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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: SHRI MAHAVIR PRASAD & SHRI, MANISH BORAD
आदेश / O R D E R
PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : These are three appeals by the assessee against the separate order of the Commissioner of Income Tax(Appeals)-VI, Ahmedabad, identically dated 15/12/2015 for the Assessment Year (AY) 2006-07, 2007-08 & 2009-10 respectively.
ITA Nos. 1376, 1377 & 1378/Ahd/2016 Shri Thakker Paresh Harilal vs. ITO Asst.Year – 2006-07, 2007-08 & 2009-10 - 2 - 2. Since the issue involved is common in all the appeals, all three appeals are disposed off by a common and consolidated order, for the sake of convenience, the case for A.Y. 2006-07 is taken for discussion in detail and the following Grounds of appeal has taken by the assessee: i. (a) The Ld CIT(A) has erred in law in confirming the impugned order passed by the Ld Assessing Officer and upholding his action taken u/s.147 of the Income Tax Act, 1961.
(b) That there being no fresh tangible material with ld. A.O. for issue of notice, conditions of section 147 were not fulfilled, the impugned order confirming the action of the Ld Assessing Officer in issuing notice u/s.148 of the Act and re-opening of the assessment u/s.147 was legally unsustainable.
ii. The Learned Commissioner of Income Tax (appeals) - VI erred in law and on facts in not accepting our claim that notice u/s.147 of the Act is invalid, void ab initio hence assessment framed pursuance to such invalid notice should be quashed.
iii. The Learned Commissioner of Income Tax (appeals) - VI erred in law and on facts in not following the ratio laid down by hon. Supreme Court in the case of Kunhayammed & Ors. vs. State of Kerala & Anr. AIR 2000 SC 2587 regarding effect of non speaking order while dismissing SLP and thus erred in considering the effect of non speaking order in the SLP case of Guredev Singh Jaggi vs. CIT (2003).
iv. The Learned Commissioner of Income Tax (appeals) - VI erred in law and on facts in not following the ratio laid down by Delhi High Court in the case of Haryana Acrylic vs. CIT 308 ITR 38 (Del) which has been followed by Delhi ITAT in the case of Balwant Rai Wadhwa vs. ITO which held that supplying reason recorded for reopening after the six years stipulated in s.149 is bad in law.
ITA Nos. 1376, 1377 & 1378/Ahd/2016 Shri Thakker Paresh Harilal vs. ITO Asst.Year – 2006-07, 2007-08 & 2009-10 - 3 - v. The Learned CIT(A)-VI erred in law and on facts in not following the ratio laid down by Delhi High Court in the case of Commissioner of Income Tax vs. Orient Craft Ltd.(2013) 354 ITR 536, MOHAN GUPTA vs. CIT-XI in W.P.(C) 7660/2012 decided on 28/01/2014, MADHUKAR KHOSILA vs. ASSISTANT COMMISSIONER OF INCOME TAX W.P.(C) 1320/2014, C.M. NO.2744/2014 & 2745/2014, in the case of Pr. CIT-09 vs. Tupperware India P. Ltd. pronounced on 10/08/2015 and also by Hon. Andhra Pradesh High Court in Sirpur Paper Mills Ltd. vs. ITO [1978] 114 ITR 404 (AP), by Calcutta High Court in the case Century Enka Ltd. vs. ITO [1983] 143 ITR 629 (Cal.) Mumbai High Court in the case of Balkrishna Hiralal Wani, (Writ Petition NO.191/2010 etc. where it was consistently held that even in the case of intimation u/s.143(1), no notice u/s.147 can be issued in absence of fresh tangible material. vi. The ld. CIT(A)-VI erred in law and on facts in not following the decision of Jurisdictional Hon. Gujarat High Court in Tax Appeal Nos.641 & 642 of 2007 in the case of Shri Mukeshbhai B Desai, P.V. Ashar Development Officer vs. B.C. Goel, as reported at (2014) 44 taxmann.com 435 and in the case of CIT vs. Nitinbhai Bhuptani in Tax Appeal No.1005 of 2005 as well as the decision of Jurisdiction Hon. Ahmedabad ITAT in the case of ITA No.1717/Ahd/2006 for the A.Ys 2002-03 & 2003-04 and in the case of ACIT, Vapi vs. Jaysukh Ratilal Patel in ITA No.4162/Ahd/2007 decided on 15/10/2010 where it was held that LIC DO is eligible for claiming deduction against incentive bonus. vii. The ld. CIT(A)-VI erred in law and on facts in holding that the decisions of Hon. Supreme Court dismissing SLP in the case of SLP(Civil) 22350 in the case of Guredev Singh Jaggi vs. CIT(2003) carry more weight than the order dismissing SLP of REVENUE in the case of CIT vs. Nittinbhai Bhuptani in SLP (Civil) 1518 of 2007 renumbered as 3842 of 2007 on 16th July 2007 against the order of Hon. Gujarat High Court allowing expenses against the income of Incentive bonus to LIC Development Officer.
ITA Nos. 1376, 1377 & 1378/Ahd/2016 Shri Thakker Paresh Harilal vs. ITO Asst.Year – 2006-07, 2007-08 & 2009-10 - 4 - viii. The ld. CIT(A)-VI erred in law and in facts in confirming the disallowance of expenses of Rs.1,33,399/- out incentive bonus of Rs.4,44,664/- ignoring the various decisions of jurisdictional honorable Gujarat High Court including decision in thecase of Mukeshbhai Desai, P. V. Ashar, Nitinbhai Bhuptani etc. 2. The relevant facts as culled out from the materials on record are as under:- In this case, the assessee is a Development officer in Life Insurance Corporation of India. He has filed his return of income for A.Y.2009-10 declaring total income at Rs.6,98,025/-.
2.2 On verification of return of income for the A.Y. 2009-10 along with computation of income, it was observed that assessee had claimed wrong deduction on the basis of lump sum expenses of Rs.1,69,419/- being 30% of incentive bonus and conveyance allowance of Rs.41,662/- as expenses, aggregating amount of Rs.2,11,081/- being part of salary which stands disallowed in view of the decision of Hon’ble Apex Court held in the SLP(Civil) 22350 of 2003 of Gurdev Singh Jaggi Vs. Commissioner of Income tax.
2.3 During the course of assessment proceedings, the assessee did not submit any documentary evidence in support of claimed deduction of Rs.41,662/- on account of Conveyance allowance u/s.10(14) of the I.T. Act against the income chargeable under the head salaries. Accordingly, vide notice dated 19/01/2015 the assessee has show-cause that due to failure to furnish any supporting evidences of expense like petrol bill, or
ITA Nos. 1376, 1377 & 1378/Ahd/2016 Shri Thakker Paresh Harilal vs. ITO Asst.Year – 2006-07, 2007-08 & 2009-10 - 5 - hire vehicle or any supporting of travelling mode, why the claim for deduction of Rs.41,662/- on account of conveyance allowance and added back to the total income.
2.4 In response to the aforesaid show-cause notice the assessee has submitted petrol bills and voucher of amount of Rs.38,063/-, insurance premium receipt of Rs.5,661/-, garage bills of Rs.6,200/-, cleaning of car bills of Rs.4,700/- and driver salary voucher 22,761/-. The bills and vouchers submitted to the assessee were considered however it was not acceptable to the AO on the account of submitted fabricated vouchers and bills prepared in single sitting. The genuineness of these voucher and bills furnished was in question. The assessee failed to prove the authenticity of these voucher and bills and there so expenses claimed. However looking to the nature of the duties of the Development officer of LIC, the conveyance expenses are restricted to the amount of Rs.20,831/- claimed by the assessee. Since the assessee failed to prove the quantum of expenses and AO disallowed the claim of Rs.20,831/-.
2.5 On verification of computation of income submitted along with the return of income failed u/s.139(1) of the Act, it is noticed that the assessee has claimed deduction on account of other deduction of Rs.1,72,019/- from the incentive bonus earned of Rs.7,22,796/- on account of expenses to earn incentive bonus.
ITA Nos. 1376, 1377 & 1378/Ahd/2016 Shri Thakker Paresh Harilal vs. ITO Asst.Year – 2006-07, 2007-08 & 2009-10 - 6 - In this regard, a show-cause notice was served to the assessee and same was not acceptable to the learned AO. Hence, Rs.1,72,019/- was disallowed and added back to the income of the assessee.
Against the said order assessee preferred first statutory appeal before the learned CIT(A) who partly allowed the appeal of the assessee.
Now appellant’s appeal is before us.
Learned AR has not pressed Ground No.1, 2, 3 & 4.
5.2 Regarding Ground No.5, issue is before us, whether Development Officer of LIC is eligible for claiming deduction against incentive bonus or law. Learned AR cited a judgment of Jurisdictional High Court in Tax Appeal No.1005 of 2005 in the matter of CIT-II vs. Nitinbhai T. Bhupatani. In this case, issue allowed in favour of the assessee by stating that “conveyance allowance and other additional conveyance allowance are paid to the Development Officer for meeting the actual expenditure incurred by the Development Officers and discharge their duties as per law and norms set out in the circular issued by the LIC. Thereafter, what should be the proportion of the amount which should be allowed, cannot be form substantial question of law. It is necessary to take note of the fact that even though the issue of conveyance allowance and additional conveyance allowance was not there before this court in CIT vs. Kiranbhai H. Shelat (supra), the
ITA Nos. 1376, 1377 & 1378/Ahd/2016 Shri Thakker Paresh Harilal vs. ITO Asst.Year – 2006-07, 2007-08 & 2009-10 - 7 - principle enunciated in the said decision would equally govern the allowance or otherwise of the said item of expenditure. In the result, appeal filed by the department is dismissed.”
5.3 Learned AR also cited a judgment of our coordinating Bench in ITA No.2771 to 2773/Ahd/2014. Similar matter came before the Coordinate Bench for the consideration. In this case also matter was decided in favour of the appellant holding that “we thus assume that their lordships have very well considered hon’ble apex Court’s decision before arriving at the very conclusion in assessee’s favour. We accordingly allow assessee’s claim of expenses in question of Rs.2,34,145/- against the incentive bonus received from LIC. 6. Respectfully, following the Jurisdictional High Court Judgment, in which Hon’ble High Court has held that development officer of the LIC has to contact to its customer to fetch policies and to calculate premium on behalf of the LIC. In our considered opinion, respectfully following the above said judgment, we decide this matter in favour of the assessee and allow the expenditure against the income of incentive bonus.
So far Appeal Nos. 1376 & 1377/Ahd/2016 for Asst. Years 2006- 07 & 2007-08 respectively are concerned. Facts are common, only figures are different and learned CIT has also passed the common order. Therefore, all the appeals are allowed.
ITA Nos. 1376, 1377 & 1378/Ahd/2016 Shri Thakker Paresh Harilal vs. ITO Asst.Year – 2006-07, 2007-08 & 2009-10 - 8 - 7. In the result, all the three appeal of the assessee are allowed.
This Order pronounced in Open Court on 18/09/2017 Sd/- Sd/- Ekuh’k cksjM Ekuh’k cksjM Ekuh’k cksjM Ekuh’k cksjM egkohj egkohj egkohj izlkn egkohj izlkn izlkn izlkn ¼ys[kk lnL;½ ¼ys[kk lnL;½ ¼ys[kk lnL;½ ¼ys[kk lnL;½ ¼U;kf;d lnL;½ ¼U;kf;d lnL;½ ¼U;kf;d lnL;½ ¼U;kf;d lnL;½ (MAHAVIR PRASAD) ( MANISH BORAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 18/09/2017 Priti Yadav, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-VI, Ahmedabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad True Copy 1. Date of dictation 12/09/2017 (dictation-pad 6 pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …15/09/2017 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S 18/09/2017 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………