Sri P Anjaneyulu, Kakinada v. The ITO, Ward-1, Kakinada

ITA 467/VIZ/2010 | 2007-2008
Pronouncement Date: 07-12-2010 | Result: Allowed

Appeal Details

RSA Number 46725314 RSA 2010
Assessee PAN ABRPV7319Z
Bench Visakhapatnam
Appeal Number ITA 467/VIZ/2010
Duration Of Justice 2 month(s) 20 day(s)
Appellant Sri P Anjaneyulu, Kakinada
Respondent The ITO, Ward-1, Kakinada
Appeal Type Income Tax Appeal
Pronouncement Date 07-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 07-12-2010
Assessment Year 2007-2008
Appeal Filed On 17-09-2010
Judgment Text
ITANOS.465 TO 469 OF 2010 VALLURI DAS KAKINADA & OTHE RS PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.465/VIZAG/2010 ASSESSMENT YEAR: 2007-08 VALLURI DAS KAKINADA VS. ITO WARD-1 KAKINADA (APPELLANT) PAN NO: ABRPV 7319 Z (RESPONDENT) ITA NO.466/VIZAG/2010 ASSESSMENT YEAR: 2007-08 SMT.VVSK SATYA RATNAM KAKINADA VS. ITO WARD-1 KAKINADA (APPELLANT) PAN NO: AIXPS 0792 G (RESPONDENT) ITA NO.467/VIZAG/2010 ASSESSMENT YEAR: 2007-08 P. ANJANEYULU KAKINADA VS. ITO WARD-1 KAKINADA (APPELLANT) PAN NO: AJNPP 4634 R (RESPONDENT) ITA NO.468/VIZAG/2010 ASSESSMENT YEAR: 2007-08 KANCHERLA SIVARAM PEDDAPURAM VS. ITO WARD-1 KAKINADA (APPELLANT) PAN NO: AEJPK 9055 J (RESPONDENT) ITA NO.469/VIZAG/2010 ASSESSMENT YEAR: 2007-08 D.G. RAJESWARA RAO SAMALKOT VS. ITO WARD-1 KAKINADA (APPELLANT) PAN NO: ACPPD 8531 L (RESPONDENT) APPELLANT BY: SHRI C.V.S. MURTHY CA RESPONDENT BY: SHRI T.L. PETER DR ORDER PER BENCH: ALL THESE APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE ASSESSEES CHALLENGING THE ORDER PASSED BY LEARNED CIT RAJAHMU NDRY UNDER SECTION 263 OF THE ACT IN THEIR RESPECTIVE HANDS AND THEY R ELATE TO THE ASSESSMENT ITANOS.465 TO 469 OF 2010 VALLURI DAS KAKINADA & OTHE RS PAGE 2 OF 7 YEAR 2007-08. SINCE THE ISSUE URGED IN THESE APPEAL S IS IDENTICAL IN NATURE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THESE ASSESSEES ARE CHALLENGING THE DIRECTION GI VEN BY LEARNED CIT TO THE ASSESSING OFFICER TO REVOKE THE EXEMPTION GR ANTED TO THEM UNDER SECTION 10(10C) OF THE ACT ON THE EX-GRATIA AMOUNT RECEIVED BY THEM ON VOLUNTARY RETIREMENT. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. ALL THESE ASSESSEES HAVE RETIRED FROM THE STATE BANK OF INDIA UNDER EXIT OPTION SCHEME (EOS) FRAMED BY THE SAID BANK. THESE ASSESSEES CLAI MED EXEMPTION UNDER SECTION 10(10C) OF THE ACT ON THE EX-GRATIA AMOUNT RECEIVED BY THEM UNDER THE SAID SCHEME. THEIR RESPECTIVE RETURN OF INCOME WAS INITIALLY ACCEPTED UNDER SECTION 143(1) OF THE ACT. THEREAFTER THE ASS ESSING OFFICER REOPENED THE ASSESSMENT OF ALL THESE ASSESSEES BY ISSUING NO TICE UNDER SECTION 148 OF THE ACT ON THE REASON THAT THESE ASSESSEES HAVE WRO NGLY CLAIMED EXEMPTION UNDER SECTION 10(10C) OF THE ACT ON THE E X-GRATIA AMOUNT RECEIVED BY THEM. IN THE REASSESSMENT PROCEEDINGS THESE ASSESSEES SUPPORTED THEIR CLAIM OF EXEMPTION ON THE BASIS OF 3 RD MEMBER DECISION OF ITAT LUCKNOW BENCH IN THE CASE OF ANANT KUMAR AGRAW AL VS. ITO (2008) (302 ITR AT 49). THE ASSESSING OFFICER AFTER COMPA RING THE CASE OF THESE ASSESSEES WITH THE ABOVE SAID DECISION ACCEPTED T HEIR CLAIM THAT THEY ARE ENTITLED FOR EXEMPTION UNDER SECTION 10(10C) OF THE ACT ON THE EX-GRATIA AMOUNT RECEIVED BY THEM. ACCORDINGLY HE COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 25-9-2008 B Y ALLOWING THE ABOVE SAID EXEMPTION. THEREAFTER THE LEARNED CIT VIDE H IS ORDER DATED 19-7-2010 PASSED UNDER SECTION 263 OF THE ACT DIRECTED THE A SSESSING OFFICER TO REVOKE THE EXEMPTION SO GRANTED TO THEM FOR THE REA SON THAT THE EXIT OPTION SCHEME OFFERED BY THE STATE BANK OF INDIA DID NOT C ONFIRM FULLY WITH THE GUIDELINES PRESCRIBED UNDER RULE 2BA OF THE INCOME- TAX RULES. AGGRIEVED BY THIS ORDER ALL THESE ASSESSEES HAVE FILED APPEA LS BEFORE US. ITANOS.465 TO 469 OF 2010 VALLURI DAS KAKINADA & OTHE RS PAGE 3 OF 7 4. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS PASSED THE IMPUGNED ASSESSMENT ORDER UN DER SECTION 147 OF THE ACT AFTER FULLY VERIFYING THE CLAIM OF THE ASSESSEE AND HENCE THE SAME CANNOT BE TERMED AS AN ERRONEOUS ORDER. IN THIS REGA RD THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE DECISION OF ITAT AGRA BENCH IN THE CASE OF RADHEY SHYAM AGARWAL (HUF) VS. CIT (201 0) 35 (III) ITCL. 392 (AGRA-TRIB) WHEREIN IT HAS BEEN HELD AS UNDER: WHEN ASSESSING OFFICER HAD REOPENED THE VERY SAME ISSUE WHICH WAS UNDER REVISION AND HAD EXAMINED ALL THE D ETAILS AND AFTER VERIFYING AND BEING SATISFIED HAS TAKEN A PL AUSIBLE VIEW HIS ORDER CANNOT BE TREATED AS ERRONEOUS SIMPLY BEC AUSE IN HIS ORDER HE HAD NOT MADE ELABORATE DISCUSSION WITH RE FERENCE TO HIS SATISFACTION. HE FURTHER SUBMITTED THAT THE LEARNED CIT HAS INITI ATED THE PROCEEDINGS UNDER SECTION 263 OF THE ACT ON THE BASIS OF A LETT ER DATED 6-10-2009 ISSUED BY THE CBDT TO ALL CHIEF COMMISSIONERS OF INCOME TAX ; WHEREIN IT WAS STATED THAT THE EXIT OPTION SCHEME OF THE STATE BAN K OF INDIA ITSELF CLEARLY LAY OUT THAT THEY ARE NOT ELIGIBLE FOR DEDUCTION UN DER SECTION 10(10C) OF THE ACT. HOWEVER THE SAID LETTER HAS BEEN ISSUED BY CB DT SUBSEQUENT TO THE DATE OF COMPLETION OF THE REOPENED ASSESSMENT AND H ENCE ON THE BASIS OF THE SAID LETTER THE IMPUGNED ASSESSMENT ORDERS CAN NOT BE TERMED AS ERRONEOUS. THE LEARNED AUTHORISED REPRESENTATIVE A LSO SUBMITTED THAT THE RBI ALSO FORMULATED A SIMILAR SCHEME AND THE CENTRAL BOARD OF DIRECT TAXES VIDE ITS LETTER F.NO.225/74/2005-ITA-II DATED 20-10 -2005 INITIALLY DIRECTED THE INCOME TAX DEPARTMENT NOT TO GRANT EXEMPTION UND ER SECTION 10(10C) OF THE ACT. APPARENTLY THE CBDT PLACED RELIANCE ON THE LETTER RECEIVED FROM THE RBI ON THE MATTER OF EXEMPTION. WHEN THE QUEST ION OF EXEMPTION WAS CHALLENGED THE HON'BLE BOMBAY HIGH COURT ALLOWED T HE EXEMPTION UNDER SECTION 10(10C) OF THE ACT ON THE SAID SCHEME OF RB I IN THE CASE OF CIT VS. KOODATHIL KALLYATAN AMBUJAKSHAN (2008) 219 CTR (BOM ) 80. ON THE BASIS OF THE SAID DECISION THE CBDT AGAIN ISSUED A CIRCU LAR DATED 8-5-2009 STATING THAT THE EX-GRATIA RECEIVED UNDER THE SAID SCHEME OF RBI IS ELIGIBLE FOR EXEMPTION SECTION 10(10C) OF THE ACT. THE HON' BLE SUPREME COURT HAS ITANOS.465 TO 469 OF 2010 VALLURI DAS KAKINADA & OTHE RS PAGE 4 OF 7 ALSO CONFIRMED THE ORDER OF THE BOMBAY HIGH COURT R EFERRED (SUPRA) IN THE CASE OF CHANDRA RANGANATHAN & ORS VS. CIT (2010) (2 35 CTR (SC) 365). 4.1 THE LEARNED AUTHORISED REPRESENTATIVE FURTH ER SUBMITTED THAT THE STATE BANK OF INDIA HAS MODIFIED THE EXIT OPTION SC HEME VIDE ITS CIRCULAR DATED 5 TH SEPTEMBER 2006 AND ON SUCH MODIFICATION THE SECON D AND THIRD CONDITIONS SPECIFIED IN RULE 2BA WHICH WERE STATED BY LEARNED CIT AS NOT COMPLIED WITH ALSO BECOMES FULFILLED. THE LEARNED A.R POINTED OUT THAT THE LEARNED CIT HAS FAILED TO CONSIDER THE CIRCULAR DAT ED 5-9-2006 OF THE STATE BANK OF INDIA REFERRED (SUPRA). THE LEARNED AUTHORI SED REPRESENTATIVE BY PLACING RELIANCE ON THE DECISION OF ITAT AHMEDABAD IN THE CASE OF PANDYA VINODCHANDRA BHOGILAL VS. INCOME TAX OFFICER (2010) 133 TTJ (AHD) 253 SUBMITTED THAT THE ASSESSEE CANNOT BE PENALIZED ON THE ASSUMPTION THAT THE SCHEME FRAMED BY THE EMPLOYER IS NOT IN ACCORDA NCE WITH THE RULE 2BA. ACCORDINGLY THE LEARNED AUTHORISED REPRESENTATIVE S UBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE TERMED AS ERRONEOUS AND HENCE THE REVISION ACTION TAKEN UNDER SECTION 263 IS NOT IN ACCORDANCE WITH THE LAW. 5. ON THE CONTRARY THE LEARNED DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT THE EXIT OPTION SCHEME THAT WAS FRAMED BY THE STATE BANK OF INDIA HAS ITSELF STATED THAT THE EXEMPTION UNDER SECTION 10(1 0C) WILL NOT BE AVAILABLE ON THE EX-GRATIA PAYMENT RECEIVED UNDER THAT SCHEME . FURTHER THE SAID SCHEME WAS NOT IN ACCORDANCE WITH THE RULE 2BA SINC E IT WAS APPLICABLE ONLY TO A CERTAIN CLASS OF OFFICERS AND NOT TO ALL EMPLO YEES. HE FURTHER SUBMITTED THAT THE MERE EXAMINATION OF THE ISSUE BY THE ASSES SING OFFICER CANNOT TAKE AWAY THE SAID ASSESSMENT ORDER OUTSIDE THE PURVIEW OF SECTION 263 IF SUCH EXAMINATION HAD NOT BEEN DONE BY APPLYING CORRECT L AW. ACCORDINGLY HE SUBMITTED THAT THE ASSESSING OFFICER IN THE PRESENT CASES HAS NOT PROPERLY APPLIED THE PROVISIONS OF 10(10C) R.W. RULE 2BA AND HENCE THE REVISION ORDER PASSED BY THE LEARNED CIT SHOULD BE SUSTAINED. ITANOS.465 TO 469 OF 2010 VALLURI DAS KAKINADA & OTHE RS PAGE 5 OF 7 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PERUSED THE RECORD. BEFORE PROCEEDING WE FEEL IT PERTINENT TO DISCUSS ON THE LEGAL POSITION ON THE ISSUE OF SECTION 263 OF THE ACT. THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 92) HA S DEALT WITH THE SCOPE OF PROVISIONS OF SECTION 263 AS UNDER: SECTION 263 OF THE INCOME-TAX ACT 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD O F ANY PROCEEDINGS UNDER THE ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER AN ENQUIR Y AS IS NECESSARY ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. TH E KEY WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORD ER MUST BE CONSIDERED BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. TH IS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JU DGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUS TRIAL CO. LTD. V. CIT [2000] 243 ITR 83 THE SUPREME COURT HELD THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFIC ER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WI LL BE ATTRACTED. THE SUPREME COURT HELD THAT AN INCORREC T ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF L AW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE O R WITHOUT APPLICATION OF MIND WOULD BE AN ORDER FALLING IN T HAT CATEGORY. THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REVENUE THE SUPREME COURT HELD IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUPREME COURT (HEA D NOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PA SSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CON SEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREA TED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE FOR EXAMPLE WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. ITANOS.465 TO 469 OF 2010 VALLURI DAS KAKINADA & OTHE RS PAGE 6 OF 7 THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAINED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA LTD. [2007] 295 ITR 282. 7. COMING TO THE FACTS OF THE CASE WE FIRST NOTI CE THAT THE LEARNED CIT HAS RELIED ON THE DIRECTIVES OF CBDT ISSUED IN THE LETTER DATED 06-10-2009 WHICH IS APPARENTLY ISSUED AFTER THE COMPLETION OF THE IMPUGNED ASSESSMENT ORDERS. SECONDLY THE LEARNED CIT HAS O PINED THAT THE EXIT OPTION SCHEME DOES NOT FULLY COMPLY WITH THE RULE 2 BA OF THE INCOME TAX RULES AND ACCORDINGLY HELD THAT THE EX-GRATIA PAYME NT RECEIVED UNDER THE SAID SCHEME WILL NOT BE ENTITLED TO EXEMPTION UNDER SECTION 10(10C) OF THE ACT. HOWEVER THE CASE OF THE LEARNED A.R IS THAT THE LEARNED CIT HAS FAILED TO CONSIDER THE SUBSEQUENT CIRCULAR ISSUED B Y THE STATE BANK OF INDIA WHEREIN THE LACUNAE POINTED OUT BY THE LEARNED CIT HAS BEEN FULFILLED. 8. APART FROM THE ABOVE WHAT IS REQUIRED TO BE S EEN IN A PROCEEDING UNDER SECTION 263 IS WHETHER THE VIEW OF THE ASSESS ING OFFICER IS A PLAUSIBLE VIEW AND IS SUSTAINABLE IN LAW. AT THE TIME WHEN THE ASSESSMENT ORDER WAS PASSED THE LETTER DATED 06 TH OCTOBER 2009 OF CBDT WAS NOT ISSUED AND HENCE THE ASSESSING OFFICER COULD NOT HAVE REFERRED TO IT. AS POINTED OUT EARLIER THE ASSESSING OFFICER HAS COMPARED THE FAC TS OF THE INSTANT CASES WITH THE DECISION OF ITAT LUCKNOW IN THE CASE OF A NANT KUMAR AGARWAL (SUPRA) AND FINALLY CAME TO THE CONCLUSION THAT THE SE ASSESSEES ARE ENTITLED FOR EXEMPTION UNDER SECTION 10(10C) OF THE ACT. HENCE IN OUR VIEW THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIE WS AND IN THESE CIRCUMSTANCES THE IMPUGNED ASSESSMENT ORDERS CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE ON THE BASIS OF A SUBSEQUENT LETTER. OUR ATTENTION WAS DRAWN TO THE LETTER ISSUED BY THE CBDT. WE NOTICE THAT THE CBDT HAS ISSUED THE SAID LETTER BY PLACING RELIANCE ON THE RECITALS OF THE SAID SCHEME. HOWEV ER THE ASSESSING OFFICER IN THE INSTANT CASES HAVE COMPARED THE FACTS WITH THE FACTS OF THE CASE OF ANANT KUMAR AGARWAL (SUPRA) AND ON BEING SATISFIE D WITH THE PARITY OF FACTS ALLOWED THE CLAIM OF THE ASSESSEES. IN THESE CIRCUMSTANCES WE DO ITANOS.465 TO 469 OF 2010 VALLURI DAS KAKINADA & OTHE RS PAGE 7 OF 7 NOT FIND ANY JUSTIFICATION IN INITIATING PROCEEDING S UNDER SECTION 263 OF THE ACT IN THE HANDS OF THESE ASSESSEES. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LEARNED CIT PASSED UNDER SECTION 263 OF THE ACT IN THE HANDS OF THESE ASSESSEES. 9. IN THE RESULT ALL THE APPEALS OF THE ASSESSEES A RE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 07-12-2010 COPY TO 1 SHRI VALLURI DAS DOOR NO.4-61 MADHURA NAGAR KAK INADA 2 SMT. VVSK SATYA RATNAM D.NO.69-17-31 RAVINDRANA GAR SBI COLONY KAKINADA 3 SHRI P. ANJANEYULU D.NO.7-2-4A NEAR RAILWAY GATE NAGESWARA RAO STREET RAMARAOPET KAKINADA 4 SHRI KANCHERLA SIVARAM D.NO. 19-1-329 SBI COLONY PEDDAPURAM 5 SHRI D.G. RAJESWARA RAO D.NO.18-6-15/1 AMBATIVAR I STREET AYODHYARAMAPURAM SAMALKOTA 6 THE ITO WARD-1 KAKINADA 7 THE CIT RAJAHMUNDRY 8 THE DR ITAT VISAKHAPATNAM. 9 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM