Income Tax Appellate Tribunal - Ahmedabad
Dharmendrasinh G. Gohil,, Bhavnagar vs Income Tax Officer, Ward-1(3), , ... on 19 May, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
ITA Nos. 2771 to 2773/Ahd/2014
(Assessment Years: 2006-07 to 2008-2009)
Shri Dharmendrasinh G. Gohil
3/B-1, Anantwadi, Opp: Jilla Udyog
Kendra, Bhavnagar Appellant
Vs.
The Income-tax Officer,
Ward -1(3), Bhavnagar 364001 Respondent
PAN: AAPPG9258D
आवेदक क ओर से/By Assessee : Mr. B. R. Popat with Rohan
Popat, A.R.
राज
व क ओर से/By Revenue : Mr. Santosh Karnani, Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 18.05.2017
घोषणा क तार ख/Date of
Pronouncement : 19.05.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
These three assessee's appeals for assessment years 2006-07 to 2008- 09 arise against the CIT(A)-XX, Ahmedabad's separate orders; all dated 19.08.2014, in cases nos. CIT(A)-XX/187/13-14, CIT(A)-XX/188/13-14 & ITA Nos. 2771 to 2773/Ahd/2014 (Shri Dharmedrasinh G. Gohil vs. ITO) A.Ys. 2006-07 to 2008-09 -2- CIT(A)-XX/189/13-14; respectively, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short "the Act".
2. We notice at the outset that the assessee's first appeal ITA No.2771/Ahd/2014 raises the following substantive grounds:
"The learned CIT(A) -XX, Ahmedabad has erred in law and on facts in-
1. Confirming the action of the AO in invoking the provisions of section 147 of the Act for the reasons as specified in the satisfaction note.
2. Confirming the action of the AO in disallowing the claim of expenses of Rs.2,34,145/- from incentive bonus received from Life Insurance Corporation of India.
3. Confirming the action of the AO in disallowing the claim of the conveyance allowance of Rs.40,620/- under the relevant provisions of the Act, received from Life Insurance Corporation of India."
3. Learned counsel representing both parties inform us that assessee's latter two appeals ITA Nos. 2772 & 2773/Ahd/2014 also raise the very substantive grounds. The only distinction stated therein is that of the relevant figures involved of Rs.2,55,452/- & Rs.3,98,530/- relating to second substantive ground as followed by conveyance disallowance amounts of Rs.36,600/- & Rs.49,001/-; respectively qua the third substantive ground raised therein. We thus treat assessee's first appeal hereinabove as the lead case.
4. We start with the relevant facts in assessment year 2006-07. The assessee is a Development Officer employed in Life Insurance Corporation of India "LIC" hereinafter. He filed his return on 20.03.2007 stating income of Rs.7,37,627/-. The Assessing Officer thereafter issued him Section 148 ITA Nos. 2771 to 2773/Ahd/2014 (Shri Dharmedrasinh G. Gohil vs. ITO) A.Ys. 2006-07 to 2008-09 -3- notice dated 22.02.2013 after forming reasons to believe of his taxable income having escaped assessment as follows:
"The assessee is Development officer of the LIC of India, Incentive Bonus if any received by the Development officer, of LIC is treated as part of Salary and is not entitled to any deduct/on over and above the Standard deduction if admissible. Therefore, the claim of assessee on account of Incentive Bonus of Rs. 234145/-out of total Incentive Bonus received Rs.780485/-as per data received from authority of LIC of India is impermissible.
In absence of proof of actual expense incurred and without certified by the employer that it is wholly necessarily and exclusively for the performance of duties. The claim of Rs.40620/- on account of conveyance allowance is also impermissible.
Considering the above I have reason to believe that the claim of the assessee on of Incentive bonus of Rs.234145/-and conveyance allowance of Rs. 40620/- is wrong and impermissible.
As such there is failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for AY 2006-07, as a result of which income of Rs. 274765/-is chargeable to tax has escaped assessment. In view of the above, I have reason to believe that income of Rs, 274765/- is chargeable to tax as escaped assessment and the case is fit for issue of notice u/s 148 of the I.T.Act.
The reliance is also placed on decision of Honourable Supreme Court:
The Honorable Apex Court had dismissed Special Leave Petition (Civil) No.22350 (from the judgment and order dated 09.05.2003 in ITA 56/00 of the High Court of M.P at Jabalpur) of Gurdev singh Jaggi v/s CIT by holding as under :
"In our view, the view taken in the impugned judgment is absolutely correct and the view taken by the Gujarat High Court is wrong. The Special Leave Petition is dismissed."
5. The Assessing Officer then framed the impugned re-assessment on 31.12.2013 disallowing assessee's expenditure claimed against incentive ITA Nos. 2771 to 2773/Ahd/2014 (Shri Dharmedrasinh G. Gohil vs. ITO) A.Ys. 2006-07 to 2008-09 -4- bonus of Rs.2,34,145/- and that pertaining to conveyance allowance of Rs.40,620/-; respectively.
6. The assessee preferred appeal inter alia challenging validity of reopening as followed by his substantive grounds on merits against the abovestated two disallowances. The CIT(A) rejects former two above substantive grounds and restricts conveyance allowance disallowance of Rs.40,620/- to Rs.20,310/- only. This leaves the assessee aggrieved raising the above reproduced three substantive grounds.
7. Learned counsel representing assessee first of all takes up assessee's challenge to validity of reopening. His case is that the issue of allowability of expenditure @30% of the incentive bonus in order to meet the corresponding expenses already stands settled in hon'ble jurisdictional high court's decision in CIT vs. Kiranbhai H Shelat & Ors. (1999) 235 ITR 635 (Guj) as reiterated in their lordships' latter decision in Tax Appeal No. 1005/2005 CIT vs. Nitinbhai T. Bhupatani decided on 08.02.2006. He therefore pleads that the Assessing Officer has committed a grave illegality in relying upon hon'ble M. P. high court's judgment in CIT vs. Gurudeo Singh Jaggi 267 ITR 763 taking a contrary view as upheld in hon'ble apex court in Special Leave Petition (supra). Mr. Popat contends that mere dismissal of Special Leave Petition against a non-jurisdictional high court's decision does not form a valid precedent. More so when hon'ble jurisdictional high court's latter judgment hereinabove considers the same in deciding the very issue against the Revenue (supra). We find no reason to agree with this legal plea. Hon'ble apex court's decision in Raymond Wollen Mills Ltd. vs. ITO (1999) 236 ITR 34 (SC) settles the law that a reopening can be resorted to on the basis of a mere prima facie material wherein sufficiency and correctness of ITA Nos. 2771 to 2773/Ahd/2014 (Shri Dharmedrasinh G. Gohil vs. ITO) A.Ys. 2006-07 to 2008-09 -5- the same is not to be considered at the threshold stage. We observe in this backdrop of facts and law that the Assessing Officer rightly reopened assessment in assessee's case after taking note of hon'ble apex court's decision hereinabove. This first substantive ground in assessee's appeal is accordingly declined. So is the outcome of corresponding legal issue in latter two appeals.
8. We now come to assessee's second substantive ground challenging correctness of disallowance of expenses claimed of Rs.2,34,145/- from his incentive bonus. There is no dispute that the LIC has issued a clarification way back w.e.f. 01.04.1989 entitling Development Officers for reimbursement to the extent of 30% of the incentive bonus granted to them. Hon'ble jurisdictional high court's former judgment also caps the same @30%. Learned Departmental Representative vehemently contends that the assessee's expenditure in question is much less than the one in hand. Mr. Popat strongly rebut the same by referring to assessee's reply dated 30.12.2013 at page 6 of assessment order claiming the actual expenditure to be much more than the one in question. We find that the same has nowhere been controverted in assessment order. The Revenue's argument regarding quantification stands rejected.
9. We proceed further to notice that hon'ble jurisdictional high court's two decisions go contrary to hon'ble Madhya Pradesh high court's judgment as well as similar other precedents. The Revenue vehemently contends that hon'ble apex court's decision (supra) makes it very clear that hon'ble jurisdictional high court's judgment in case of Kiranbhai H Shelat (supra) is wrong. There is no dispute about this factual position. It however emerges that hon'ble jurisdictional high court's latter decision in Nithinbhai's case (supra) takes due note thereof in allowing assessee's identical claim once ITA Nos. 2771 to 2773/Ahd/2014 (Shri Dharmedrasinh G. Gohil vs. ITO) A.Ys. 2006-07 to 2008-09 -6- again at page 4. 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 his incentive bonus received from LIC. This second substantive ground therefore succeeds in all three appeals as we have already clarified that there is no distinction except that of the relevant figures involved therein.
10. This leaves us with assessee's third substantive ground challenging the lower appellate findings restricting conveyance disallowance of Rs.40,620/- to Rs.20,310/- only after adopting estimation method. The assessee had quoted Section 10(14) of the Act in raising the impugned claim. The Assessing Officer took into account his alleged failure in producing evidence in incurring the expenses in the course of performing his insurance job. The CIT(A) agrees with assessee's claim in principle. He observes in lower appellate order that such kind of expenditure in the form of petrol, vehicle, insurance, office expenses are bound to be there even in absence of the relevant supportive evidence. We observe in these facts that there is no plausible reason for the CIT(A) to restrict the impugned expenditure in absence of any specific irregularity being pointed out. The fact however also remains that the assessee's evidence in the case file does not produce the relevant details. We thus conclude that the impugned disallowance of conveyance allowance @50% is too high. The same is accordingly ordered to be deleted to the extent of 75%. The balance 25% disallowance amount of Rs.10,155/- is accordingly upheld. The very order shall be followed in latter two years regarding this third substantive ground (supra) wherein the impugned disallowance would stand confirmed @25% of the original claim ITA Nos. 2771 to 2773/Ahd/2014 (Shri Dharmedrasinh G. Gohil vs. ITO) A.Ys. 2006-07 to 2008-09 -7- raised before the Assessing Officer. This third substantive ground in all three appeals is partly accepted.
11. These three assessee's appeals are partly allowed.
[Pronounced in the open Court on this the 19th day of May, 2017.] Sd/- Sd/-
(PRADIP KUMAR KEDIA) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 19/05/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज
व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।