Shri Julfikar Khan, Bharuch V. The Income tax Officer, Ward-3, Bharuch

ITA 677/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5813 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 21-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 15/06/2010 DRAFTED ON: 1 7/06/2010 ITA NO.677/AHD/2008 ASSESSMENT YEAR : 2000-01 JULFIKAR KHAN C/O. B.C. MEHTA 15, AJANTA NAGAR BHARUCH VS. THE INCOME TAX OFFICER WARD-3 BHARUCH PAN/GIR NO. : AGMPK 3308 H (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI MEHUL K.PATEL RESPONDENT BY: SHRI K.MADHUSUDAN, SR. D.R. O R D E R PER SHRI MUKUL SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VI, BARODA DATED 27/04/2006. IN THIS APPEAL, SEVERAL GROUNDS HAVE BEEN RAISED WH ICH ARE ARGUMENTATIVE IN NATURE, HOWEVER, REVOLVED AROUND A SINGLE ISSUE OF CONFIRMATION OF PENALTY. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S. 271(1)(C) OF THE I.T.ACT, 1961 DATED 2 7/03/2002 WERE THAT ASSESSEE IN HIS INDIVIDUAL CAPACITY IS SUBJECT TO ASSESSMENT IN RESPECT OF SALARY AND EX-GRATIA PAYMENT RECEIVED FROM THE EMPL OYER. AN ADDITION OF RS.5 LACS WAS MADE DUE TO DISALLOWANCE OF CLAIM OF DEDUCTION IN RESPECT OF EX-GRATIA COMPENSATION. RESULTANTLY, PENALTY U /S.271(1)(C) ITA NO .677/AHD/2008 JULFIKAR KHAN VS. ITO ASST.YEAR - 2000-01 - 2 - OF THE I.T. ACT, 1961 INITIATED ON ACCOUNT OF THE S AID DISALLOWANCE. WHILE IMPOSING THE PENALTY, IT WAS NOTED BY THE ASSESSIN G OFFICER THAT THE ASSESSEE WAS AN EMPLOYEE OF PFIZER LTD. THE COMPA NY HAD CLOSED ITS PLANT AS WELL AS THE BUSINESS AND IN ACCORDANCE WIT H THE AGREEMENT BETWEEN THE MANAGEMENT AND EMPLOYEES UNION AN EX-GR ATIA COMPENSATION AMOUNTING TO RS.7 LACS WAS PAID TO EAC H PERMANENT EMPLOYEE. THE EMPLOYER HAS ISSUED A CERTIFICATE O N FORM NO.16 AND MENTIONED THE PAYMENT OF RETRENCHMENT COMPENSATIO N SUBJECT TO EXEMPTION U/S.10(10B) OF THE I.T. ACT, 1961. THERE FORE, AS PER THE SALARY CERTIFICATE ISSUED BY THE EMPLOYER, I.E. PFIZER COM PANY, THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S.10(10B) OF RS.26,208/-, W HEREAS AS PER THE RETURN THE ASSESSEE HAS CLAIMED THE ENTIRE AMOUNT O F EX-GRATIA PAYMENT AS NOT CHARGEABLE TO INCOME-TAX WHILE TAKING THE SHELT ER OF SECTIONS 15, 16 & 17 OF THE I.T. ACT, 1961. THE SAID CLAIM OF EXEM PTION WAS HELD AS INCORRECT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS TAXED THE ENTIRE AMOUNT U/S.17(3)(I) OF THE I.T. ACT, 1961 BY HOLDING THE SAID EX- GRATIA PAYMENT AS PROFIT IN LIEU OF SALARY. THE A SSESSEE PREFERRED AN APPEAL AND THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY THE LEARNED CIT(APPEALS). DUE TO THIS REASON, THE ASSE SSING OFFICER HAS HELD THAT ONCE THE ADDITION WAS CONFIRMED IN THE FI RST APPEAL, THEREFORE, THE IMPUGNED AMOUNT WAS WRONGLY CLAIMED AS DEDUCTIO N, THEREFORE, LIABLE TO PENALTY. ACCORDINGLY, A MINIMUM PENALTY OF RS.2,03,070/- WAS IMPOSED WHICH IS A SUBJECT MATTER OF THIS APPEAL. THE FIRST APPELLATE AUTHORITY HAS RELIED UPON THE SALARY CERTIFICATE IS SUED BY THE EMPLOYER AND HELD THAT THE SAID INFORMATION HAD CLEARLY INDICATE D THAT THE SAID EX-GRATIA PAYMENT WAS IN RECOGNITION OF THE PAST SERVICES, TH EREFORE, RIGHTLY TAXED ITA NO .677/AHD/2008 JULFIKAR KHAN VS. ITO ASST.YEAR - 2000-01 - 3 - IN THE HANDS OF THE ASSESSEE, HENCE, FALLS WITHIN THE AMBITS OF THE PENALTY PROVISIONS. NOW THE ASSESSEE IS IN FURTHER APPEAL . 3. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEA RD BOTH THE SIDES. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE, SHRI MEHUL K.PATEL, AT THE OUTSET, HAS PLACED AN ORDER OF RESP ECTED CO-ORDINATE BENCH D AHMEDABAD IN ASSESSEES OWN CASE BEARING ITA NO.3921/AHD/2004 FOR ASSESSMENT YEAR 2000-01, DATED 20/10/2009 AND INFORMED THAT THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR DE NOVO CONSIDERATION. THEREFORE, LEAR NED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS PLEADED THAT SIN CE THE MATTER HAS BEEN SET ASIDE, THEREFORE, THE PENALTY DO NOT SURVIVE AT PRESENT. FROM THE SIDE OF THE REVENUE, LEARNED DEPARTMENTAL REPRESENTATIVE SHRI K.MADHUSUDAN HAS OBJECTED THE SAID PROPOSITION AND ARGUED THAT MERELY ON THE GROUND THAT THE QUANTUM HAS BEEN RESTORED BA CK TO THE FILE OF ASSESSING OFFICER FOR RE-ADJUDICATION DOES NOT MEAN THAT THE PENALTY DO NOT SURVIVE. LEARNED DEPARTMENTAL REPRESENTATIVE H AS ARGUED THAT THE PENALTY HAS ALREADY BEEN LEVIED FOR CONCEALMENT OF INCOME, THEREFORE, IF THE SAID QUANTUM GET EFFECTED BY THE ORDER OF THE T RIBUNAL REFERRED(SUPRA), THEN THE AMOUNT OF PENALTY SHALL A LSO GET AMENDED ACCORDINGLY, BUT THE PENALTY IN QUESTION HAS TO BE IMPOSED. 3.1. IN THE REJOINDER, LEARNED AUTHORISED REPRESENT ATIVE OF THE ASSESSEE HAS VEHEMENTLY CONTESTED THAT WHILE PASSIN G AN ORDER CONSEQUENCE UPON THE DECISION OF THE HON'BLE TRIBUN AL, THE ASSESSING OFFICER IS JUDICIALLY EMPOWERED TO TAKE AN ACTION OF IMPOSING THE CONCEALMENT PENALTY IF DEEM FIT. ITA NO .677/AHD/2008 JULFIKAR KHAN VS. ITO ASST.YEAR - 2000-01 - 4 - 4. ON HEARING THE RIVAL SUBMISSIONS, WE HAVE NOTICE D THAT THE RESPECTED CO-ORDINATE BENCH HAS DIRECTED TO RE-CONS IDER THE ISSUE IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN THE CASE O F DEEPAK VERMA VS. DCIT (2008) 22 SOT 345 (DELHI) WHICH WAS NOT CONSI DERED BY THE ASSESSING OFFICER. ONCE THE MATTER HAS BEEN RESTOR ED BACK FOR FRESH ADJUDICATION AND TO BE DECIDED DE NOVO , BEING THE ASSESSMENT ORDER WAS SET ASIDE, THEREFORE, IN THE FITNESS OF THE CIRCUMS TANCES, IT IS PRE-MATURE TO ADJUDICATE EITHER WAY THIS PENALTY. IN THE CASE OF CIT VS. R.HARIKRISHNA NADAR REPORTED AS 216 ITR 65 (MAD.), THE HON'BLE CO URT HAS HELD SO. THEREFORE, WE DEEM IT FIT TO RESTORE THE QUESTION O F LEVY OF PENALTY BACK TO THE STAGE OF THE ASSESSING OFFICER TO BE DECIDED CONSEQUENCE UPON RE- FRAMING OF THE ASSESSMENT, IF DEEM FIT. WE ORDER A CCORDINGLY. AS A RESULT, AT PRESENT, GROUND OF THE ASSESSEE MAY BE T REATED AS ALLOWED ONLY FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/ 06 /2010. SD/- SD/- ( N.S. SAINI ) ( MUKUL SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 06 /2010 T.C. NAIR, SR. PS ITA NO .677/AHD/2008 JULFIKAR KHAN VS. ITO ASST.YEAR - 2000-01 - 5 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VI, BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD