The DCIT, Circle 1, JUNAGADH V. Shri Kirtikant Chhotalal Trivedi, JUNAGADH

ITA 77/RJT/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56758 (ITAT-RAJKOT)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 04-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CJ MANIAR
• Keywords: Opportunity of being heard; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.77/RJT/2011 (ASSESSMENT YEAR 2004-05) THE DY.CIT, CIR.1 VS KIRITKANT CHHOTALAL TRIVEDI JUNAGADH RAM NIVAS GIR GADHADA ROAD UNA PAN : AAWPT8861E (APPELLANT) (RESPONDENT) DATE OF HEARING : 22-11-2011 DATE OF PRONOUNCEMENT : 02-12-2011 REVENUE BY : SHRI CJ MANIAR ASSESSEE BY : WRITTEN SUBMISSION O R D E R PER T.K. SHARMA (JM) THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DA TED 23-12-2010 PASSED BY THE CIT(A)-XXI, AHMEDABAD FOR THE ASSESSMENT YEA R 2004-05. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A DEVELOPMENT OFFICER WITH LIC OF INDIA WHICH IS A GOVERNMENT OF INDIA UNDERTA KING. HE IS IN RECEIPT OF SALARY, ADDITIONAL CONVEYANCE ALLOWANCE AND INCENTI VE BONUS. HE CLAIMED EXPENSES LIMITED TO 30% OF INCENTIVE BONUS. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DISALLOWED RS. 1,88,993 OUT OF IN CENTIVE BONUS AND RS.1,93,139 OUT OF ADDITIONAL CONVEYANCE ALLOWANCE. ON APPEAL, IN THE IMPUGNED ORDER, THE LD.CIT(A) DELETED BOTH THE ADDITIONS. AGGRIEVED BY THE ORDER OF LD.CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOL LOWING EFFECTIVE GROUND: ITA NO.77/RJT/2011 2 THE LD.CIT(A), HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION MADE BY THE AO BY DISALLOWING THE ASSESSEE S CLAIM FOR INCENTIVE BONUS OF RS.1,88,993/- AND ALSO ERRED IN ALLOWING THE ASSESSES CLAIM FOR A.C.A. & F.C.A. EXEMPTION OF RS .1,93,139/- WITHOUT CONSIDERING THE BOARD CIRCULAR, SINCE THE A SSESSEE IS A DEVELOPMENT OFFICER OF LIC OF INDIA. 3. ON THE DATE FIXED FOR HEARING NONE WAS PRESENT F ROM THE SIDE OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS FURNISHED, IT WAS MENTIONED THAT THE TAX EFFECT IS RS.1,64,550 WHICH IS LESS THAN RS.3 LAKHS . THEREFORE, THE APPEAL OF THE REVENUE IS MAINTAINABLE. AS AGAINST THIS, SHRI CJ MANIAR APPEARED ON BEHALF OF THE REVENUE AND DREW OUR ATTENTION TO THE OFFICE NO TE APPENDED BY THE AO WITH THE ASSESSMENT ORDER, WHICH READS AS UNDER: THE ASSESSEE HAS CLAIMED 30% OF INCENTIVE BONUS AS EXPENSES RELYING ON THE JUDGMENT OF HONBLE GUJARAT HIGH COU RT IN THE CASE OF C.I.T. V/S KIRAN SHELAT AND OTHER [147 CTR 43]. HOWEVER, WITHDRAWS THE CLAIM OF THE BASIS OF SUPREME COURT J UDGMENT. THUS THE ASSESSEE HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS BUT MERELY FOLLOWED THE JUDG MENT OF GUJARAT HIGH COURT . ACCORDINGLY THE PENALTY PROCEEDING U/ S 271(1)(C) OF THE I.T. ACT IS NOT INITIATED IN THE CASE. 4. THE LD.DR POINTED OUT THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS NOT FURNISHED SUPPORTING VOUCHERS AND DETAILS INDIC ATING HOW THE EXPENSES CLAIMED WERE INCURRED, ITS SOURCE. HE ALSO POINTED OUT THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE FILED WRITTEN SUBMISSION DATED 03-12-2007 STATING THAT HE HAS AGREED TO WITHDRAW THE DEDUCTION CLAIMED TO BUY PEACE OF MIND AND ANY FURTHER AND REQUESTED NOT TO LEVY ANY PENALTY FOR C ONCEALMENT. THEREFORE, ON AGREED BASIS, THE ADDITIONS OF RS.1,88,993 AND RS.1 ,93,139 WERE MADE AND THE ITA NO.77/RJT/2011 3 LD.CIT(A) HAS CLEARLY ERRED IN ENTERTAINING THE APP EAL OF THE ASSESSEE IN RESPECT OF BOTH THESE ADDITIONS / DISALLOWANCES. IN SUPPOR T OF THIS, THE LD.DR HAS RELIED UPON THE DECISION OF ITAT, AHMEDABAD BENCH, THIRD M EMBER IN THE CASE OF ITO VS SHRI SIDHIVINAYAK DYEING & PRINTING MILLS (P) LT D 119 ITD 169 (AHD)(TM). HE POINTED OUT THAT THE PRESENT APPEAL OF REVENUE IS C OVERED IN EXCEPTIONAL CIRCUMSTANCES NARRATED IN THE INSTRUCTION NO.3/2011 (F.NO.279/MISC.142/2007ITJ/ DT 09-02-2011, THEREFOR E, ADDITIONS MADE BY A.O. ON AGREED BASIS BE RESTORED. 5. WE HAVE CAREFULLY GONE THROUGH THE REASONING GIV EN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IT IS PERTINENT T O NOTE THAT IN PARAGRAPH 6 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTION ED THAT THE ASSESSEE VIDE WRITTEN REPLY DATED 03-12-2007 AGREED TO WITHDRAW T HE DEDUCTION CLAIMED TO BUY PEACE OF MIND AND ANY FURTHER LITIGATION AND REQUES TED NOT TO LEVY ANY PENALTY FOR CONCEALMENT. IN THE OFFICE NOTE LEFT BY THE ASSESS ING OFFICER IN THE ASSESSMENT ORDER ALSO IT IS CLEARLY MENTIONED THAT THE ASSESSE E WITHDREW THE CLAIM OF 30% OF INCENTIVE BONUS AS EXPENSES. WHILE ENTERTAINING TH E APPEAL OF THE ASSESSEE, IN THE IMPUGNED ORDER, THE LD.CIT(A) COMPLETELY IGNORE D THAT ADDITION OF RS.1,88,993 AND RS.1,93,139 WERE MADE BY THE ASSESS ING OFFICER ON AGREED BASIS. THEREFORE, THE PRESENT APPEAL IS COVERED BY EXCEPTIONAL CIRCUMSTANCES DETAILED IN INSTRUCTION NO. 3/2011 (F.NO.279/MISC.1 42/2007ITJ/ DT 09-02-2011. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD .CIT(A) CLEARLY ERRED IN ENTERTAINING THE APPEAL OF THE ASSESSEE IN RESPECT OF DISALLOWANCE OF RS.1,88,993 ITA NO.77/RJT/2011 4 OUT OF INCENTIVE BONUS AND CLAIMED EXEMPTION OF RS. 1,93,139 OUT OF ADDITIONAL CONVEYANCE ALLOWANCE AND FIXED CONVEYANCE ALLOWANCE . ON THESE FACTS WE ARE OF THE VIEW THAT THE APPEAL OF THE REVENUE ON ACCOU NT OF LOW TAX EFFECT CANNOT BE DISMISSED. 6. WE, THEREFORE, SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE LD.CIT(A) TO DECIDE THE APPEAL OF THE ASSESSEE AFRESH KEEPING IN VIEW THE WRITTEN REPLY DATED 03-12-2007 FILED BEFORE THE ASSESSING OFFICER WHERE IN THE ASSESSEE AGREED TO WITHDRAW THE DEDUCTION CLAIMED TO BUY PEACE OF MIND AND ANY FURTHER LITIGATION AND REQUESTED THE ASSESSING OFFICER NOT TO LEVY PEN ALTY FOR CONCEALMENT. THE LD.CIT(A) WILL CALL FOR THE RECORD AND DECIDE THE A PPEAL OF THE ASSESSEE AFRESH KEEPING IN VIEW THE RATIO OF JUDGMENT OF THE FOLLOW ING DECISIONS AND ALLOWING OPPORTUNITY OF BEING HEARD TO BOTH SIDES. (I) RAMSHCHANDRA & CO VS CIT (1987) 168 ITR 375 (B OM) (II) STERLING MACHINE TOOLS VS CIT (1980) 123 ITR 181 (III) ITO VS SHRI SIDHIVINAYAK DYEING & PRINTING MI LLS (P) LTD (2009) 119 ITD 169 (AHD) 6. RESULTANTLY, FOR STATISTICAL PURPOSE, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED ON THE DATE AS MENTI ONED ABOVE. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 02 ND DECEMBER, 2011 PK/- ITA NO.77/RJT/2011 5 COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-XXI, AHMEDABAD 4. THE CIT-III, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT