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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI
Before: SHRI R. K. PANDA
O R D E R
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated 26.07.2017 of the CIT(A)- 21, New Delhi relating to assessment year 2012-13.
Facts of the case, in brief, are that the assessee is a Development Officer- cum- Business Associate with LIC of India. He filed his return of income on 06.03.2013 declaring total income of Rs.21,51,950/-. The case was reopened u/s 147 after recording reasons. During the course of assessment proceedings, the Assessing Officer observed from the records that as per Form No.16 for the year under consideration the salary income is reflected at Rs.28,66,404/-. However, the assessee in his return of income has declared total salary of Rs.21,22,706/-. The difference of Rs.7,43,692/- was claimed exempt u/s 10(14)(1) of the I.T. Act, 1961 under the following heads :-
(i) Conveyance Expenses Rs.1,80,557/- (ii) Allowance to D.O. for Procuring business Rs.1,80,557/- (iii) Office Management Expenses Rs.3,00,000/- (iv) Transaction fee Rs.82,584/- Total Rs.7,43,698/-
The Assessing Officer asked the assessee to explain as to how the above amounts can be claimed as exempt u/s 10(14)(1) of the I.T. Act since there is no evidence that allowance was actually incurred or how much amount was incurred. Rejecting the various explanations given by the assessee, the Assessing Officer after allowing Rs.9,600/- towards conveyance expenses at the rate of Rs.800 per month made addition Rs.7,34,098/- to the total income of the assessee.
4. In appeal, the ld. CIT(A) upheld the action of the Assessing Officer.
Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :-
“1. That the learned Assessing Officer (‘AO') erred in passing the impugned assessment order dt. 29.03.2016 u/s 143/147 of the Income Tax Act 1961 & the Hon’ble Commissioner of Income Tax (Appeals) 21 vide his appellate order u/s 250(6) of the Income Tax Act 1961 received by the appellant on 8th August 2017 erred in dismissing the appeal made by the appellant under section 246A of the Act. On the Facts & Circumstances in the case & in law the learned AO has erred in disallowing the claim of exemption of Rs.7,34,098/- when this claim was allowable as per the provisions of section 10(14)(1) of the Income Tax Act, 1961 with reference to the Circulars issued by the LIC. The Hon’ble CIT Appeal 21 has erred in rejecting the contentions of the appellant and dismissed the Appeal of the assessee.
2. That the learned AO & Hon’ble CIT (Appeal) has erred in law in not considering the details and documentary evidence including the circulars, bill vouchers etc. which were filed during the course of assessment proceedings before the Assessing Officer.
3. That the disallowance made by the AO & Confirmed by the Hon’ble CIT appeal 21 deserves to be deleted in appeal.
That the appellant reserves the right to change, alter, modify these grounds of appeal or add any other ground of appeal either before or during the course of hearing of the appeal.”
6. The assessee has also filed the following additional grounds :-
“(i) That on the facts and circumstances of the case and in law, the Assistant Commissioner of Income Tax, Circle- 68(1), Delhi was not justified in initiating re- assessment proceedings under section 147 of the Income Tax Act, 1961 on the basis of information received from the Additional Commissioner of Income Tax, Range-68, and without application of his mind. (ii) That on the facts and circumstances of the case and in law, the Assistant Commissioner of Income Tax, Circle-68(1), Delhi was not justified in initiating re- assessment proceedings under section 147 of the Income Tax Act, 1961 on the basis of satisfaction borrowed from the Additional Commissioner of Income Tax, Range-68, and without application of his mind.”
The ld. counsel for the assessee referring to the decision of the Hon’ble Supreme Court in the case of NTPC vs. CIT reported in 229 ITR 383, the decision of the Hon’ble Delhi High Court in the case of Orissa Cement Ltd. vs. CIT reported in 250 ITR 856 and various other decisions submitted that these grounds being legal grounds and all material facts are available on record, therefore, these additional grounds should be admitted.
After hearing both the sides, the additional grounds raised by the assessee are admitted for adjudication.
The ld. counsel for the assessee submitted that the case of the assessee was reopened on the basis of recommendation of the JCIT for initiating reassessment proceedings u/s 147/148 of the I.T. Act, 1961. Thus, the Assessing Officer has not applied his mind independently and the Assessing Officer reopened the assessment on the borrowed satisfaction. Relying on various decisions including the decisions of the Hon’ble Delhi High Court in the case of Pr.CIT vs. G and G Pharma India Ltd. reported in 384 ITR 147 and ITO vs. Moksha Securities P. Ltd. reported in 50 ITR 130, he submitted that the reassessment proceedings are bad in law. So far as merit of the case is concerned, the ld. counsel for the assessee submitted that the lower authorities have not considered the complete details of expenses along with documentary evidences such as bills/vouchers filed during the course of assessment proceedings. Although the assessee had filed full details with documentary evidence, however, the claim was rejected on the ground that no evidence showing incurring of the expenses was filed. He accordingly submitted that the grounds raised by the assessee should be allowed and the order of the ld. CIT(A) should be set-aside.
The ld. DR on the other hand submitted that the assessee in the instant case filed application for rectification u/s 154 in the office of the Assessing Officer claiming refund of Rs.1,92,280/-. When the matter went to the JCIT for approval of refund, the JCIT observed that there is variation in the income declared in the income tax return as per Form No.26AS. He, therefore, asked the Assessing Officer to examine the issue of variation of income declared in the income tax return. The Assessing Officer after perusal of the records found that there is difference in the taxable income as reflected in Form No.26AS as declared by the assessee in the return of income for which he has initiated the reassessment proceedings. Therefore, the claim of the assessee that the Assessing Officer initiated reassessment proceedings on borrowed satisfaction is not correct. He further submitted that the issue of challenging the reassessment proceedings was never raised before the ld. CIT(A). Therefore, the assessee cannot raise this ground now. Even otherwise also, the Assessing Officer after due application of mind has initiated the reassessment proceedings and, therefore, it cannot be said that the same has been done on borrowed satisfaction. So far as the merit of the case is concerned, he submitted that the assessee admittedly did not furnish the requisite details before the Assessing Officer for which he rejected the claim of exemption u/s 10(14)(1) of the I.T.
Act. He accordingly submitted that the order of the ld. CIT(A) be upheld.
I have considered the rival arguments made by both the sides and perused the material available on record. I find the ground challenging the validity of reassessment proceedings was not raised before the ld. CIT(A) and the assessee for the first time has raised this legal ground before the Tribunal in shape of two additional grounds. It is also the allegation of the ld. counsel for the assessee that despite submission of various details including the bills/vouchers in support of the claim of exemption u/s 10(14)(1), the lower authorities have not considered the same. Under these circumstances, I deem it proper to restore the issue to the file of the ld. CIT(A) with a direction to decide the issue challenging the validity of the reassessment proceedings. Further, since the various documentary evidences filed by the assessee were not considered by the lower authorities as stated by the ld. counsel for the assessee at the bar, therefore, ld. CIT(A) is directed to consider the evidences so filed as claimed by the ld. counsel for the assessee and decide the issue as per fact and law. Needless to say, the ld. CIT(A) shall give due opportunity of being heard to the assessee.
The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on this 28th September, 2018.