Ms. Soniya Hiren Kothari, JAMNAGAR V. The Deputy Commissiner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITSSA 116/RJT/2012

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9059 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR L I
• Assessee Lawyers: CHETAN AGARWAL L
• Keywords: Salary income; Opportunity of being heard
• Section: 10(14); 132; 10

Judgement Text

I R, IN THE INCOME TAX APPELLATE TRIBU N AL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI D.K.SHRIVASTAVA , AM IT (SS) A NO . 111 AND 112 /RJT / 201 2 )O O / ASSESSMENT YEAR 200 8 - 09 AND 2009 - 10 M S. KH USHBOO P SHAH C/O MEENA AGENCY PVT.LTD., C/O CHETAN AGARWAL AND CO., CHARTERED ACCOUNTANTS, 601/602, SWAGAT COMPLEX, P.N.MARG, JAMNAGAR . PAN: BTPPS2316J ( T / APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II , RAJKOT . ST / RES PONDENT IT (SS) A NO. 113 /RJT / 201 2 )O O / ASSESSMENT YEAR 2008 - 09 MS. EKTA KETAN KOTHARI SAME AS ABOVE PAN:BCNPK1647P ( T / APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II, RAJKOT. ST / RESPONDENT IT (SS) A NO. 114 /R JT / 201 2 )O O / ASSESSMENT YEAR 2009 - 10 SHRI DEVANG PANKAJ SHAH SAME AS ABOVE PAN: CBEPS52 7 7A ( T / APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II, RAJKOT. ST / RESPONDENT IT (SS) A NO. 115 /RJT / 201 2 )O O / A SSESSMENT YEAR 2009 - 10 SHRI DEVANGI MUKESH SHAH SAME AS ABOVE PAN: CBEPS 4974E ( T / APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II, RAJKOT. ST / RESPONDENT IT(SS)A NO. 111 TO 117 /RJT/2012 2 IT (SS) A NO. 116 /RJT / 201 2 )O O / ASSESSMENT YEAR 2009 - 10 MS.SONIYA HITESH KOTHARI SAME AS ABOVE PAN: CBEPS527 9Q ( T / APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II, RAJKOT. ST / RESPONDENT IT (SS)A NO. 117 /RJT / 201 2 )O O / ASSESSMENT YEAR 2009 - 10 MS.SIDHI YOGESH SHAH, SAM E AS ABOVE PAN: DBEPS5278R ( T / APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II, RAJKOT. ST / RESPONDENT )O\L / ASSESSEE BY SHRI. CHETAN AGARWAL L / REVENUE BY SHRI AVINASH KUMAR L I / DATE OF HEARING 8.2.2013 L I / DATE OF PRONOUNCEMENT 28.2.2013 / ORDER .. [, RV / T. K. SHARMA, J. M . ALL THESE SEVEN APPEALS ARE FILED BY THE SIX DIFFERENT ASSESSEE S FOR THE ASSESSMENT YEARS 2008 - 09 AND 200 9 - 10 WHICH ARE DIRECTED AGAINST COMMON ORDER OF THE LD. CIT (A) I V , AHMEDABAD DATED 2 8.8.2012 CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961(THE ACT) . SINCE ONLY ONE COMMON ISSUE IS INVOLVED IN ALL THESE SEVEN APPEALS I.E. REGARDING PENALTY IMPOSED BY THE AO U/S 271(1)( C) OF THE INCOME TAX ACT, 1961, ALL THESE APPEA LS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NO. 111 TO 117 /RJT/2012 3 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE S IN THESE APPEALS ARE INDIVIDUALS AND EMPLOYEES OF M/S MEENA AGENCY PVT.LTD. , JAMNAGAR . ALL THESE ASSESSEE HAVE RECEIVED CONVEYANCE ALLOWANCE, UNIFORM ALLOWANCE, LAUNDRY ALLOWANCE, AND MEDICAL ALLOWANCE FROM THE ABOVE EMPLOYER. THE EMPLOYER M/S MEENA AGENCY PVT.LTD. HAS ISSUED SALARY CERTIFICATE IN FORM NO.16 TO ALL THESE EMPLOYEES, WHEREIN THE EMPLOYER HAS SHOWN THAT THE PAYMENTS AMOUNTING TO RS.44,600/ - IS EXEMPT U/S 10(14) OF THE ACT. A SEARCH ACTION U/S 132 OF THE ACT WAS CARRIED OUT/REQUISI TION WAS MADE U/S 132A OF THE ACT IN THE CASE OF SHRI SHAKTISINH CHUDASAMA AND OTHER MEMBERS OF THE MEENA AGENCY GROUP ON 29.1.2009. THEREFORE, THE ASSESSMENT OF ALL THESE EMPLOYEES WERE ALSO FRAMED U/S 153C OF THE ACT. ON VERIFICATION OF THE CAPITA L ACCOUNT OF THESE EMPLOYEES, THE AO NOTICED THAT ALL THESE EMPLOYEES HAVE CREDITED WITH THE FOLLOWING ALLOWANCES : NAME OF THE EMPLOYEE AY AMOUNT MS. KHUSHBOO P SHAH 2008 - 09 RS.2,12,632 MS. KHUSHBOO P SHAH 2009 - 10 RS.5,23,243 MS. EKTA KETAN KOT HARI 2009 - 10 RS.44,600 SHRI DEVANG PANKAJ SHAH 2009 - 10 RS.44,600 SHRI DEVANG MUKESH SHAH 2009 - 10 RS.44,600 MS.SONIYA HITESH KOTHARI 2009 - 10 RS.44,600 MS.SIDHI YOGESH SHAH 2009 - 10 RS.44,600 THE AO OBSERVED THAT THIS IS A LUMPSUM FIXED REIMBU RSEMENT. ALL THESE ASSESSEE HAVE NOT INCURRED ACTUAL EXPENDITURE TOWARDS THE IT(SS)A NO. 111 TO 117 /RJT/2012 4 ABOVE PERQUISITES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEES TO EXPLAIN THE SAME BUT DUE ABSENCE OF ANY EXPLANATION FROM THE ASSESSEE THE AO AD DED THE SAME AS WELFARE INCOME RECEIVED BY THE ASSESSEE FROM THE EMPLOYER WHICH HAVE NOT BEEN EXPENDED AND ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT. 3 . IN REPLY TO THE SHOW CAUSE NOTICE , ISSUED BEFORE LEVYING PENALTY U/S 271 (1)( C ), ALL THE ASSESSEE S CONTENDED THAT ON ACCOUNT OF THE AFORE SAID ALLOWANCES WERE EITHER PAID BY THE THEM OR BY THEIR OTHER RELATIVES AND THEREFORE, THE AMOUNT RECEIVED FROM THE EMPLOYER CANNOT BE CONSIDERED AS INCOME FOR THE RELEVANT ASSESSMENT YEAR. IT WAS ALSO SUBMITTED THAT THE ADDITION MADE WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD , THEREFORE, THIS CANNOT BE CONSIDERED AS CONCEALED INCOME . AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO REJECTED THIS EXPLANATION OF ALL THE A SSESSEE AND LEVIED PENALTY AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EVADE D . THE DETAILS OF ASSESSEE - WISE PENALTY IS AS UNDER : NAME OF THE EMPLOYEE AY PENALTY LEVIED MS. KHUSHBOO P SHAH 2008 - 09 RS. 48,000 MS. KHUSHBOO P SHAH 2009 - 10 RS. 73,000 MS. EKTA KETAN KOTHARI 2009 - 10 RS. 14 , 0 00 SHRI DEVANG PANKAJ SHAH 2009 - 10 RS. 15200 SHRI DEVANG MUKESH SHAH 2009 - 10 RS .15,200 MS.SONIYA HITESH KOTHARI 2009 - 10 RS.15,200 MS.SIDHI YOGESH SHAH 2009 - 10 RS.15,200 IT(SS)A NO. 111 TO 117 /RJT/2012 5 4 . AGAINST THE PENALTY ORDER, ALL THE ASSESSEES PREFERRED THE APPEAL BEFORE THE LD. CIT(A) . BEFORE THE LD. CIT(A), ALL THE ASSESSEE S CONTENDED THAT PENALTY U/S 271(1)( C ) IS NOT LEVIABLE. THE LD. CIT(A) ALLOWED THE PARTIAL RELIEF HOLDING THAT ONLY TRANSPORT ALLOWANCE OF RS.9,600/ - IS NO T TAXABLE. HE ACCORDINGLY DIRECTED THE AO TO RE - CALCULATE THE PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF ALLOWANCES RECEIVED EXCEEDING TRANSPORT ALLOWANCE OF RS.9600/ - IN THE CASE OF EACH AND EVERY ASSESSEE AT THE MINIMUM RATE OF TAX SOUGHT TO BE EVADED. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE ASSESSEES ARE IN APPEAL BEFORE THE TRIBUNAL . AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), PARTLY CONFIRMING THE PENALTY U/S 271(1)( C ), THE ASSESSEES ARE IN APPEAL BEFORE THE TRIBUNAL. 5 . AT THE TI ME OF HEARING, SHRI CHETAN AGARWAL, THE LD. COUNSEL FOR THE ASSESSEE APPEARED AND PRODUCED THE COPIES OF FORM NO.16 ISSUED BY THE EMPLOYER WHEREIN ALLOWANCES PAID TO THE ASSESSEE HAVE BEEN REFLECTED TO THE EXTENT OF RS.44,600/ - . THE BREAK OF ALLOWANCES P AID ARE AS UNDER : A. CONVEYANCE ALLOWANCE RS.9,600/ - B. MEDICAL ALLOWANCES RS.15,000/ - C. OTHER ALLOWANCES RS.20,000/ - TOTAL RS.44,600/ - THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT IN RESP ECT OF ALL THE 5 EMPLOYEES THE EMPLOYER HAS REFLECTED THE AFORESAID ALLOWANCES IN FORM NO.16 ISSUE D BY IT AND TREATED THE ALLOWANCES ARE EXEMPT U/S 10(14) OF THE ACT. HE FURTHER POINTED OUT THAT ONLY IN RESPECT OF MS . KHUSHBOO P SHAH, THE EMPLOYER HAS NOT REFLECTED THE REMAINING ALLOWANCE I.E.RS. 1,68,032 / - FOR T HE ASSESSMENT YE A R 2008 - 09 AND IT(SS)A NO. 111 TO 117 /RJT/2012 6 RS. 4,78,643/ - FOR THE ASSESSMENT YEAR 2009 - 10. HE SUBMITTED THAT ALL THE ASSESSEE - EMPLOYEES SHOWN THE SALARY INCOME AS PER THE SALARY CERTIFICATE ISSUED BY T HE EMPLOYER . HE CONTENDED THAT WHEN THE EMPLOYER HAVE RETURNED THE SALARY INCOME IN THEIR RETURN OF INCOME AS REFLECTED IN THE SALARY CERTIFICATE , THE PENALTY U/S 271(1)( C ) IS NOT LEVIAB LE . AS AGAINST THIS, SHRI AVINASH KUMAR, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE POINTED OUT THAT ONLY THE TRAVELLING ALLOWANCES TO THE EXTENT OF RS.9600/ - IS EXEMPT U/S 10(14) OF THE ACT AND REMAINING ALLOWANCES WERE TAXABLE AS ALL THESE EMPLOYEES HAS NOT SPENT THIS ALLOWANCE S IN PERFORMANCE OF THEIR DUTIES. IN COUNTER, THE LD. COUNSEL OF THE ASSESSEE EXPLAINED THAT ALL THESE EMPLOYEES HAVE SPENT THESE AMOUNT S THROUGH THEIR PARENTS OR THROUGH NEAR RELATIVE. . THE COUNSEL OF THE ASSESSEE FURTHER CONTENDED THAT ALL THESE EMPL OYEES ARE NOT CONVERSANT WITH THE INTRICACY OF THE INCOME TAX LAWS. THE UNDERSTATEMENT OF INCOME IN THE RESPECT IVE RETURN OF INCOME , IF ANY, HAS OCCURRED DUE TO MISTAKE BY THE EMPLOYER IN SALARY CERTIFICATE ISSUED IN FORM NO.16. ALL THE EMPLOYEES HAS REFLECTED THE SALARY AS RETURN IN THE SALARY CERTIFICATE IN FORM NO.16, FOR MISTAKE OF THE EMPLOYER IN NO COMPUTING THE CORRECT INCOME UNDER THE HEAD SALARY, CONCERN EMPLOYEE CANNOT BE PENALIZE D U/S 271(1)( C ). THEREFORE, THE LD.CIT(A) OUGHT TO HAVE CANC ELLED THE ENTIRE PENALTY LEVIED U/S 271(1)( C ) OF THE ACT. 6 . HAVING HEARD BOTH THE SIDES. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY ALL THE ASSESSEES BEFORE US ARE EMPLOYEE OF M/S MEENA AGENCY PVT.LTD. ALL THESE ASSESSEE HAVE IT(SS)A NO. 111 TO 117 /RJT/2012 7 REFLECTED THEIR INCOME AS SHOWN BY THEIR EMPLOYER IN FORM NO.16 ISSUED TO THEM. IT IS TRUE THAT ON ACCOUNT OF SOME MISUNDERSTANDING OF RELEVANT PROVI SIONS OF INCOME TAX ACT, THE EMPLOYER HAS NOT COMPUTED THE CORRECT INCOME WHICH IS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY , K EEPING IN VIEW THE PROVISIONS CONTAINED IN SECTION 10(14) OF THE ACT. FOR THIS MISTAKE OF THE EMPLOYER, THE EMPL OYEE CANNOT B E PENALIZED. IT IS PERTINENT TO NOTE THAT ALL THE EMPLOYEES HA VE REFLECTED THE INCOME UNDER THE HEAD INCOME AS PER THE SALARY CERTIFICATE ISSUED TO THEM IN FORM NO.16, WE ARE THEREFORE OF THE VIEW THAT KEEPING IN VIEW THE CONSPICUOUS FACTS OF THE C A SE, THE PENALTY U/S 271(1)( C ) IS NOT LEVIABLE. WE, THEREFORE, CANCEL THE PENALTY U/S 271(1)( C ) OF THE ACT TO THE EXTENT OF PENALTY CONFIRMED BY THE LD. CIT(A) IN RESPECT OF SIX EMPLOYEES IN THE IMPUGNED ORDER. 7 . RESULTANTLY, ALL THE APP EALS OF THE ASSESSEES ARE ALLOWED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD SD ( D.K.SRIVASTAVA ) (T. K. SHARMA) VIEW / ACCOUNTANT MEMBER ) / JUDICIAL MEMBER / ORDER DATE 28. 2.2013 . /RAJKOT SRL VJO O / COPY OF ORDER FORWARDED TO: - 1 T / APPELLANT - , ST / RESPONDENT - 3 R / CONCERNED CIT . 4. - / CIT (A) . IT(SS)A NO. 111 TO 117 /RJT/2012 8 5 ))R, I R, / DR, ITAT, RAJKOT 6 O / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUN AL, RAJKOT.