SHRI THAKKER PARESH HARILAL,BHAVNAGAR vs. THE INCOME TAX OFFICER, WARD-1(3), BHAVNAGAR

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.

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 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.

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 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.

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/-.

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.

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. In the result, appeal filed by the department is dismissed.”

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.

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.

In the result, all the three appeal of the assessee are allowed.

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