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IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI
.. , ,
BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA, AM
./I.T.A. No. 6063/Mum/2012
( / Assessment Year: 2009-10)
Jimmy F. Bilimoria ITO-26(2)-4,
3rd Floor, Sleater House, Room No. 610, 6th Floor,
Sleater Road, Grand Road, / K. G. Mittal Ayurvedic Hospital
Mumbai-400 007 Vs. Bldg., Charni Road,
Mumbai-400 002
. / . /PAN/GIR No. AEKPB 1973 R
( /Appellant) : ( / Respondent)
/ Appellant by : Shri Kirit Sheth
/Respondent by : Shri Akhilendra Yadav
/ : 16.12.2014
Date of Hearing
/
: 18.12.2014
Date of Pronouncement
/ O R D E R
Per Sanjay Arora, A. M.:
This is an Appeal by the Assessee directed against the Order by the Commissioner
of Income Tax (Appeals)-28, Mumbai (`CIT(A)' for short) dated 30.07.2012, partly
allowing the assessee's appeal contesting its assessment u/s. 147 r/w s. 143(3) of the
Income Tax Act, 1961 (`the Act' hereinafter) for the assessment year (A.Y.) 2009-10
vide order dated 26.12.2011.
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Jimmy F. Bilimoria vs. ITO
2. The only issue arising in this appeal is the maintainability of the impugned
assessment, assessing the sum of Rs.18 lacs received by the assessee from his ex-
employer, M/s. Kuwait Airways Corporation. The assessee's principal challenge is qua
the validity of the assessment; the ld. Authorized Representative (A.R.), the assessee's
counsel, conceding before us that the said sum, received from an ex-employer, is taxable
as salary, further limiting his prayer for a direction to be allowed credit for the tax
deducted at source thereon, i.e., u/s.192 of the Act.
3. We have heard the parties, and perused the material on record.
3.1 The assessee's case is that the return of income in the instant case, filed on
14.07.2010, is a valid return u/s. 139(4). That being so, the Revenue, if it wanted to
repudiate the same, following the verification procedure under the Act, was required to
serve upon him notice u/s.143(2) of the Act, the time limit for which is available up to
30.09.2011. The Assessing Officer (A.O.) issued instead a notice u/s.148 on 14.03.2011.
The same is not permissible in-as-much as the time for the issue of notice u/s. 143(2) was
available, and for which proposition reliance is placed on the decisions in the case of CIT
vs. Rajendra G. Shah [2001] 247 ITR 772 (Bom), besides by the Tribunal in the case of
Eenadu Relief Fund vs. Dy. DIT(E) (in ITA No. 434/Hyd/2010 dated 13.01.2011),
following a third member decision in the case of Super Spinning Mills Ltd. vs. Addl. CIT
[2010] 3 ITR 258 (Chennai)(TM). Further on, the A.O., in issuing notice u/s.148, takes
note of the information which stands already communicated by the assessee per his return
of income, i.e., by way of a note to the computation of income, enclosed along with,
clearly stating that the assessee is during the relevant previous year in receipt of Rs.18
lacs from M/s. Kuwait Airways Corporation by way of retirement dues. The Revenue, on
the other hand, relying on the decisions in the case of CIT vs. Jora Singh [2013] 215
Taxman 424 (All.); CIT vs. Smt. Shakuntala Devi [2009] 318 ITR 273 (P & H); ITO vs.
K.M. Pachiappan [2009] 311 ITR 31 (Mad), contends that the pendency of the
proceeding u/s. 143(3) is no bar for the initiation of the reassessment proceedings, i.e.,
where the conditions for the initiation thereof are otherwise satisfied. There is no charge
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Jimmy F. Bilimoria vs. ITO
in it's respect, the notice u/s.148 being issued upon receipt of specific information from
the TDS wing of the Department.
We are completely at loss to understand as to what the legal controversy in the
present case is about. The reasons are more than one. No doubt, as explained in Trustees
of H.E.H. the Nizam's Supplemental Family Trust vs. CIT [2000] 242 ITR 381 (SC), the
reassessment proceedings could not be initiated pending the assessment proceedings. The
moot question however is if any assessment proceedings were on at the time of issue of
reassessment notice u/s.148 on 14.03.2011 the answer to which is clearly in the
negative. The decision by the hon'ble apex court shall therefore not apply. In fact, as
explained by the hon'ble high courts in the decisions relied upon by the Revenue, with
that by the Allahabad and Punjab & Haryana high court noticing the said decision by the
apex court, the legal position stands materially altered after the amendment to section 147
w.e.f. 01.04.1989. It is, in view of Explanation 2(b) to section 147, now no longer open to
contend that notice u/s.148 could not be issued where the time for the completion of
assessment u/s.143(3) was available or, for that matter, for service of notice u/s.143(2).
There is, it was further explained, nothing in the language of section 143, which may
suggest that the recourse to section 147 could be had only when the period of limitation
to complete the assessment proceedings has expired or the A.O. should wait for the
expiry of the said period. The apex court in Asst. CIT v. Rajesh Jhaveri Stock Brokers
(P.) Ltd. [2007] 291 ITR 500 (SC), taking note of the amended provisions of section 147,
as well as sections 148 to 152, clarified that the failure to take steps u/s.143(3) will not
render the A.O. powerless to initiate reassessment proceedings. As long as therefore the
conditions of section 147 are fulfilled, the A.O. is free to initiate proceedings u/s.147,
which constitute the only bar on the power of A.O. to initiate such proceedings under the
amended law. This, thus, constitutes our second reason for stating the assessee's legal
plea qua non-maintainability in law of the assessment proceedings as not valid. This
would also constitute our reason for considering the decision by the hon'ble jurisdictional
high court in the case of Rajendra G. Shah (supra), binding on us, as not applicable; the
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Jimmy F. Bilimoria vs. ITO
assessment year involved in that case being prior to 1982 in-as-much as the return was
filed on 29.06.1982.
The assessee stating that no information had come to the A.O.'s possession, i.e.,
prior to the issue of notice u/s.148, or that there was true and full disclosure per the return
of income, invalidating the said notice, would also be of no consequence in-as-much as
the reopening is within a period of four years from the end of the relevant assessment
year. The stipulation with regard to the disclosure or the disclosure requirements, i.e.,
where the assessment is reopened after a period of four years, vide proviso to section 147,
would not therefore come into play. There is, we may add, nothing in the return to
indicate that the impugned receipt was not taxable, being in fact by way of retrenchment
compensation.
Finally, and without prejudice, notice u/s. 143(2) stands issued in the instant case
for the first time only on 06.07.2011. The assessee claims the same to be in pursuance to
the notice u/s.148. The same is without basis in-as-much as the assessee did not
admittedly file any return, or even a communication to the effect that the return filed
earlier (i.e., on 14.07.2010) be treated as, in response to notice u/s.148. A notice u/s.
143(2) could only be issued in pursuance of a return either u/s.139 or in response to
notice u/s. 142(1). The said notice could thus only be considered as in pursuance to the
return furnished u/s. 139(4) on 14.07.2010. The impugned assessment, therefore, can at
worst be considered as an assessment u/s. 143(3).
We, accordingly, for the reasons afore-mentioned, find no merit in the assessee's
legal claim of the non-maintainability in law of the impugned assessment.
3.2 Coming, next, to the merits of the case; the only issue in its respect is toward
allowing the assessee the credit for TDS. The amount, its stands explained to us by the ld.
AR, came to be received on the directions of the labour court, and on net of tax basis.
TDS has however been subsequently recovered by the Revenue from the employer, who
though has contested the liability.
We do not find any merit in the assessee's claim that the decision in the case of the
employer, M/s. Kuwait Airways Corporation, would ipso facto be made applicable to the
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Jimmy F. Bilimoria vs. ITO
assessee's case, so that in case the employer was held as not liable to deduction of tax at
source, no tax would stand to be payable by the assessee. The deposit of TDS is only for
and on behalf of the assessee-payee; TDS being only a manner and mode of recovery of
tax qua the income comprised in the amount paid to him. We are equally unimpressed
with the Revenue's argument that in-as-much as the assessee has received the payment
admittedly without deduction of tax, no tax can be said to have been deducted on the
salary income of Rs.18 lacs paid to him. The payment after deduction of tax would only
be received by the payee at net of tax. As such, it was preposterous to contend that no tax
in its respect stands at all deducted in-as-much as it is received on net of tax basis. What,
however, would be more appropriate in law to say is that the assessee would stand to be
properly assessed for the gross amount, i.e., on cum tax basis; the tax deducted being
only income, since received, applied toward the assessee-payee's tax liability. Further,
credit for TDS is to be allowed in the year for which the corresponding income is
assessable the current year in the instant case (sections 198, 199). A proportionate
receipt /income would accordingly be entitled to a proportionate credit for TDS. The
entire payment having been received during and assessable for the current year, i.e., the
previous year corresponding to A.Y. 2009-10, the assessee shall, accordingly, be allowed
full credit for the tax deducted, since recovered by the Department, and which sum would
also stand to be assessed as a part of the salary income for the current year. In the event,
however, of the employer not being finally found as liable to deduct any tax at source, so
that the tax deducted stands recovered in excess, and repaid/repayable to the employer by
the Revenue; the assessee having no right therein, the same cannot be brought to tax in
his hands, and neither would he be allowed any credit in its respect. Reference in this
regard be made to the decision by the hon'ble jurisdictional high court in the case of CIT
vs. Jaydev H. Raja [2013] 357 ITR 293 (Bom). As regards our power to issue such a
direction, the same is the subject matter of settled law, and toward which we may readily
cite the decision in Ahmedabad Electricity Co. Ltd. vs. CIT [1993] 199 ITR 351
(Bom)(FB). We decide accordingly.
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ITA No. 6063/Mum/2012 (A.Y. 2009-10)
Jimmy F. Bilimoria vs. ITO
4. In the result, the assessee's appeal is partly allowed.
Order pronounced in the open court on December 18, 2014
Sd/- Sd/-
(I. P. Bansal) (Sanjay Arora)
/ Judicial Member / Accountant Member
Mumbai; Dated : 18.12.2014
. ../Roshani, Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent
3. () / The CIT(A)
4. / CIT - concerned
5. , , / DR, ITAT, Mumbai
6. / Guard File
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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