Shri Kiran H. Shelat, Ahmedabad V. The ACIT, Circle-15, Ahmedabad

ITA 965/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1816 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-12-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 20-04-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B S GEHLOT
• Assessee Lawyers: S N DIVATIA
• Keywords: Salary income; Opportunity of being heard; Principle of natural justice; Difference of opinion; Tax effect; Change of opinion; Set aside
• Section: 143(3); 10(14); 143(1); 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND A. N. PAHUJA, A.M. KIRAN M. SHELAT, NEAR RAMJI MANDIR, BAVLA, DIST. AHMEDABAD. V/S . ACIT, CIRCLE-15, AHMEDABAD. PAN NO.ANDPS 4022 J (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S. N. DIVATIA, AR REVENUE BY:- SHRI B. S. GEHLOT, DR O R D E R A. N. PAHUJA : THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE - ITA NO.965/AHD/2006 IS AGAINST AN ORDER DATED 7.2 .2006 UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961[HEREINAFTER REFERRE D TO AS THE ACT] PASSED BY THE LD. CIT-VII,AHMEDABAD AND THE OTHER AGAINST AN ORDER DATED 30/08/2007 OF THE LD. CIT(A)-XX,AHMEDABAD. THESE APPEALS WERE HEARD SIMULTANEOUSLY AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER .. ITA NO.965/AHD/2006 2. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED AN O RDER DATED 7.2.2006 PASSED UNDER SECTION 263 OF THE ACT. FACTS, IN BRIE F, ARE THAT THE ASSESSEE IS A DEVELOPMENT OFFICER IN THE LIFE INSURANCE CORPORATI ON OF INDIA. THE RETURN DECLARING SALARY INCOME OF RS.6,41,493/-, INCLUDING INCENTIVE BONUS WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY THE A SSESSMENT WAS REOPENED U/S 147/148 OF THE IT ACT ON THE GROUND THAT CLAIM FOR DEDUCTION @ 30% OF THE INCENTIVE BONUS WAS NOT ALLOWABLE TO THE ASSESSEE. THE ASSESSING OFFICER[AO IN SHORT] WHILE REFERRING TO A DECISION OF THE HON BLE HIGH COURT OF GUJARAT IN CIT VS. KIRANBHAI H. SHELAT & ANOTHER, 235 ITR 635 WHEREIN IT WAS HELD THAT THE DEDUCTION OUT OF INCENTIVE BONUS IS ALLOWABLE O N ACCOUNT OF REIMBURSEMENT OF EXPENSES ACTUALLY INCURRED TO THE EXTENT OF 30% OF THE INCENTIVE BONUS EARNED BY THE ASSESSEE, CONCLUDED T HAT THE SAID DEDUCTION IS ADMISSIBLE TO THE ASSESSEE. THERE IS NOTHING ON RE CORD SUGGESTING AS TO ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 ASST. YEAR: 1998-99 2 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 WHETHER OR NOT THE AO ASCERTAINED THAT THE EXPENSE S WERE ACTUALLY INCURRED BY THE ASSESSEE, AS LAID DOWN IN THE SAID DECISION. THUS, WITHOUT ANALYSING THE IMPORT OF THE AFORESAID JUDGMENT OF THE HONBLE HIGH COURT, THE AO DROPPED THE PROCEEDINGS INITIATED U/S 147/148 OF TH E ACT. THE LD. CIT, AFTER EXAMINING THE RECORDS, WAS OF THE OPINION THAT THE DROPPING OF PROCEEDINGS BY THE AO WAS ERRONEOUS IN SO FAR AS PREJUDICIAL TO TH E INTEREST OF REVENUE SINCE THE AO DID NOT FOLLOW THE AFORESAID DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN PROPER PERSPECTIVE NOR CARED TO ASCERTAIN AS TO WHETHER OR NOT THE ASSESSEE ACTUALLY INCURRED THE EXPENDITURE FOR EAR NING INCENTIVE BONUS. THE LD. CIT WAS ALSO OF THE VIEW THAT THE CONVEYANCE AL LOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE GIVEN TO A DEVELOPMENT OFFICER WAS RELATED TO INCENTIVE BONUS AND SHOULD HAVE BEEN CONSIDERED WHILE ALLOWIN G DEDUCTION OF EXPENDITURE ACTUALLY INCURRED TO THE EXTENT OF 30% OF THE BONUS. MOREOVER, THE AO DID NOT EXAMINE THE CLAIM FOR EXEMPTION OF CONV EYANCE ALLOWANCE OF RS.19,175/- AND ADDITIONAL CONVEYANCE ALLOWANCE OF RS.1,14,523/- IN TERMS OF PROVISIONS OF THE SECTION 10(14) OF THE ACT. ACCO RDINGLY, A SHOW CAUSE NOTICE DATED 18/10/2005, PROPOSING TO SET ASIDE THE ASSESS MENT, WAS ISSUED TO THE ASSESSEE. AFTER SEEKING ADJOURNMENT, THE LD. AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT NOTICE FOR REVISION U/S 263 OF THE A CT WAS BAD IN LAW AS THE ASSESSEE HAD ALREADY FURNISHED DETAILED EXPLANATION ALONGWITH THE EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AFT ER CONSIDERING THE SAME THE AO ALLOWED THE CLAIMS FOR CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE. INTER ALIA, THE ASSESSEE CITE D A DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES LTD .,243 ITR 83(SC) AND CLAIMED THAT IT WAS A MERE CHANGE OF OPINION AND TH E CASE WAS NOT COVERED U/S 263 OF THE ACT. HOWEVER, THE LD. CIT AFTER CONS IDERING THE SUBMISSIONS ON BEHALF OF THE ASSESSEE CONCLUDED THAT THE PROVISIO NS OF SECTION 263 OF THE ACT ARE APPLICABLE TO ANY ORDER, INCLUDING ORDER U/S. 1 43(3) R.W.S. 147 OF THE ACT PASSED BY THE AO, WHICH IS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE. THE LD. CIT OBSERVED THAT THIS IS NOT A Q UESTION OF CHANGE OF OPINION AS THE AO FAILED TO ANALYSE AND APPLY THE CORRECT R ATIO OF THE DECISION OF THE HONBLE HIGH COURT WHILE DECIDING THE ISSUE. HE FUR THER HELD THAT REIMBURSEMENT OF EXPENSES IS THE BASIC CONDITION FO R ITS ALLOWABILITY SUBJECT TO 3 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 THE MAXIMUM LIMIT OF 30% AND THAT THE AO DID NOT E XAMINE THE CLAIM FOR EXEMPTION OF CONVEYANCE ALLOWANCE AND ADDITIONAL C ONVEYANCE ALLOWANCE IN TERMS OF PROVISIONS OF THE SECTION 10(14) OF THE ACT . THE LD. CIT OBSERVED THAT THE DECISION OF HONBLE SUPREME COURT RELIED U PON BY THE ASSESSEE IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 BEIN G IN FAVOUR OF THE DEPARTMENT, RELIANCE ON THE SAID DECISION IS MISPLA CED. ACCORDINGLY, THE LD. CIT SET-ASIDE THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 WITH THE DIRECTIONS TO DECIDE THE ISSUES AFTER PROPERLY APPLYING THE RATIO OF DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASSESSEE HIMSELF AND INSTRUCTIONS/CIRCULARS ISSUED BY THE BO ARD FROM TIME TO TIME REGARDING THE ABOVE MATTER APART FROM EXAMINING THE CLAIM MADE BY THE ASSESSEE FOR EXEMPTION OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE U/S 10 OF THE ACT . 3. THE ASSESSEE IS NOW IN APPEAL AGAINST THE A FORESAID ORDER OF THE LD. CIT. THE LD. AR ON BEHALF OF THE ASSESSEE WHILE CAR RYING US THROUGH THE IMPUGNED ORDER AND THE RELEVANT ASSESSMENT ORDER CO NTENDED THAT PROVISIONS OF SECTION 263 OF THE ACT WERE NOT APPLICABLE IN TH EIR CASE AND THE AO RIGHTLY ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE IN VI EW OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE ASSESSEES OWN CA SE. INTER ALIA, THE LD. AR RELIED UPON THE DECISIONS IN THE CASE OF MALABAR IN DUSTRIAL CO. LTD. VS. CIT,243 ITR 83(SC) AND CIT VS. MUNJAL CASTINGS,303 ITR 23(P&H). 4. ON THE OTHER HAND, THE LD. DR WHILE RELYING UP ON THE DECISIONS IN THE CASE OF TOYOTO MOTOR CORPORATION VS. CIT,306 ITR 52(SC), RAMPYARI DEVI SAROGI VS. CIT, 67 ITR 84 & CIT VS. SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS,231 ITR 53(SC) CONTENDED THAT THE AO DID NOT MAKE ANY ENQUIRY AS TO WHETHER OR NOT THE ASSESSEE ACTUALLY INCURRED ANY EXPENDITURE AND SIMPLY REFERRING TO THE DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF KIRANBHAI H. SHELAT & ANOTHER(SUPRA) , ALL OWED THE CLAIM OF THE ASSSESSEE. THUS, THE AO NEITHER CORRECTLY FOLLOWED THE SAID DECISION NOR EVEN EXAMINED THE CLAIM OF CONVEYANCE EXPENSES AND ADDITIONAL CONVEYANCE EXPENSES IN TERMS OF PROVISIONS OF SEC. 10(14) OF T HE ACT, THE LD. DR ARGUED. 4 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 IN HIS REJOINDER, THE LD. AR CONTENDED THAT THE HON BLE HIGH COURT DISTINGUISHED THE CONVEYANCE EXPENDITURE AND ADDL. CONVEYANCE EXPENDITURE AND ARGUED THAT THE EXPENDITURE HAD BEEN ACTUALLY INCURRED FOR EARNING INCENTIVE BONUS. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. IN THE ASSESSMEN T ORDER DATED 25.2.2004 PASSED U/S 143(3) R.W.S. 147 OF THE ACT, THE AO M ENTIONED THAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS NO REIMBURSEMEN T OF EXPENSES BY LIC. THOUGH THE ASSESSEE IS STATED TO HAVE INCURRED EXPE NSES OF RS.2,06,359/-, DEDUCTION WAS RESTRICTED TO AN AMOUNT OF RS.1,92,4 49/-, BEING 30% OF THE INCENTIVE BONUS. THE AO ALLOWED THE CLAIM IN TERMS OF THE AFORESAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE AS SESSEES OWN CASE, WITHOUT ASCERTAINING AS TO WHETHER OR NOT THE ASSESSEE ACTU ALLY INCURRED THE EXPENDITURE. THE LD. CIT, ON EXAMINATION OF RECORDS , FOUND THAT THE AO DID NOT CORRECTLY FOLLOW THE AFORESAID DECISION OF THE HON BLE HIGH COURT NOR EXAMINED THE CLAIM FOR EXEMPTION OF CONVEYANCE ALL OWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE IN TERMS OF PROVISIONS OF SEC. 10(14) OF THE ACT AND ACCORDINGLY SET ASIDE THE ASSESSMENT ,INVOKING PRO VISIONS OF SECTION 263 OF THE ACT. BEFORE PROCEEDING FURTHER , WE MAY POINT OUT THAT THE HONBLE JURISDICTIONAL HIGH COURT HELD IN THAT CASE THAT TH E ASSESSEE WAS ENTITLED TO CLAIM SUCH DEDUCTION BUT ONLY TO THE EXTENT OF REIM BURSEMENT OF EXPENSES ACTUALLY INCURRED UP TO THE MAXIMUM LIMIT OF THIRTY PER CENT. OF THE INCENTIVE BONUS EARNED BY THE ASSESSEE.IN THE CASE BEFORE US, THE LD. CIT CONCLUDED THAT WITHOUT ASCERTAINING AS TO WHETHER OR NOT TH E ASSESSEE HAD ACTUALLY INCURRED ANY EXPENDITURE FOR EARNING INCENTIVE BONU S, THE AO SIMPLY ALLOWED THE CLAIM EVEN WHEN THE ASSESSEE DID NOT RECEIVE A NY REIMBURSEMENT OF EXPENDITURE. SECTION 263 OF THE ACT STATES THAT TH E COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THE ACT, AND IF HE CONSIDERS THAT ANY ORDER IS ERRONEOUS, IN SO FAR AS IT IS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, PASS SUCH ORDER THEREON AS THE CIR CUMSTANCES OF THE CASE JUSTIFY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING ANY INQUIRY TO BE MADE. SUCH AN O RDER MAY INCLUDE AN 5 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CAN CELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE SCOPE OF PROVISIONS OF SECTION 263 OF THE ACT IS NO LONGER RES INTEGRA. THE POWER TO EXER CISE SUO MOTU REVISION IN TERMS OF SECTION 263(1) IS IN THE NATURE OF SUPERVI SORY JURISDICTION AND SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIE D THEREIN, VIZ., (1) THE ORDER IS ERRONEOUS; (2) BY VIRTUE OF THE ORDER BEING ERRO NEOUS PREJUDICE HAS BEEN CAUSED TO THE INTEREST OF THE REVENUE, EXIST. IN MALABAR INDUSTRIAL CO. LTD. VS. CIT [243 ITR 83 (SC)] : [(2000) 2 SCC 718), HONBL E SUPREME COURT HELD: '7. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED B Y THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLI CATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SA ME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE OR WITHOUT APPLICATION OF MIND. 5.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS APPARENT THAT THE AO ALLOWED THE CLAIM ON AN INCORRECT ASSUMPTION OF FAC TS WITHOUT MAKING ANY INQUIRY AS TO WHETHER OR NOT THE ASSESSEE ACTUALLY INCURRED ANY EXPENDITUREFOR EARNING INCENTIVE BONUS WHILE IN TERMS OF THE AFOR ESAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE, THE ASSESSEE WAS ENTITLED TO CLAIM SUCH DEDUCTION BUT ONLY TO TH E EXTENT OF REIMBURSEMENT OF EXPENSES ACTUALLY INCURRED UP TO THE MAXIMUM LIM IT OF THIRTY PER CENT. OF THE INCENTIVE BONUS EARNED BY THE ASSESSEE. THUS, THE A O ON INCORRECT ASSUMPTION OF FACTS AND INCORRECT APPLICATION OF LA W, ALLOWED THE CLAIM OF THE ASSESSEE IN HIS ORDER. MOREOVER, THE ASSESSING OFFI CER DID NOT EXAMINE THE CLAIM FOR EXEMPTION OF CONVEYANCE ALLOWANCE AND ADD ITIONAL CONVEYANCE ALLOWANCE IN TERMS OF PROVISIONS OF SEC. 10(14) OF THE ACT. BEFORE US, NO CASE HAS BEEN MADE OUT ON BEHALF OF THE ASSESSEE TO SHOW EITHER THAT SUCH ENQUIRIES, AS POINTED OUT BY THE LEARNED CIT, WERE NOT REQUIRED TO BE MADE BY THE AO IN THE FACTS AND CIRCUMSTANCES OF THE CASE O R THAT SUCH ENQUIRIES HAD ACTUALLY BEEN MADE BY THE AO DURING THE COURSE OF A SSESSMENT PROCEEDINGS. THE ASSESSMENT MADE BY THE AO IN THIS CASE HAS BEEN HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVEN UE FOR THE REASON THAT NO 6 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 PROPER ENQUIRIES AS REQUIRED IN THE FACTS AND CIRCU MSTANCES OF THE CASE WERE MADE BY THE AO WHILE COMPLETING THE ASSESSMENT AND THE AO DID NOT PROPERLY APPRECIATE THE IMPORT OF DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE WHILE ALLOWING THE CLAIM. IN THE CASES OF SMT. TARA DEVI AGGARWAL VS. CIT 1973 CTR (SC) 107 : (1973) 88 ITR 323 (SC) AND RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 ITR 84 (SC), IT WAS HELD BY THE HON'BLE SUPREME COURT THAT THE CIT CAN REGAR D THE ORDER OF THE AO AS ERRONEOUS ON THE GROUND THAT IN THE FACTS AND CIRCU MSTANCES OF THE CASE, THE ITO SHOULD HAVE MADE FURTHER ENQUIRIES BEFORE ACCEP TING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. FOLLOWING THESE TWO DECISIONS OF HON'BLE SUPREME COURT, HON'BLE ALLAHABAD HIGH COURT HAS HEL D IN THE CASE OF SMT. LAJJA WATI SINGHAL VS. CIT (1997) 138 CTR (ALL) 320 : (1997) 226 ITR 527 (ALL) THAT AN ASSESSMENT MADE ON INCOME SURRENDERED BY TH E ASSESSEE WITHOUT MAKING ANY ENQUIRY WHETHER THE SAME WAS IN FACT TAX ABLE IN HIS HANDS WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. FURTHER, AS HELD BY HON'BLE DELHI HIGH COURT IN THE CASES OF GEE VEE EN TERPRISES VS. ADDL. CIT 1975 CTR (DEL) 61 : (1975) 99 ITR 375 (DEL), DUGGAL & CO. VS. CIT (1994) 122 CTR (DEL) 171 : (1996) 220 ITR 456 (DEL), IT IS INCUMBENT ON THE AO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN ENQUIRY PRUDENT AND HIS ORDER BECOMES ERRONEOUS IF SUCH AN ENQUIRY HAS NOT BEEN MADE. MOREOVER, AS HELD BY HON 'BLE GUJARAT HIGH COURT IN THE CASE OF ADDL. CIT VS. MUKUR CORPORATION (197 8) 111 ITR 312 (GUJ), AN ORDER OF ASSESSMENT PASSED BY THE AO WITHOUT MAKING NECESSARY ENQUIRIES ON CERTAIN IMPORTANT POINTS CONNECTED WITH THE ASSE SSMENT WOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. TO THE SIMILAR EFFECT IS THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN T HE CASE OF CWT VS. RAMNARAYAN BHOJNAGARWALA (1992) 104 CTR (CAL) 50 : (1992) 194 ITR 489 (CAL), WHEREIN IT WAS HELD THAT WHENEVER A QUESTION ARISES AS TO WHETHER A CORRECT AND PROPER ASSESSMENT HAS BEEN MADE UPON DU E ENQUIRY AND IT IS FOUND THAT NO SUCH ENQUIRY WAS MADE, THE CIT HAS JU RISDICTION IN SUCH A CASE TO SET ASIDE THE ASSESSMENT BY INVOKING THE POWERS CONFERRED UPON HIM UNDER S. 263. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. RELIED UPON BY BOTH THE SIDES , HON'BLE SUPREME COURT HAS HELD THAT THE PHRASE 'P REJUDICIAL TO THE INTEREST OF 7 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 THE REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. EXPLAINING FURTHER, IT WAS OBSERVED BY THE HON'BLE SUPREME COURT THAT UNDERSTOOD IN ITS ORDINARY MEANING, THE SAID EXPRES SION IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. 5.2 AS REGARDS DECISION IN THE CASE OF MUNJAL C ASTINGS(SUPRA) RELIED UPON ON BEHALF OF THE ASSESSEE, WE ARE OF THE OPINION TH AT THE FACTS IN THE SAID DECISION WERE ALTOGETHER DIFFERENT AND THUS, RELIAN CE ON THE SAID DECISION IS TOTALLY MISPLACED. EVEN OTHER WISE, THE LD. AR DID NOT DEMONSTRATE BEFORE US AS TO HOW THIS DECISION IS APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION.IN THE CITED CASE,HONBLE HIGH COURT UPHELD THE FINDINGS OF THE ITAT IN CANCELLING THE ORDER U/S 263 OF THE ACT FIR STLY THERE BEING NO TAX EFFECT AS THE INTEREST INCOME REALISED FROM THE CAPITAL IN VESTED BY THE PARTNERS WAS BOUND TO BE ASSESSED IN THEIR HANDS AND SECONDLY, THE ASSESSING OFFICER HAD TAKEN ONE VIEW WHICH WAS FOUND TO BE PROBABLE IN TH E LIGHT OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. R.M . CHIDAMBARAM PILLAI [1977] 106 ITR 292 WHILE THE TRIBUNAL HELD THAT IT MAY STILL BE POSSIB LE TO TAKE ANOTHER VIEW. APPARENTLY, SUCH ARE NOT THE FACTS OR THE ISSUES IN THE CASE UNDER CONSIDERATION . 5.3. IN THE LIGHT OF AFORESAID JUDICIAL PRONOUN CEMENTS IN PARA 5& 5.1 ABOVE, IT IS APPARENT THAT THE VERY TACT THAT ASSESSMENT W AS MADE BY THE AO WITHOUT PROPER AND SUFFICIENT ENQUIRIES, AS WARRANTED IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, MAKES IT ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, GIVING JURISDICTION TO THE LEARNED CIT UND ER S. 263 AT THAT STAGE. AS SUCH, KEEPING IN VIEW ALL THE FACTS OF THE CASE AS WELL AS THE LEGAL POSITION EMANATING FROM THE AFORESAID JUDICIAL PRONOUNCEMENT S, WE ARE OF THE VIEW THAT THE ASSUMPTION OF JURISDICTION BY THE LEARNED CIT WAS IN ACCORDANCE WITH LAW AND THERE WAS NO LEGAL INFIRMITY IN THE IMPUGNE D ORDER PASSED BY HIM ON THIS COUNT AS ALLEGED BY THE LEARNED COUNSEL FOR TH E ASSESSEE. WE, THEREFORE, FIND NO MERITS IN THE CONTENTIONS RAISED BY HIM ON THIS ISSUE AND REJECT THE GROUNDS NO. 1.1 TO 4 RAISED BY THE ASSESSEE. 8 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 ITA NO.4126/AHD/2007 6. NOW ADVERTING TO THE APPEAL AGAINST AN ORDER DAT ED 30.08.2007 OF THE LD. CIT(A),THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS :- 1.1 THE ORDER PASSED BY CIT(A) XX, AHMEDABAD CONFI RMING THE AD HOC DISALLOWANCE OF RS.60,000/- MADE BY AO IS WHOLLY I LLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND/ OR ON FACTS IN CONFIRMING THE AD HOC DISALLOWANCE OF RS.60,000/- OUT OF PETRO L AND TAXI CHARGES. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE OF RS.60,000/-. THE CIT(A) HAS FAILED TO APPRECIATE THE NATURE OF WORK, THE MAGNIT UDE OF BUSINESS AND PLACE OF WORK CARRIED OUT BY THE APPELLANT AND MOST FAIR AND REASONABLE. 7. THE MAIN ISSUE INVOLVED IN THESE GROUNDS IS DISA LLOWANCE OF RS.60,000/- OUT OF PETROL EXPENSES AND TAXI CHARGES . THE AO NOTICED THAT THE ASSESSEE, A DEVELOPMENT OFFICER OF LIC , HAD CLAIME D EXEMPTION OF CONVEYANCE ALLOWANCE OF RS.19,175/- AND ADDITIONAL CONVEYANCE ALLOWANCE OF RS.1,14,523/- U/S 10(14) OF THE ACT. IN PURSUANCE T O THE DIRECTIONS OF THE CIT IN THE ORDER DATED 7.2.2006 U/S 263 OF THE ACT, THE AO AFTER EXAMINING THE DETAILS FURNISHED BY THE ASSESSEE CONCLUDED THAT T HERE WAS NO CHECK ON EXPENSES INCURRED TOWARDS PETROL AND TAXI CHARGES N OR THE ASSESSEE FURNISHED ANY DETAILS OF VEHICLES USED OR LOG BOOK IN RESPECT OF VEHICLES WHILE NOR EVEN DETAILS OF PLACES VISITED BY THE ASSESSEE BY HIRING TAXIES WAS PRODUCED. INTER ALIA, IN THE ABSENCE OF COMPLETE VO UCHERS, THE AO DISALLOWED THE CLAIM FOR EXEMPTION TO THE EXTENT OF RS. 60,000 . ON APPEAL, THE AUTHORISED REPRESENTATIVE ON BEHALF OF THE ASSESSEE MADE DETAILED SUBMISSIONS AS HAVE BEEN MENTIONED IN THE IMPUGNED ORDER. HOWEVER, THE LD. CIT(A) MAINTAINED THE DISALLOWANCE ,HOLDING AS UND ER :- 6. I HAVE CAREFULLY GONE THROUGH THE FINDINGS OF T HE ASSESSING OFFICER AND CONSIDERED THE SUBMISSIONS AND ARGUMENTS PUT FORTH BY THE LD. AUTHORISED REPRESENTATIVE OF THE APPELLANT. THE APPELLANT DURI NG THE PERIOD UNDER CONSIDERATION WAS POSTED AS DEVELOPMENT OFFICER AT BAVLA BRANCH OF LIC. AS MENTIONED IN THE ASSESSMENT ORDER ON PAGE 2 AND AS CLARIFIED BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE, THE ASSE SSEE HAS CLAIMED TO 9 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 HAVE INCURRED CONVEYANCE EXPENSES OF RS.1,33,698/- DEBITED IN P & L ACCOUNT AS UNDER :- 1. RS.9,600/- CONVEYANCE EXPENSES TO STAFF. 2. RS.51,418/- PETROL EXPENSES 3. RS.72,680/- TAXI CHARGES ------------------------------- RS.1,33,698/- SO FAR AS RS.9,600/- IS CONCERNED, IT HAS ALREADY B EEN ALLOWED BY THE ASSESSING OFFICER AS STATED BY THE LD. AUTHORISED R EPRESENTATIVE. OUT OF PETROL EXPENSES AND TAXI CHARGES, THE LD. ASSESSING OFFICE R DISALLOWED A SUM OF RS.60,000/- CONSIDERING ALL FACTS IN THE CASE AND I N ABSENCE OF DETAILS IN RESPECT OF VEHICLES, LOG BOOKS, DETAILS OF PLACES V ISITED AND COMPLETE VOUCHERS IN RESPECT OF PETROL EXPENSES AND TAXI CHARGES CLAI MED. IT IS VERY CLEAR IN THIS CASE AND ALSO ADMITTED BY THE LD. AUTHORISED REPRES ENTATIVE THAT BILLS FOR EXPENSES TOWARDS TOURS TO INTERIOR PLACES MADE WITH JEEPS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER. AS SUCH, THE CLAIM OF THE ASSESSEE U/S 10(14) OF THE ACT, IT IS NOT TENABLE BECAUSE BEFORE ME ALSO, THE ASSESSEE IS NOT IN A POSITION TO PROVE THAT SUCH EXPENSES HAD B EEN ACTUALLY INCURRED. ACCORDINGLY, I HOLD THAT THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER AT RS.60,000/- OUT OF CONVEYANCE EXPENSES IS JUSTIFIED . THE DISALLOWANCE AND ADDITION MADE IS, THEREFORE, CONFIRMED. 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US. THE LD. AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FURNISHED COMPLETE DETAILS BEFORE THE AO, WHO DISALLOWED AN AMOUNT OF RS.60,000/- OU T OF PETROL EXPENSES AND TAXI CHARGES. ON THE OTHER HAND, THE LD. DEPARTMENT AL REPRESENTATIVE RELIED ON THE ORDERS OF LOWER AUTHORITIES AND STATED THAT SINCE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE OF ACTUALLY INCURRING THE EXPE NDITURE NOR THE COMPLETE DETAILS OF PLACES VISITED BY HIRING TAXIES OR OTHER WISE, THE LD. CIT(A) RIGHTLY UPHELD THE DISALLOWANCE. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE THE LD. CIT(A) UPHELD THE DISALLOWANCE OF RS 60,000/ OUT OF PETROL EXPENSES AND TAXI HIRING CHARGES SINCE THE ASSESSEE DID NOT FURNISH COMPLETE DETAILS IN RESPECT OF VEHICLES, LOG BOOKS, DETAILS OF PLACES VISITED AND COMPLETE VOUCHERS IN RESPECT OF PETROL EXPENSES AND TAXI CHA RGES NOR COULD ESTABLISH THAT THE EXPENDITURE TO THE SAID EXTENT WAS ACTUALL Y INCURRED. BEFORE US, THE LD. AR ON BEHALF OF THE ASSESSEE DID NOT PLACE ANY MATE RIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. THE EXEMPTION U/S 10(14) OF THE ACT READ WITH RULE 2BB(1)(C) CAN BE CLAIMED ONLY BY ESTABLIS HING THAT SUCH EXPENSES HAVE BEEN ACTUALLY INCURRED FOR THAT PURPOSE. THERE FORE, THE REQUIREMENT OF 10 ITA NO.965/AHD/2006 & ITA NO.4126/AHD/2007 ASSESSING THE EXPENSES WHICH HAS BEEN ACTUALLY INCU RRED FOR THAT PURPOSE CLEARLY FLOWS FROM THE SAID DEFINITION. IT IS ONLY THE EXPENSES WHICH ARE ACTUALLY INCURRED ARE EXEMPTED. THE ENTIRE AMOUNT OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE ARE NOT EXEMPTED UN LESS THEY ARE ACTUALLY INCURRED AND THIS IS PROVED TO THE SATISFACTION OF THE ASSESSING OFFICER. IN VIEW OF THE FOREGOING, WE ARE NOT INCLINED TO INTERFERE. THUS, GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE DISMISSED. 10. IN THE RESULT, BOTH THESE APPEALS ARE DISMI SSED . . SD/- SD/- (MAHAVIR SINGH) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED :18/12/2009 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. ACIT, CIRCLE-15, AHMEDABAD. 3. CIT(A)-XX,AHMEDABAD 4. THE CIT-VII,AHMEDABAD . 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ORDER PRONOUNCED IN OPEN COURT ON 18 /12/2009