SMT. SUSHMA BALASAHEB KADAM,PUNE vs. ACIT CENTRAL CIRCLE 2(4), PUNE

The assessee submitted that he was a director in BSA Corporation and had given the statement under duress during the survey to get rid of the prolonged survey action and harassment and such income disclosure had been taken by the survey party after repeated insistence without pointing out any discrepancy in accounts and so also without impounding any incriminating documents revealing such additional income disclosed during the survey. It was stated that the assessee had not even examined the salary account and details of salary / remuneration in books of company before giving any statement in regard to salary / remuneration paid by the company. It was submitted that it was adhoc disclosure made @ 15% of salary and since salary has already been offered to tax in the return filed, therefore, the said amount of perquisite should be considered as included in salary already offered.

However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He observed from the return filed by the assessee that in schedule ‘S’ related to income from salary the assessee has shown salary income received from M/s. BSA Corporation. In the schedule under the head ‘Income from salary’, there is a para No.4 perquisite value which is shown as Nil. Since the assessee had admitted that he was staying in the company guest house for which he was not paying any rent. Therefore, the perquisite value of Rs.5,94,000/- was estimated in the statement recorded and admitted as income over and above the regular income which had remained to be taxed. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of the same and determined the total income of the assessee at Rs.54,70,960/-.

Similar additions on account of perquisite value have been made by the Assessing Officer for other years, the details of which are as under: Sr No (Rs.) 1 980/PUN/2025 5,94,000 2 1005/PUN/2025 5,94,000 3 1004/PUN/2025 11,88,000

In case of other assessees the Assessing Officer has made addition on account of perquisite value. The details of which are as under:

Before the Ld. CIT(A) the assessee, apart from challenging the addition on merit, challenged the validity of re-assessment proceedings. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee and dismissed the appeal.

So far as the validity of re-assessment proceedings are concerned, he dismissed the same by observing as under:

So far as the addition on merit is concerned, he dismissed the same by observing as under:

Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), Pune-12, Pune erred in dismissing the appeal of the appellant filed for AY 2016-17 contesting the Assessment Order passed u/s.143(3) r.w.s 147 of the I.T. Act, 1961 dated 28/03/2022 by the Assessing Officer ignoring and without appreciating the fact that he should have passed the assessment order only after the expiry of 4 weeks from the date of order passed removing the objection against re-opening the case u/s 147/148 of the Act and not prior to that when in the case of the appellant the assessment order was passed on 28/03/2022 and the objection raised disposed of by the Assessing Officer on 04/03/2022 before the expiry of 4 weeks. Therefore, the Appellate Order passed by the Ld. CIT(A) ignoring the above and confirming the assessment order in violation of judicial precedence referred to before him of the Hon'ble Bombay High Court in the case of Asian Paint Ltd. Vs. Dy. CIT [2009] 308 ITR 195 (Bom-HC) and of the Hon'ble Delhi Tribunal in the case of Meta Plast Engineering P. Ltd. Vs. ITO in order dated 06/04/2018 being arbitrary, illegal and bad-in-law be quashed/set-aside.

The Ld. Counsel for the assessee at the outset submitted that the amount of perquisite has already been offered to tax in the return filed. Merely because the director in his statement recorded u/s 131 of the Act has erroneously accepted to pay taxes on the perquisite value, the same cannot be added as it will make double addition of the said amount. Referring to the copy of annual salary statement of M/s. BSA Corporation for the financial year 2015-16, he submitted that identical amount of Rs.5,94,000/- has already been considered in the salary slip while calculating the total salary and therefore, the addition of the same amounts to double addition. Referring to the letter addressed to the Assessing Officer on 18.02.2022, copy of which is placed at pages 108 to 115 of the paper book, he drew the attention of the Bench to para 2.2 of the same which reads as under: “2.2 The assessee has already stated above that the entire salary income which even if considered to have included perquisite as deposed by him during survey had already been offered to tax in the return of income filed…..”

Referring to para 3 of the said letter he drew the attention of the Bench to the following: “3. In view of the facts of the case of the assessee as discussed and various judicial decisions cited and relied upon by the assessee above, it is reiterated by the assessee that there was no perquisite remained to be disclosed by the assessee and the entire salary income received from the company BSA Corporation Ltd had been disclosed in the Return of income filed for AY 2016-17, even if in the statement given by the assessee wherein he had stated that 15% of salary to be treated as perquisite for the use of guest house which in fact had been used for the business purpose of the company wherein the assessee was a Director. Therefore, based on merely the statement given by the assessee Shri Balasheb V. Kadam u/s. 131 of the Act during survey stating that perquisite in his hand should be treated of Rs.5,94,000/- as additional income, the assessee was not obliged to offer such additional income in the return of income filed, as no such income remained to be offered in the said return …..”

He accordingly submitted that merely because the director under misconception and without going through the salary statement and books of account of the company has erroneously admitted that 15% of the salary be treated as perquisite, the same should not be held against the assessee. He submitted that once the perquisite value has already been added in the salary income and merely because in the return form such perquisite value erroneously remained to be mentioned and has been stated as nil, the same cannot be a ground to make the addition. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) should be deleted.

The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A). He submitted that the assessee in the return form under the particular column of perquisite has stated the same to be nil, therefore, the addition made by the Assessing Officer and sustained by the Ld. CIT(A) should be upheld. In his alternate contention, he submitted that the matter may be restored to the file of the Assessing Officer for due verification.

The Ld. Counsel for the assessee in his rejoinder submitted that this is a very small addition and the assessee has substantiated by producing the salary slip. Further during the course of assessment proceedings also it was categorically stated that such perquisite value has already been disclosed in the salary income. He accordingly submitted that this being a very small addition and relates to assessment year 2016-17, therefore, the same should be decided and need not be restored to the file of the Assessing Officer.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case, on the basis of statement of the assessee recorded u/s 131 during the course of survey, wherein he had admitted to treat 15% of the salary as perquisite, made addition of Rs.5,94,000/- to the total income of the assessee being the perquisite value of the rent free accommodation given to the directors by the company. We find the Ld. CIT(A) upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that such perquisite is already a part of the salary income which has already been offered to tax and therefore, the addition of the same again amounts to double addition of the same amount. Further, merely because the director of the assessee company has erroneously admitted for such perquisite value, however, since the same has already been offered to tax in the return of income and merely because in the perquisite column in the return form it is stated nil, the addition of the same is not justified.

We find some force in the above arguments of the Ld. Counsel for the assessee. A perusal of the annual salary statement of M/s. BSA Corporation for the period from 01.04.2015 to 31.03.2016 shows that an amount of Rs.5,94,000/- has already been considered in the salary. Therefore, merely because the director in his statement recorded u/s 131 of the Act during the course of survey has admitted erroneously and in the relevant clause of the return form for perquisite it has erroneously been mentioned as nil, the same cannot be a ground to make the addition again since it will amount to double addition i.e. addition of the same amount twice. Since the factual aspect is crystal clear and since the assessee during the course of assessment proceedings has also stated before the Assessing Officer that such amount has already been offered to tax and the assessment year involved is very old, therefore, to end the litigation, we do not feel it necessary to restore the matter to the file of the Assessing Officer. Since the perquisite amount of Rs.5,94,000/- is already a part of the salary income which has been offered to tax, therefore, the same in our opinion cannot be added again as it will amount to addition of the same amount twice. In this view of the matter, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly partly allowed.

Identical grounds have been raised by the assessee for other years as well as other assessees for different years challenging the addition of perquisite, the details of which have already been reproduced in the preceding paragraphs. Following similar reasoning, the above appeals filed by the assessee and other assessees are accordingly partly allowed.

In the result, all the appeals filed by the assessee are partly allowed.