Bhaskar Sen, Kolkata V. ITO, WD-16(4), KOLKATA, Kolkata

ITA 851/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1750 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 28-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: K M ROY
• Keywords: Salary income; Corroborative evidences; Reassessment proceedings
• Section: 147; 10; 2

Judgement Text

1 ITA NO.851/KOL/2016 BHASKAR SEN, AY 2008-09 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE .., /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 851/KOL/2016 ASSESSMENT YEAR: 2008-09 BHASKAR SEN (PAN: ABDPS7579L) VS. INCOME-TAX OFFICE R, WD-16(4), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 13.06.2017 DATE OF PRONOUNCEMENT 03.08.2017 FOR THE APPELLANT SHRI K. M. ROY, FCA FOR THE RESPONDENT N O N E ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-XIV, KOLKATA DATED 11.03.2014 FOR AY 2008-09. NONE APPEARED ON BEHALF OF THE REVENUE. AFTER HEARING THE LD. AR AND CONSIDERING THE MATERIAL AVAILABLE O N RECORD, WE DISPOSE OF THE APPEAL EX PARTE QUA THE REVENUE. 2. THE FIRST GROUND OF APPEAL IS AGAINST THE REOPEN ING U/S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHICH I S NOT PRESSED BY THE LD. AR, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 3. BY RAISING THE SECOND GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE ADDITION OF RS.19,61,23 0/- TOWARDS DISALLOWANCE OF EXEMPTION CONFIRMED BY THE EMPLOYER IN TAX DEDUCTION CERTIFIC ATE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DIRECTOR OF M/S B.C.C. SHIPPING & SHIP BUILDING LTD. (IN SHORT BCCSSBL) AND IN HIS RE TURN OF INCOME DECLARED INCOME CHARGEABLE UNDER THE HEAD SALARIES AT RS.4,36,270/- , WHICH IN TURN WAS PROCESSED U/S. 143(1) 2 ITA NO.851/KOL/2016 BHASKAR SEN, AY 2008-09 OF THE ACT. LATER ON, THE AO AFTER VERIFICATION OF THE CERTIFICATE I.E. FORM 16 ISSUED U/S. 203 OF THE ACT BY THE ASSESSEES EMPLOYER M/S. BCCSSBL, IT WAS NOTICED THAT THE ASSESSEE HAD RECEIVED GROSS SALARY OF RS. 24 LACS AND THAT THE A SSESSEE HAS CLAIMED EXEMPTION U/S. 10 OF THE ACT FOR RS.19,61,230/- ON ACCOUNT OF REIMBURSEM ENT OF EXPENSES INCURRED FOR OFFICE. THE AO NOTICED THAT SEVERAL OPPORTUNITIES WERE GIVE N TO THE ASSESSEE, HOWEVER, THE NOTICE AT TIMES WERE RETURNED BACK AND LATER ON AT THE FAG EN D OF THE ASSESSMENT PROCEEDINGS, THE LD. AR APPEARED ONCE OR TWICE ONLY, HOWEVER HE COULD NO T EXPLAIN/FURNISH THE DOCUMENTS TO SUBSTANTIATE THE CLAIM MADE BY THE ASSESSEE. THE A O THEREAFTER MADE A FINDING AT PARA 5 AS UNDER: 5. ON PERUSAL OF THE SALARY CERTIFICATE (FORM NO. 16) SUBMITTED BY THE ASSESSEE WITH HIS RETURN IT IS OBSERVED THAT THE ASSESSEE HAS CLAIMED EXEMPTION FOR AN AMOUNT OF RS.19,61,230/- U/S. 10 OF THE ACT UNDER THE HEAD REIMBURSEMENT O F OFFICE EXPENSES. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE HAS FAILED TO PRODUCE A NY EXPLANATION REGARDING THE CLAIM OF THIS EXEMPTION. MOREOVER, NO PROVISION OF THE ACT ALLOW S EXEMPTION UNDER THIS HEAD AS CLAIMED BY THE ASSESSEE FROM HIS SALARY INCOME. HENCE, THE EX EMPTION CLAIMED OF RS.19,61,230/- IS DISALLOWED. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO UPHOLD THE ORDER OF THE AO. AGGRIEVED BY THE DECIS ION OF THE LD. CIT(A), THE ASSESSEE IS BEFORE US. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LD. AR AND HAVE GONE THROUGH THE CASE RECORDS CAREFULLY. WE NOTE THAT THE AO AFTER PERUS AL OF THE SALARY CERTIFICATE I.E. FORM NO. 16 SUBMITTED BY THE ASSESSEE WITH HIS RETURN WAS OF THE VIEW THAT THE ASSESSEE HAD CLAIMED EXEMPTION FOR AN AMOUNT OF RS.19,61,230/- U/S. 10 O F THE ACT UNDER THE HEAD REIMBURSEMENT OF OFFICE EXPENSES. ACCORDING TO T HE AO, DURING THE RE-ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO PRODUCE ANY EXPL ANATION REGARDING THE CLAIM OF THIS EXEMPTION, AND, THEREFORE, HE DID NOT ALLOW THE CLA IM AND AN AMOUNT OF RS.19,61,230/- WAS DISALLOWED. THE LD. CIT(A) CONFIRMED IT. WE DO NO T AGREE WITH THE ACTION OF THE AUTHORITIES BELOW. IT SHOULD BE KEPT IN MIND THAT FORM 16 IS THE CERTIFICATE ISSUED BY THE EMPLOYER TO AN EMPLOYEE. IN THE SAID TDS CERTIFICA TE, THE EMPLOYER IS BOUND TO DISCLOSE ALL THE PAYMENTS MADE BY HIM TO THE EMPLOYEE UNDER THE HEAD GROSS SALARY AND ALSO SPELL OUT CLEARLY THE AMOUNT WHICH IS EXEMPT AS PER THE PROVI SIONS OF THE ACT I.E. ANY AMOUNT WHICH IS 3 ITA NO.851/KOL/2016 BHASKAR SEN, AY 2008-09 REIMBURSED TO THE EMPLOYEE WHICH DOES NOT FORM PART OF THE TAXABLE SALARY OF THE EMPLOYEE. IN THIS CASE, THE FORM 16 HAS BEEN ISSUED BY THE EM PLOYER I.E. M/S. BCCSSBL. IN THE SAID CERTIFICATE IT WAS CLEARLY STATED BY THE EMPLOYER T HAT RS.19,61,230/- IS EXEMPT BECAUSE THAT WAS THE REIMBURSEMENT OF OFFICE EXPENSES THAT MEANS THE EMPLOYER HAS REIMBURSED THE AMOUNT WHICH HAS BEEN SPENT BY THE EMPLOYEE ON EMPL OYERS BEHALF. THE EXPENSES MADE ON BEHALF OF THE EMPLOYER BY THE EMPLOYEE ARE REIMB URSEMENT OF EXPENSES AND CANNOT PARTAKE THE CHARACTER OF INCOME. IT IS WELL SETTLE D THAT THE AMOUNTS PAID BY WAY OF REIMBURSEMENT OF EXPENSES DO NOT CONSTITUTE INCOME IN THE HANDS OF RECIPIENT (HERE THE ASSESSEE). FORM 16 IS A CERTIFICATE ISSUED BY THE E MPLOYER AND THE CORRECTNESS OF THE SAME CAN BE ASCERTAINED BY THE EMPLOYER. WE NOTE THAT T HE ENTIRE DISALLOWANCE HAS BEEN MADE ON THE PLEA THAT THE ASSESSEE HAS FAILED TO EXPLAIN BE FORE THE AO OF THE REIMBURSEMENT OF OFFICE EXPENSES AS STATED IN FORM 16 ISSUED BY THE EMPLOYE R. IN SUCH A SCENARIO, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED BY THE AO FOR WHICH WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MA TTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO HIM TO ENQUIRE FROM THE EMPLOYER THE V ERACITY OF WHAT IS STATED IN FORM 16 WHICH HAS BEEN ISSUED BY THE EMPLOYER M/S. BCCSSBL AND ASCERTAIN THE CLAIM OF THE ASSESSEE IN RESPECT TO HIS CLAIM OF REIMBURSEMENT O F EXPENSES AND THEREAFTER, AFTER HEARING THE ASSESSEE THE ISSUE BE ADJUDICATED DE NOVO. 6. THE THIRD GROUND OF APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING AN ADDITION OF RS.5 LACS TOWARDS SALARY DE HORSE THE C ERTIFICATE ISSUED BY THE EMPLOYER. DURING THE REASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE SALARY CERTIFICATE ISSUED BY THE EMPLOYER REFLECTED GROSS SALARY OF RS.24 LACS TO TH E ASSESSEE. HOWEVER, WHEN HE VERIFIED FROM THE BANK STATEMENT OF THE ASSESSEE, HE FOUND T HAT THE ASSESSEE HAD RECEIVED A TOTAL AMOUNT OF RS.29 LACS FROM HIS EMPLOYER. THUS, HE F OUND THAT THERE WAS A DISCREPANCY OF RS. 5 LACS BETWEEN THE AMOUNT OF SALARY SHOWN IN THE SA LARY CERTIFICATE AND THE AMOUNT REFLECTED IN THE BANK STATEMENT. THE ASSESSEE WAS ASKED TO E XPLAIN THE DISCREPANCY. THE LD. AR OF THE ASSESSEE STATED THAT SINCE THE ASSESSEE BEING T HE DIRECTOR OF THE COMPANY HAS TO TRAVEL TO VARIOUS PLACES ON OFFICIAL DISCHARGE OF HIS DUTIES ALONG WITH HIS STAFF AND OTHER EMPLOYEES, AND THIS AMOUNT (RS. 5 LAKHS) WAS THE ADVANCE PAYME NTS MADE BY THE COMPANY TO THE 4 ITA NO.851/KOL/2016 BHASKAR SEN, AY 2008-09 ASSESSEE TO MEET THE EXPENSES ON BEHALF OF THE EMPL OYER AND THESE AMOUNTS WERE THE FUND DEPOSITED BY THE EMPLOYER TO THE ASSESSEE IN HIS BA NK ACCOUNT. ACCORDING TO THE ASSESSEE, IT WAS ADVANCE FOR EXPENSES TO BE MET BY THE ASSESSEE IN THE COURSE OF BUSINESS AND WHICH WERE INCURRED ON BEHALF OF THE EMPLOYER AND THUS CA NNOT PARTAKE THE CHARACTER OF INCOME. BEFORE THE AO, THE LD. AR STATED THAT HE WOULD PROD UCE THE BREAKUP OF THE AMOUNT AND THE EMPLOYERS CERTIFICATE SUPPORTING THE SAME, HOWEVER , THE AO RECORDS THAT THE LD. AR DID NOT DO SO, THEREFORE, THE AO MADE THE ADDITION OF R S. 5 LACS. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS P LEASED TO CONFIRM THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LD. AR AND HAVE GONE THROUGH THE CASE RECORDS CAREFULLY. WE NOTE THAT THERE IS A DISCREP ANCY OF RS. 5 LACS BETWEEN THE AMOUNT OF SALARY SHOWN IN THE SALARY CERTIFICATE AND AMOUNT S HOWN IN THE BANK STATEMENT OF THE ASSESSEE. ACCORDING TO THE ASSESSEE, BEING A DIREC TOR OF THE COMPANY HE HAD TO TRAVEL ALONG WITH OTHER EMPLOYEES TO VARIOUS PLACES IN DISCHARGE OF HIS OFFICIAL DUTIES AND FOR THAT HE HAD TO SPEND MONEY ON BEHALF OF THE EMPLOYER WHICH THE EMPLOYER HAS MADE ADVANCE DEPOSIT IN HIS ACCOUNT; AND SO THE ADVANCE AMOUNT THUS DEPOSIT ED FOR INCURRING EXPENSES IN THE COURSE OF BUSINESS ON BEHALF OF THE EMPLOYER CANNOT BE TRE ATED AS INCOME IN THE HANDS OF ASSESSEE. WE NOTE THAT SINCE THE LD. AR OF THE ASSESSEE HAD A SSURED BEFORE THE AO THAT HE WOULD BE PRODUCING THE BREAK UP ALONG WITH THE EMPLOYER CERT IFICATE FAILED TO DO SO, THEN THE AO MADE THE ADDITION WHICH WAS CONFIRMED BY THE LD. CI T(A). WE NOTE THAT THIS ISSUE NEEDS TO BE REEXAMINED BY THE AO BECAUSE OF LACK OF TIME FOR THE ASSESSEE TO PRODUCE THE DOCUMENTS. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION THAT THE AO SHOULD ENQUIRE FROM M/S. BCCSSBL AND CALL FOR DETAILS REGARDING THE DISCREPANCY OF RS. 5 LACS IN FORM 16 ISSUED BY IT AND THE AMOUNT DEPOSITED BY IT IN THE BANK ACCOUNT OF THE ASSESSEE AND WHILE DOING SO, IF THE CLAIM OF THE ASSESSEE THAT THIS IS NOTHING BUT ADVANCES MADE BY THE EMPLOYER TO ASSESSEE FOR EXPENSES ANTICIPATED TO BE INCURRED ON ITS BEHALF FOR THE PU RPOSE OF BUSINESS, THEN NO ADDITION SHOULD BE MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, IF THE ASSESSEE OR THE EMPLOYER FAILS TO GIVE ANY SUPPORTING EVIDENCE TO THE CLAIM MADE BY THE AS SESSEE THEN THE ADDITION WOULD BE 5 ITA NO.851/KOL/2016 BHASKAR SEN, AY 2008-09 SUSTAINED. WITH THE AFORESAID OBSERVATION, WE REMA ND THE MATTER BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION ON THIS ISSUE AND THE AO TO PASS ORDERS AFTER HEARING THE ASSESSEE AND THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE DE N OVO PROCEEDINGS. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 03.08.2017 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 RD AUGUST, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT SHRI BHASKER SEN, 16A, LAKE VIEW ROAD, KOLKATA-29 2 RESPONDENT ITO, WARD-16(4), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY