Manjit Kumar, Moga V. The Dy. Commissioner of Income Tax, Moga

MA 37/ASR/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 5471 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T. S. KAPOOR, ACCOUNTANT MEMB ER AND SH.N. K.CHOUDHRY, JUDICIAL MEMBER M. A. NO. 37/(ASR)/2016 (ARISING OUT OF I.T.A NO. 175(ASR)/2013) ASSESSMENT YEAR: 2009-10 PAN: ACCPK4197J [[ SH. MANJIT KUMAR, 618, DEV SAMAJ STREET, MOGA. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE, MOGA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. WRITTEN SUBMISSION RESPONDENT BY: SH. RAHUL DHAWAN (D.R.) DATE OF HEARING: 18.08.2017 DATE OF PRONOU NCEMENT: 04.09.2017 ORDER PER T. S. KAPOOR (AM): THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY AS SESSEE AGAINST THE ORDER OF THE HON'BLE TRIBUNAL DATED 21.05.2014 IN ITA NO. 175 (ASR)/2013. 2. NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE HOW EVER ASSESSEE HAD FILED WRITTEN SUBMISSIONS IN SUPPORT OF HIS MIS CELLANEOUS APPLICATION. IN THE WRITTEN SUBMISSIONS, THE ASSESS EE SUBMITTED THAT THE ISSUE OF KEYMAN INSURANCE POLICY WAS DECIDED BY HON 'BLE TRIBUNAL AGAINST THE ASSESSEE BY FOLLOWING THE ORDER OF M/S F.C. SONDHI & CO. (INDIA) PVT. LTD. IT WAS SUBMITTED THAT THE SAID OR DER OF THE TRIBUNAL IN THE CASE OF F.C. SONDHI CO. (INDIA) PVT. LTD. HAS B EEN RECALLED IN M.A. NO. 75 VIDE ORDER DATED 31 ST AUGUST, 2015 AND THEREFORE THE ORDER PASSED BY THE HON'BLE TRIBUNAL IN THE CASE OF ASSESSEE BE ALS O RECALLED. MA NO. 37 (ASR)/2016 ARISING OUT OF IT A NO. 175(ASR)/2013 ASST. YEAR:2009-10 2 3. THE LD. DR STATED THAT AT THE TIME WHEN THE ORDE R DATED 21.05.2014 WAS PASSED BY THE HON'BLE TRIBUNAL, THE RECALLING ORDER IN THE CASE OF F.C. SONDHI & CO. (INDIA) PVT. LTD. WAS NOT AVAILABLE AND THEREFORE THE ORDER COULD NOT BE RECALLED. 4. WE HAVE HEARD THE LD. DR AND HAVE GONE THROUGH T HE MATERIAL PLACED ON RECORD. WE FIND THAT THE HON'BLE TRIBUNAL VIDE ORDER DATED 21.05.2014 HAD ALLOWED GROUND NO. 1 AND 2 OF REVENU ES APPEAL WHICH RELATED TO THE DISALLOWANCE OF KEYMAN INSURANCE POL ICY. THE RELEVANT FINDINGS OF HON'BLE TRIBUNAL WHICH HAD FOLLOWED THE CASE LAW OF F.C. SONDHI & CO. (INDIA) PVT. LTD. ARE REPRODUCED BELOW : 5. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT A FTER ASSIGNMENT, THE POLICY IS NOT A KEYMANS INSURANCE POLICY BUT A NOR MAL INSURANCE POLICY, AS HELD IN THE CASE OF M/S. F.C. SONDHI & CO. (INDI A ) PVT. LTD. VS. DCIT R-L, JALANDHAR (SUPRA). IT IS NOT AT ALL A LIFE INSURANC E POLICY BUT AN INVESTMENT POLICY. IN THIS REGARD, THE ID. CIT(A) HJIS MISINTE RPRETED THE DECISION OF IT AT DELHI BENCH WHERE IT HAS BEEN HELD THAT THE SURREND ER VALUE OF THE POLICY WAS TAXABLE IN THE HANDS OF THE TRANSFEREE AND IT H AS BEEN CLAIMED THAT ON THE DATE OF TRANSFER THAT POLICY HAS NO SURRENDER V ALUE. THE SAID CLAIM SHOWS THAT POLICY HAS NOT COMPLETED THREE YEARS BUT IN THE PRESENT CASE THE POLICY HAS COMPLETED THREE YEARS AND THE AO HAS RIGHTLY HELD THAT DUE TO MALAFIDE INTENTION OF THE ASSESSEE TO EVADE PAYM ENT OF TAX WHICH HAS TRANSFERRED TWO DAY BEFORE COMPLETION OF THREE YEAR S. THIS CONTENTION OF THE ASSESSEE IS FURTHER STRENGTHENED BY THE FACT TH AT THE ASSESSEE DID NOT PAY PREMIUM DUE ON 31.03.2008 WHICH SHOWS THAT HE I NTENDED TO ENCASH POLICY AFTER COMPLETION OF THREE YEARS. IN THE PRES ENT CASE, THERE IS ASSIGNMENT OF POLICY FOR MALAFIDE PURPOSE AS OBSERV ED BY THE A.O. ACCORDINGLY; THE CONTENTION OF THE ASSESSEE IS NOT VALID IN THE GIVEN CIRCUMSTANCES. THE ACTION OF THE FIRM IN ASSIGNMENT OF POLICY WAS NOT LEGAL WHICH WAS THERE TO EVADE PAYMENT OF TAX DUE. MOREOV ER, IN VIEW OF THE LEGAL POSITION, THE SUM RECEIVED UNDER THE POLICY I S TAXABLE IN THE HANDS OF RECEIVER OF THE SUM. SINCE THE FIRM COULD SURRENDER POLICY AT ANY TIME AFTER RETAINING IT AT LEAST FOR THREE YEARS. IT WAS STATE D BY THE ASSESSEE THAT TO OVERCOME SHORTAGE OF FUNDS, IT SURRENDERED AND ENCA SHMENT OF POLICY WAS MADE A HANDY TOOL. IN FACT, AFTER ASSIGNMENT, THE A SSESSEE DID NOT PAY NEXT PREMIUM DUE ON 31.03.2008. THIS SHOWS THAT THE Y INTENDED TO ENCASH THE POLICY IMMEDIATELY AFTER OF THREE YEARS, WHICH WAS ENCASHED IN ITS OWN HANDS AND ACCORDINGLY A CIRCUITOUS ROUTE WA S ADOPTED FOR FULFILLING THE REQUIREMENT OF ON ONE HAND AND NOT PAYING TAX D UE ON THE OTHER AND. IT IS A COLOURFUL METHOD ADOPTED TO EVADE TAX IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MCDOWELL & CO. 154 ITR 148, WHICH MA NO. 37 (ASR)/2016 ARISING OUT OF IT A NO. 175(ASR)/2013 ASST. YEAR:2009-10 3 IN FACT IS APPLICABLE IN THE FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE. THE WHOLE AFFAIR IS RENDERED SHAM AND THE ASSESSEE IS L IABLE TO PAY TAX ON THE AMOUNT OF RS.59,14,702/-. THE LD. CIT(A) HAS IGNORE D ALL THESE FACTS AND ACCORDINGLY THE ORDER OF THE LD. CIT(A) IS REVERSED AND THAT OF THE A.O. IS RESTORED. THESE GROUNDS NO. 1 & 2 OF THE REVENUE AR E ALLOWED. HOWEVER, WE FIND THAT THE ORDER IN THE CASE OF F.C . SONDHI & CO. (INDIA) PVT. LTD. HAS BEEN RECALLED BY THE HON'BLE. TRIBUNAL VIDE ORDER DATED 31.08.2015. THE RELEVANT PARA IN THE ORDER DA TED 31.08.2015 IS REPRODUCED BELOW: 19. WE, THEREFORE, RECALL THE ORDER DATED 21 ST APRIL, 2014 FOR THE PURPOSES OF ADJUDICATING THE PLEA OF THE ASSESSEE T O THE EFFECT THAT, ON THE FACTS OF THIS CASE, THE IRDA CIRCULARS HAVE N ROLE TO PLAY IN DECIDING WHETHER THE PREMIUM ON THE INSURANCE POLICIES PAID ARE COVERED BY THE SCOPE OF KEYMAN INSURANCE POLICY UNDER SECTION 10 (10D) OF THE ACT, AND FOR DECIDING THE MATTER AFRESH IN THE LIGHT OF THE SAID ADJUDICATING. WE HAVE NOTED THAT AN EARLIER DECISION OF THIS TRIBUNAL, IN THE CASE OF SHRI NIDHI CORPORATION VS. ADDITIONAL CIT [(20140 151 ITD 470 (MUM)], WAS NOT TAKEN INTO ACCOUNT BY THE TRIBUNAL, WHILE DISPOSING OF TH E MATTER, AS THE SAID ORDER, THOUGH PASSED EARLIER, WAS NOT IN PUBLIC DOM AIN BY THAT POINT OF TIME. NOW THAT THE MATTER IS GOING BACK TO THE TRIB UNAL FOR FRESH CONSIDERATION, NEEDLESS TO SAY, THIS DECISION WILL ALSO HAVE TO BE TAKEN INTO ACCOUNT. SINCE THE ORDER IN THE CASE OF ASSESSEE HAD FOLLOW ED THE ORDER IN THE CASE OF F.C. SONDHI & CO. (INDIA) PVT. LTD. WHI CH ITSELF HAS BEEN RECALLED, THEREFORE WE RECALL THE ORDER OF THE TRIB UNAL DATED 21.05.2014 FOR ADJUDICATION OF GROUND NO. 1 AND 2 OF THE APPEA L. 5. IN VIEW OF THE ABOVE, THE MISCELLANEOUS APPLICAT ION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.09. 2017. SD/- SD/- (N. K. CHOUDHRY) (T. S . KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 04/09/2017 GP/SR./PS MA NO. 37 (ASR)/2016 ARISING OUT OF IT A NO. 175(ASR)/2013 ASST. YEAR:2009-10 4 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER