IN THE ITAT CHENNAI BENCH ‘D’ (Third Member)
R. Natarajan
V/s.
Assistant Commissioner of Income-tax
IT APPEAL NO. 1058 (MDS.) OF 2010 – [ASSESSMENT YEAR 2007-08]
JANUARY 23, 2012
ORDER
Abraham P. George, Accountant Member – This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-VI, Chennai, for the impugned assessment year. The grounds raised by the assessee are reproduced as under:-
The appellant at the time of filing the return for the assessment year 2007-08, in addition to the regular income also admitted a sum of Rs. 4,28,750/- as performance incentive from his employer. A sum of Rs. 1,28,625/- was claimed as tax deducted at source by the employer for the said performance incentive. The case was selected for scrutiny for the assessment year 2007-08 and the income admitted by the appellant was accepted by the assessing officer ended up in the demand of Rs. 2,51,720/-. The reason for the demand is non availability for TDS credit claim of Rs. 1,28,625/-.
On going through the assessment order the appellant realized that the performance incentive which was admitted by him for the assessment year 2007-08 actually belong to the assessment order 2008-09. On seeing the Form 16 given by the company for the assessment year 2008-09 the performance incentive of Rs. 4,28,750/- was included there and the appellant without knowing that it was admitted in the assessment year 2007-08 also admitted in the assessment year 2008-09. In effect the same performance incentive of Rs. 4,28,750/- was admitted both in the assessment year 2007-08 and 2008-09, whereas TDS credit of Rs. 1,28,625/- is available only for the assessment year 2008-09.
The appellant being aggrieved by the order for the assessment year 2007-08 filed on appeal before the Commissioner of Income Tax (Appeals VI) The Commissioner dismissed the appeal inviting reference to 246 of the Income-tax Act, 1961.
The fact remains that the amount Rs. 4,28,750/- has been taxed twice by the Income Tax Department. Hence the appeal.
2. Assessee has also filed an additional ground wherein it assails the action of the CIT(Appeals) in dismissing the appeal in limine.
3. Short facts apropos are that the assessee had filed his return of income for the impugned assessment year declaring a total income of Rs. 14,86,210/-. The said return was accepted in an assessment done under Section 143(3) of Income-tax Act, 1961 (hereinafter called “the Act”) and assessment was completed. Appeal was filed by the assessee against the order of the A.O. wherein its main submission was as under:-
The assessee at the time of filing the return for the assessment year 2007-08 has admitted an income of Rs. 4,28,750/- being performance incentive received from SSL TT Ltd., Credit for tax deducted at source was also claimed for a sum of Rs. 1,28,625/- for the same assessment year. Now, it has been noticed that the assessee’s employer M/s SSL TTK Ltd., has considered the said performance incentive in the subsequent year namely assessment year 2008-09 and has given TDS certificate for the assessment year 2008-09. The assessee in addition to admitting the income of Rs. 4,28,750/- in the assessment year 2007-08 also admitted the same in the assessment year 2008-09. Therefore, the income cannot be taxed in the assessment year 2007-08 and if it is done, the same amount will get taxed twice.
4. However, the CIT(Appeals) was of the opinion that an appeal would lie only when the assessee denied his liability to be assessed. Here, the Assessing Officer had accepted the returned income. According to him, the case had become infructuous and he dismissed the appeal.
5. Now before us, the learned A.R. submitted that assessee had filed his return of income for the impugned assessment year wherein he had shown salary received from M/s SSL TTK Ltd. According to him, Form 16 issued by the said company, placed at page No.7 in paper-book, clearly shows that the income chargeable under the head “Salary” was Rs. 11,67,780/-. However, the assessee had aggregated with this amount, performance incentive of Rs. 4,28,750/- which was given by the said company to him in financial year 2007-08 relevant to the assessment year 2008-09, by mistake. According to him, the said company vide its letter dated 5th July, 2007, placed at page No.10 of paper-book, had informed him regarding performance incentive of Rs. 4,28,750/-. Such letter having been received before filing of the return for the impugned assessment year, assessee by mistake included the performance incentive also in the salary. The corresponding tax was also claimed for credit along with tax deductions on salary of Rs. 11,67,780/-. Learned A.R. submitted that the A.O. while completing assessment, accepted the return but did not give credit for the tax deduction made on performance incentive of Rs. 4,28,750/-. For assessment year 2008-09 the assessee in his return of income once again included the same amount of Rs. 4,28,750/- and for this learned A.R. placed reliance on page No.17 of paper-book which is an annexure to Form 16 issued by M/s SSL TTK Ltd. for assessment year 2008-09. According to him, though the assessee had returned the same amount as a part of his income for the impugned assessment year, the Assessing Officer in the assessment for assessment year 2008-09 also considered it as a part of assessee’s income, whereas as he ought have excluded it, considering the mistake committed by the assessee. Therefore, according to him, the said amount of performance incentive was included twice by the assessee for assessment year 2007-08 as well as assessment year 2008-09 and credit for TDS also claimed both the years. The Assessing Officer had accepted the returns in so far as it related to the salary income for both the years but for assessment year 2007-08, he denied the tax credit on performance incentive. Relying on the decision of co-ordinate Bench of this Tribunal in the case of Ark Investments Ltd. v. ITO [1985] 13 ITD 65 (Mad.), learned A.R. submitted that an appeal was maintainable even where income returned was accepted but there was a subsequent claim that income was not taxable. Relying on para 5 of this order, learned A.R. submitted that even if the assessee by mistake had shown certain receipts as taxable, it would not per se make him liable for tax thereon. As per the learned A.R., an assessee could be taxed only on income which can be included as a part of the total income. Relying on Circular No.14 (XL-35) dated 11.4.1995 issued by CBDT, learned A.R. submitted that Revenue had wrongly taken advantage of assessee’s ignorance, to collect more tax out of his income than was legitimately payable by him. At this juncture, the Bench asked the learned A.R. as to why in the certificate issued by M/s SSL TTK Ltd., placed at page 10 of paper-book, it was mentioned that the performance incentive was being awarded, as done in the past. Or in other words, query posed by the Bench was whether in preceding assessment year there was any performance incentive received and shown by the assessee in his return of income. There upon, the learned A.R. filed a copy of return filed by the assessee for assessment year 2006-07 and submitted that assessee had joined M/s SSL TTK Ltd. only in March, 2006 as an employee and was not in receipt of any performance incentive for financial year 2005-06 from the said company. Learned A.R. submitted that prior to March, 2006 assessee was working with T.V. Sundaram Iyengar & Sons Ltd. and the salary received therefrom along with one month salary received from SSL TTK Ltd. was duly shown in the return of income for assessment year 2006-07. Copy of SARAL tax return for assessment year 2006-07 was placed on record at page No.22 of paper-book. In so far as the statement in the letter of SSL TTK Ltd., regarding past performance incentive, learned A.R. submitted that the said company was using a standardized template for all employees while giving performance incentive, and hence this aberrance.
6. Per contra, learned D.R. submitted that a same amount was admittedly taxed twice both for the assessment year 2007-08 and 2008-09. He further stated that tax credit could be given to the assessee only in the year in which corresponding income was admitted.
7. We have perused the orders and heard the rival contentions. There is no dispute that assessee had filed return for the impugned assessment year which was accepted in a scrutiny assessment done under Section 143(3) of the Act. Assessee by mistake included in the said assessment year, a sum of Rs. 4,28,750/- received as performance incentive in the subsequent year. As per the assessee, such amount was again included by him in the return for the subsequent year and A.O. while completing assessment for the impugned assessment year did not give credit for the TDS relatable to performance incentive. Records placed by the assessee would show that he was in the employment of SSI TTK Ltd. only from March, 2006 (paper-book page No.28) and prior to that he was with T.V. Sundaram Iyengar & Sons Ltd. (paper-book page Nos.23 to 27). In assessment year 2006-07 relevant to previous year ending 31.3.2006, assessee had shown in his return of income salary received from both these concerns. Performance incentive of Rs. 4,28,750/- was received by the assessee on 5th July, 2007 vide letter of SSL TTK Ltd. placed at page 10 in paper-book. Return for the impugned assessment year was filed by the assessee after 5th July, 2007. Therefore, there is every chance that the assessee had by mistake included the said amount in his income for the impugned assessment year on a mistaken impression that the amount had to be considered for assessment in the impugned assessment year. The A.O. while accepting the return as filed by the assessee, obviously did not give credit for tax on performance incentive. Whatever be the situation, it is clear that same amount was included twice as income of the assessee, once for assessment year 2007-08 and again for assessment year 2008-09. Co-ordinate Bench in the case of Ark Investments Ltd. (supra) has clearly held that an assessee can file an appeal if he considers himself to be aggrieved by the total income assessed or tax determined, on account of some amount of income having been taxed which he believed to be not taxable, even though he had returned it as his income under an erroneous or mistaken view of the law. Here, the assessee was clearly under a mistake when he included performance incentive in his return of income for the impugned assessment year while the said amount was received in the subsequent year. As rightly relied on by the learned A.R., Circular No.14 of CBDT clearly emphasizes that the Revenue should not take advantage of an assessee’s ignorance. One of the canons of taxation is that tax is to be collected from a subject as per law, and not a pie more or not a pie less. The A.O. ought have excluded the sum of performance incentive while completing assessment under Section 143(3) of the Act, since the said amount was received by the assessee in the subsequent year. He was aware that the said amount was received by the assessee in the next year, as is clear from the fact that TDS credit was not given by him for the impugned assessment year on the performance incentive. Though the CIT(Appeals) dismissed the appeal of the assessee in limine, we are not inclined to remit the issue back to him, all the facts being on record and not being disputed by the D.R. In any case, the primary duty of any Tribunal established under a statute is to ease the regours of procedure and render substantial justice without taking refuge under cumbersome technicalities, which would defeat the very purpose of its formation. We are, therefore, of the opinion that to meet the ends of justice, the amount of Rs. 4,28,750/- shown by the assessee as performance incentive has to be excluded from the assessee’s total income for impugned assessment year. Directed accordingly.
8. In the result, the appeal filed by the assessee stands allowed.
U.B.S. Bedi, Judicial Member. – Despite best persuasion of myself, I am not able to agree with the finding and conclusion as drawn by the Id. Accountant Member and I write my order as under:
10. Facts indicate that the assessee declared income of Rs. 14,86,210/- in his return filed on 09.07.2007 relevant to the assessment year 2007-08. The said return was processed under section 143(1) and the case was selected for scrutiny and the notice under section 143(2) was issued. The Id. AR of the assessee appeared before the Assessing Officer on the dates of hearing on 07.12.2009, 11.12.2009 and 15.12.2009, details were furnished as called for in respect of mutual fund investment, which was claimed to be out of salary earning and accumulation of saving bank account about which necessary documentary evidences were produced. The assessment was completed accepting the returned income vide order dated 31.12.2009 giving credit of taxes to the extent of Rs. 2,29,841/- as TDS and Rs. 71,690/- as self-assessment tax, thereby demand of Rs. 2,51,720/- was raised as per calculation sheet attached in the assessment order.
11. The assessee filed appeal against this order, through which the assessee challenged the order of the Assessing Officer by raising a ground that the Assessing Officer should tax the incentive amount in the assessment year 2008-09 and not for the assessment year 2007-08 and following reasons were given:
“The assessee at the time of filing the return for the assessment year 2007-08 has admitted an income of Rs.4,28,750/- being performance incentive received from SSL TTK Ltd., Credit for tax deducted at source was also claimed for a sum of Rs.1,28,625/-for the same assessment year. Now, it has been noticed that the assessee’s employer M/s. SSL TTK Ltd., has considered the said performance incentive in the subsequent year namely assessment year 2008-09 and has given TDS certificate for the assessment year 2008-09. The assessee in addition to admitting the income of Rs. 4,28,750/- in the assessment year 2007-08 also admitted the same in the assessment year 2008-09. Therefore, the income cannot be taxed in the assessment year 2007-08 and if it is done, the same amount will get taxed twice.”
11.1 During the hearing of the appeal, the Id. Counsel for the assessee submitted that the assessee has wrongly paid tax and shown income with respect to incentive amount in the return. The assessee also claimed that although the Assessing Officer has accepted the return on the same income, but amount is added twice as the assessee has offered such income for the assessment year 2008-09 also.
12. The Id. CIT(A), while considering, but not accepting the appeal of the assessee has concluded to dismiss the appeal as per para 4.1 of his order, which is reproduced below:
“4.1 Reference is invited to section 246A of the I.T. Act and it is noticed that CIT(A) can only alter, reduce, annul and enhance the order of the Assessing Officer. The appeal lies only when the assessee denies his liability to be assessed and in the instant case the AO has accepted the returned income and there is no denial of liability. When there is no liability, the case becomes infructuous and the appeal is dismissed.”
13. Still aggrieved, the assessee filed further appeal and contested in the memorandum of appeal that the assessee, at the time of filing of the return for 2007-08, in addition to regular income also admitted a sum of Rs. 4,28,750/- as performance incentive from his employer. A sum of Rs. 1,28,625/- was claimed as tax deducted at source by the employer for the said performance incentive. The case was selected for scrutiny for the assessment year 2007-08 and the income admitted by the assessee was accepted by the Assessing Officer, which ended up in the demand of Rs. 2,51,720/-. The reason for the demand is non-availability for TDS credit claim of Rs. 1,28,625/-. On going through the assessment order, the assessee is stated to have realized that the performance incentive which was admitted by him for the assessment year 2007-08 actually belongs to the assessment order 2008-09. On seeing the Form 16 given by the company for the assessment year 2008-09, the performance incentive of Rs. 4,28,750/- was included there and the assessee without knowing that it was admitted in the assessment year 2008-09 also admitted in the assessment year 2007-08. In effect the same performance incentive of Rs. 4,28,750/- was admitted both in the assessment year 2007-08 and 2008-09, whereas TDS credit of Rs. 1,28,625/- is available only for the assessment year 2008-09. The assessee being aggrieved by the order for the assessment year 2007-08 filed an appeal before the Id. CIT(A) and the Id. CIT(A) dismissed the appeal inviting reference to section 246A of the Income-tax Act, 1961. The fact remains that the amount Rs. 4,28,750/- has been taxed twice by the Income Tax Department, therefore the assessee preferred the appeal.
14. At the time of hearing of the appeal, the assessee also filed additional ground. Based on the Tribunal’s decision, the same was found to contain same issue as raised in the memo of appeal except relying upon our Tribunal decision which the assessee could otherwise raise, so the same is not considered.
15. At the time of hearing of the appeal, the assessee’s counsel has relied upon the written submission as well as authorities cited therein to plead that the same amount, which has been taxed during the assessment year 2007-08 has again been offered for taxation in 2008-09 and assessed, therefore, the same is being taxed twice, which is not permissible under law, otherwise also, though intimation about incentive amount pertaining to the financial year 2006-07 was communicated to the assessee by his employer vide letter dated 05.07.2007, the amount of incentive was determined in the next year relevant to the assessment year 2008-09, the assessment with respect to the said amount could only be made in the assessment year 2008-09 and not in 2007-08. The assessee, mistakenly offered the said amount in the assessment year under consideration and claimed TDS with respect to the said amount and the Assessing Officer has accepted the returned income, but did not give credit to the TOS pertaining to the incentive amount and it is a settled law that credit of TOS could be given in the year in which the income has been assessed. So, on this score also, the order of the Assessing Officer is not proper and justified. As far as first appellate authority is concerned, the assessee is denying its liability to tax with respect to the incentive amount, so the appeal was maintainable and even if the claim is made before the first appellate authority the same could be allowed. At this juncture, the assessee’s counsel was asked to clarify if he was of the opinion that this amount is not taxable in 2007-08, then why a revised return was not filed to exclude such amount when the assessee himself offered the same amount for the assessment year 2008-09 in the return for that year filed on 15.07.2008 with TDS certificate etc. The assessee simply insisted that since incentive amount, though pertaining to the year under consideration, it is taxable in the subsequent year, because the same was determined and communicated to the assessee in the subsequent year. Since legitimate and proper tax has to be collected from the assessee, therefore, even if revised return was not filed and such amount was not excluded from the total income before the Assessing Officer, the Id. CIT(A) could very well decide the issue without going into the ground of non- maintainability of the appeal and the assessee’s appeal should not have been dismissed. It was prayed for exclusion of income, taxed twice.
16. The Id. DR submitted that the best course for the assessee was to file revise return if he wanted to exclude such income, when he came to know about TDS on such amount in next year on filing of his return for the subsequent year, which event took place on 15.07.2008, so he could revise his income by filing revised return, but he opted not to do so, despite having attended on number of occasion during hearing before the Assessing Officer during the proceedings for the assessment year 2007-08 when the assessment order under section 143(3) was passed on 31.12.2009. The assessee also could not be able to establish that there is no tax liability in his case. Therefore, the action of the Id. CIT(A) in dismissing the appeal of the assessee is proper and justified, which should be further confirmed. The Id. DR has relied upon the decision in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1 (SC)] to plead that in the absence of having filed revised return of income, the assessee could not claim any deduction exclusion by way of letter addressed to the Assessing Officer or letter addressed to the AR. So, the action of authorities below should be confirmed.
16.1 To counter the submission of the Id. DR, the Id. Counsel for the assessee submitted that this decision pertains to the proceedings before the Assessing Officer and not before the Id. CIT(A) or any higher forum. So, it cannot be held to be applicable in this case.
17. After having considered the arguments of both the sides, material on record and precedents as relied upon by rival sides, it is found that the assessee declared income of Rs. 14,86,210/- in his return filed on 09.07.2007 relevant to the assessment year 2007-08. The said return as processed under section 143(1) and the case selected for scrutiny and after due notice and considering the reply and material on record, the Assessing Officer accepted the returned income. It is not in dispute that the assessee himself declared the incentive income of Rs. 4,28,750/- as performance incentive for the financial year 2006-07 relevant to the assessment year 2007-08 making a claim of TDS in respect to the said income at Rs. 1,28,625/- on the basis of communication received by the assessee from SSL TTK Ltd. dated 05.07.2007, which letter has been placed by the assessee in his paper book at page 10 and the same reads as under:
SSL – TTK Limited
July 5,2007
Mr. R Natarajan Chennai
Dear Mr. Natarajan,
As in the past, we are pleased to award Performance Incentive for your performance during 2006-07 as follows:
