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Facts
The assessee, a salaried individual, did not file an income tax return. The Assessing Officer (AO) reopened the assessment and made additions, including salary, interest, and investment income. The assessee claimed that a portion of the salary income was exempt under Section 10, but could not provide supporting documents during the original assessment proceedings.
Held
The Tribunal noted that the assessee claimed a significant portion of their salary income was exempt under Section 10. Given that documentary evidence like salary slips were now available, the Tribunal restored the issue to the AO for factual verification.
Key Issues
Whether the assessee is entitled to claim exemptions under Section 10 on certain components of salary income, and if such claim can be verified by the AO.
Sections Cited
10, 147, 148, 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, V.P. & SHRI NARENDRA KUMAR BILLAIYA, AM
O R D E R Per Saktijit Dey, VP: This is an appeal filed by the assessee against order dated 27.11.2024 passed by the National Faceless Appeal Centre (NFAC), Delhi for the Assessment year (AY) 2015-16. 2. The grounds raised by the assessee as per revised Grounds of Appeal are as under:-
1. The sum of Rs. 12,26,902/- (gratuity, leave encashment, and conveyance) is exempt under Section 10 and should be deducted from the total income to arrive at the correct taxable income. A copy of income computation sheet is attached for your kind reference.
The total income determined for the year as per the decision of the CIT (Appeals) is Rs. 56,77,550/-, but the correct taxable
The appellant requests the Honorable Bench to allow the filing of the return of income for the year under appeal, as the correct total income, after exemptions, has not been considered.
4. The appellant requests the recalculated tax liability, resulting in a refund of Rs. 27,250/-.”
3. As could be seen from the grounds raised, the basic grievance of the assessee is against disallowance of various statutory exemptions claimed in respect of service benefits received on account of gratuity, leave encashment, conveyance etc.
Briefly the facts are, the assessee is a resident individual and was a salaried person. As per information available in the system of the Department, Assessing Officer found that though in the previous year relevant to the assessment year under dispute, the assessee had received salary to the tune of Rs.55,74,289/- and income from other sources. However, he had not filed any return of income. Therefore, being of the view that income assessable to tax has escaped assessment, the AO reopened the assessment u/s. 147 of the Income Tax Act, 1961 (hereinafter called the ‘Act’).
As alleged by the AO, the assessee did not respond to any statutory notices issued u/s. 148 and 142(1) of the Act. Thus, finally the AO issued a show cause notice to the assessee seeking response as to why the assessment should not be concluded invoking the provisions of Section 144 of the Act. Since there was no response from the assessee, the AO proceeded to complete the assessment u/s. 147 r.w.s. 144 of the Act, while doing so, he made the following additions; (i) salary received- deposit-Rs.15,00,000/-. Against the assessment order so passed, the assessee preferred an appeal before learned First Appellate Authority. However, by the impugned order, learned First Appellate Authority partly allowed the appeal sustaining the additions of Rs.55,74,289/- and Rs.1,03,260/-. Whereas, with regard to addition made of Rs.15,00,000/- he directed the AO to delete the addition. He further directed the AO to grant credit for TDS of Rs.11,28,747/- appearing in Form- 26AS.
Before us, learned counsel appearing for the assessee submitted that when the proceedings were taken up by the Departmental Authority, the assessee was staying abroad. Hence, he could not make necessary compliance, resulting in, completion of proceedings ex-parte. He submitted, the salary income of Rs.55,74,289/- includes an amount of Rs.12,26,902/- comprising of gratuity, leave encashment and conveyance which are exempt u/s. 10 of the Act. Thus, he submitted, after grant of exemption direct taxable income of the assessee would be Rs.43,06,080/-. Since, the assessee did not have the salary slip and other evidences to explain the aforesaid factual position, he could not furnish them before the Departmental Authority. However, he submitted, now the assessee is having these evidences to prove his claim.
Learned Departmental Representative (DR) relied upon the observations of learned Departmental Authorities. However, he submitted, assessee’s claim can be factually verified by the AO.
Assessee has pleaded before us that the salary income of Rs.56,77,550/- includes amount of Rs.12,76,902/- comprising of gratuity, leave encashment and conveyance, which are exempt u/s. 10 of the Act. He has further submitted before us that these facts can be established through documentary evidences such as salary slip and other documents now available with the assessee.
Keeping in view the aforesaid submission of the assessee, we are inclined to restore the issue to the AO with a direction to factually verify assessee’s claim qua the amount of Rs.12,26,902/- stated to be exempt u/s. 10 of the Act. Upon factual verification, if assessee’s claim is found to be correct, the amount of Rs.12,26,902/- should be reduced from the salary income of Rs.56,77,550/- for determining the total income. Needless to mention, the AO must provide fair opportunity to the assessee to establish his case. Grounds are allowed for statistical purposes.
In the result, appeal is allowed for statistical purposes.
Order pronounced in the open court on 05.05.2025 Sd/- Sd/- (N.K. BILLAIYA) (SAKTIJIT DEY) Accountant Member Vice President Mumbai: Dated : 05.05.2025 Aks/- /Mum/2025 Rohit Keshavrao Gujar Vs. Income Tax Officer Copy of the Order forwarded to : 1. The Applicant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,