 273 (P & H); ITO VS. K.M. PACHIAPPAN [2009] 311 ITR 31 (MAD), CONTENDS THAT THE PENDENC Y OF THE PROCEEDING U/S. 143(3) IS NO BAR FOR THE INITIATION OF THE REASSESSMENT PROCEEDINGS, I.E., WHERE THE CONDITIONS FOR THE INITIATION THEREOF ARE OTHERWISE SATISFIED. THERE IS NO CHARGE 3 ITA NO. 6063/MUM/2012 (A.Y. 2009-10) JIMMY F. BILIMORIA VS. ITO IN ITS RESPECT, THE NOTICE U/S.148 BEING ISSUED UP ON RECEIPT OF SPECIFIC INFORMATION FROM THE TDS WING OF THE DEPARTMENT. WE ARE COMPLETELY AT LOSS TO UNDERSTAND AS TO WHAT THE LEGAL CONTROVERSY IN THE PRESENT CASE IS ABOUT. THE REASONS ARE MORE THAN ON E. NO DOUBT, AS EXPLAINED IN TRUSTEES OF H.E.H. THE NIZAMS SUPPLEMENTAL FAMILY TRUST VS. CIT [2000] 242 ITR 381 (SC), THE REASSESSMENT PROCEEDINGS COULD NOT BE INITIATED PEN DING THE ASSESSMENT PROCEEDINGS. THE MOOT QUESTION HOWEVER IS IF ANY ASSESSMENT PROCEEDI NGS WERE ON AT THE TIME OF ISSUE OF REASSESSMENT NOTICE U/S.148 ON 14.03.2011 THE ANS WER TO WHICH IS CLEARLY IN THE NEGATIVE. THE DECISION BY THE HONBLE APEX COURT SH ALL THEREFORE NOT APPLY. IN FACT, AS EXPLAINED BY THE HONBLE HIGH COURTS IN THE DECISIO NS RELIED UPON BY THE REVENUE, WITH THAT BY THE ALLAHABAD AND PUNJAB & HARYANA HIGH COU RT NOTICING THE SAID DECISION BY THE APEX COURT, THE LEGAL POSITION STANDS MATERIALLY AL TERED AFTER THE AMENDMENT TO SECTION 147 W.E.F. 01.04.1989. IT IS, IN VIEW OF EXPLANATION 2(B) TO SECTION 147, NOW NO LONGER OPEN TO CONTEND THAT NOTICE U/S.148 COULD NOT BE ISSUED WHE RE THE TIME FOR THE COMPLETION OF ASSESSMENT U/S.143(3) WAS AVAILABLE OR, FOR THAT MA TTER, FOR SERVICE OF NOTICE U/S.143(2). THERE IS, IT WAS FURTHER EXPLAINED, NOTHING IN THE LANGUAGE OF SECTION 143, WHICH MAY SUGGEST THAT THE RECOURSE TO SECTION 147 COULD BE H AD ONLY WHEN THE PERIOD OF LIMITATION TO COMPLETE THE ASSESSMENT PROCEEDINGS HAS EXPIRED OR THE A.O. SHOULD WAIT FOR THE EXPIRY OF THE SAID PERIOD. THE APEX COURT IN ASST. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD . [2007] 291 ITR 500 (SC), TAKING NOTE OF THE AMEND ED PROVISIONS OF SECTION 147, AS WELL AS SECTIONS 148 TO 152, CLARIFIED THAT THE FAILURE TO TAKE STEPS U/S.143(3) WILL NOT RENDER THE A.O. POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS. AS LONG AS THEREFORE THE CONDITIONS OF SECTION 147 ARE FULFILLED, THE A.O. I S FREE TO INITIATE PROCEEDINGS U/S.147, WHICH CONSTITUTE THE ONLY BAR ON THE POWER OF A.O. TO INITIATE SUCH PROCEEDINGS UNDER THE AMENDED LAW. THIS, THUS, CONSTITUTES OUR SECOND REA SON FOR STATING THE ASSESSEES LEGAL PLEA QUA NON-MAINTAINABILITY IN LAW OF THE ASSESSMENT PROCEE DINGS AS NOT VALID. THIS WOULD ALSO CONSTITUTE OUR REASON FOR CONSIDERING TH E DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJENDRA G. SHAH (SUPRA), BINDING ON US, AS NOT APPLICABLE; THE 4 ITA NO. 6063/MUM/2012 (A.Y. 2009-10) JIMMY F. BILIMORIA VS. ITO ASSESSMENT YEAR INVOLVED IN THAT CASE BEING PRIOR T O 1982 IN-AS-MUCH AS THE RETURN WAS FILED ON 29.06.1982. THE ASSESSEE STATING THAT NO INFORMATION HAD COME T O THE A.O.S POSSESSION, I.E., PRIOR TO THE ISSUE OF NOTICE U/S.148, OR THAT THERE WAS TRUE AND FULL DISCLOSURE PER THE RETURN OF INCOME, INVALIDATING THE SAID NOTICE, WOULD ALSO BE OF NO CONSEQUENCE IN-AS-MUCH AS THE REOPENING IS WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE STIPULATION WITH REGARD TO THE DISCLOSURE OR THE DISCLOSURE REQUIREMENTS, I.E., WHERE THE ASSESSMENT IS REOPENED AFTER A PERIOD OF FOUR YEARS, VIDE PROVISO TO SECTION 147, WOULD NOT THEREFORE COME INTO PLAY. THERE IS, WE MA Y ADD, NOTHING IN THE RETURN TO INDICATE THAT THE IMPUGNED RECEIPT WAS NOT TAXABLE, BEING IN FACT BY WAY OF RETRENCHMENT COMPENSATION. FINALLY, AND WITHOUT PREJUDICE, NOTICE U/S. 143(2) STANDS ISSUED IN THE INSTANT CASE FOR THE FIRST TIME ONLY ON 06.07.2011. THE ASSESSEE CLAIMS THE SAME TO BE IN PURSUANCE TO THE NOTICE U/S.148. THE SAME IS WITHOUT BASIS IN-AS -MUCH AS THE ASSESSEE DID NOT ADMITTEDLY FILE ANY RETURN, OR EVEN A COMMUNICATION TO THE EFFECT THAT THE RETURN FILED EARLIER (I.E., ON 14.07.2010) BE TREATED AS, IN RES PONSE TO NOTICE U/S.148. A NOTICE U/S. 143(2) COULD ONLY BE ISSUED IN PURSUANCE OF A RETUR N EITHER U/S.139 OR IN RESPONSE TO NOTICE U/S. 142(1). THE SAID NOTICE COULD THUS ONLY BE CONSIDERED AS IN PURSUANCE TO THE RETURN FURNISHED U/S. 139(4) ON 14.07.2010. THE IMP UGNED ASSESSMENT, THEREFORE, CAN AT WORST BE CONSIDERED AS AN ASSESSMENT U/S. 143(3). WE, ACCORDINGLY, FOR THE REASONS AFORE-MENTIONED, F IND NO MERIT IN THE ASSESSEES LEGAL CLAIM OF THE NON-MAINTAINABILITY IN LAW OF TH E IMPUGNED ASSESSMENT. 3.2 COMING, NEXT, TO THE MERITS OF THE CASE; THE ON LY ISSUE IN ITS RESPECT IS TOWARD ALLOWING THE ASSESSEE THE CREDIT FOR TDS. THE AMOUN T, ITS STANDS EXPLAINED TO US BY THE LD. AR, CAME TO BE RECEIVED ON THE DIRECTIONS OF THE LA BOUR COURT, AND ON NET OF TAX BASIS. TDS HAS HOWEVER BEEN SUBSEQUENTLY RECOVERED BY THE REVENUE FROM THE EMPLOYER, WHO THOUGH HAS CONTESTED THE LIABILITY. WE DO NOT FIND ANY MERIT IN THE ASSESSEES CLAIM TH AT THE DECISION IN THE CASE OF THE EMPLOYER, M/S. KUWAIT AIRWAYS CORPORATION, WOULD IPSO FACTO BE MADE APPLICABLE TO THE 5 ITA NO. 6063/MUM/2012 (A.Y. 2009-10) JIMMY F. BILIMORIA VS. ITO ASSESSEES CASE, SO THAT IN CASE THE EMPLOYER WAS H ELD AS NOT LIABLE TO DEDUCTION OF TAX AT SOURCE, NO TAX WOULD STAND TO BE PAYABLE BY THE ASS ESSEE. THE DEPOSIT OF TDS IS ONLY FOR AND ON BEHALF OF THE ASSESSEE-PAYEE; TDS BEING ONLY A MANNER AND MODE OF RECOVERY OF TAX QUA THE INCOME COMPRISED IN THE AMOUNT PAID TO HIM. WE ARE EQUALLY UNIMPRESSED WITH THE REVENUES ARGUMENT THAT IN-AS-MUCH AS THE ASSESSEE HAS RECEIVED THE PAYMENT ADMITTEDLY WITHOUT DEDUCTION OF TAX, NO TAX CAN BE SAID TO HAVE BEEN DEDUCTED ON THE SALARY INCOME OF RS.18 LACS PAID TO HIM. THE PAYMEN T AFTER DEDUCTION OF TAX WOULD ONLY BE RECEIVED BY THE PAYEE AT NET OF TAX. AS SUCH, IT WAS PREPOSTEROUS TO CONTEND THAT NO TAX IN ITS RESPECT STANDS AT ALL DEDUCTED IN-AS-MUCH AS IT IS RECEIVED ON NET OF TAX BASIS. WHAT, HOWEVER, WOULD BE MORE APPROPRIATE IN LAW TO SAY IS THAT THE ASSESSEE WOULD STAND TO BE PROPERLY ASSESSED FOR THE GROSS AMOUNT, I.E., ON CU M TAX BASIS; THE TAX DEDUCTED BEING ONLY INCOME, SINCE RECEIVED, APPLIED TOWARD THE ASS ESSEE-PAYEES TAX LIABILITY. FURTHER, CREDIT FOR TDS IS TO BE ALLOWED IN THE YEAR FOR WHI CH THE CORRESPONDING INCOME IS ASSESSABLE THE CURRENT YEAR IN THE INSTANT CASE ( SECTIONS 198, 199). A PROPORTIONATE RECEIPT /INCOME WOULD ACCORDINGLY BE ENTITLED TO A PROPORTIONATE CREDIT FOR TDS. THE ENTIRE PAYMENT HAVING BEEN RECEIVED DURING AND ASSE SSABLE FOR THE CURRENT YEAR, I.E., THE PREVIOUS YEAR CORRESPONDING TO A.Y. 2009-10, THE AS SESSEE SHALL, ACCORDINGLY, BE ALLOWED FULL CREDIT FOR THE TAX DEDUCTED, SINCE RECOVERED B Y THE DEPARTMENT, AND WHICH SUM WOULD ALSO STAND TO BE ASSESSED AS A PART OF THE SALARY I NCOME FOR THE CURRENT YEAR. IN THE EVENT, HOWEVER, OF THE EMPLOYER NOT BEING FINALLY FOUND AS LIABLE TO DEDUCT ANY TAX AT SOURCE, SO THAT THE TAX DEDUCTED STANDS RECOVERED IN EXCESS, A ND REPAID/REPAYABLE TO THE EMPLOYER BY THE REVENUE; THE ASSESSEE HAVING NO RIGHT THEREIN, THE SAME CANNOT BE BROUGHT TO TAX IN HIS HANDS, AND NEITHER WOULD HE BE ALLOWED ANY CRED IT IN ITS RESPECT. REFERENCE IN THIS REGARD BE MADE TO THE DECISION BY THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT VS. JAYDEV H. RAJA [2013] 357 ITR 293 (BOM). AS REGARDS OUR POWER TO I SSUE SUCH A DIRECTION, THE SAME IS THE SUBJECT MATTER OF SETTLE D LAW, AND TOWARD WHICH WE MAY READILY CITE THE DECISION IN AHMEDABAD ELECTRICITY CO. LTD. VS. CIT [1993] 199 ITR 351 (BOM)(FB). WE DECIDE ACCORDINGLY. 6 ITA NO. 6063/MUM/2012 (A.Y. 2009-10) JIMMY F. BILIMORIA VS. ITO 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. /-)0 &12/) # 3. ' 4 ) # ) 56 ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 18, 2014 SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % ( MUMBAI; 7& DATED : 18.12.2014 '.&../ ROSHANI , SR. PS !' # $%&' ('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. % 8) ( ) / THE CIT(A) 4. % 8) / CIT - CONCERNED 5. ;'<= !)&>1 , * >1- , % ( / DR, ITAT, MUMBAI 6. =?2 @( / GUARD FILE !' ) / BY ORDER, */)+ (DY./ASSTT. REGISTRAR) , % ( / ITAT, MUMBAI