Bijay Kumar Agarwal Vs ITO (ITAT Kolkata)
Summary: The Kolkata Bench of the Income Tax Appellate Tribunal considered an assessee’s appeal concerning alleged double taxation of maturity proceeds received from two Keyman Insurance policies for Assessment Year 2017-18. The assessee originally filed his return on 04.12.2017 and revised it on 07.07.2018, declaring total income of ₹50,07,740. While processing the return under Section 143(1) of the Income Tax Act, 1961, the Centralized Processing Centre computed total income at ₹1,68,83,670 after adding ₹1,18,75,930 towards LIC maturity proceeds of Keyman Insurance Scheme under the head “Income from Other Sources”. The assessee maintained that the proceeds had already been offered to tax under the head “Income from Salary”. A subsequent rectification order under Section 154 dated 30.01.2020 made no change to the addition. The Addl/JCIT(A) dismissed the assessee’s appeal after observing that corroborative evidence had not been furnished along with Form No. 26AS and that no regular salary income had been shown.
Before the Tribunal, the assessee sought remand of the issue to the Assessing Officer, contending that the Keyman insurance maturity proceeds had already been included under “Income from Salary” and were again added under “Income from Other Sources”, resulting in double taxation of the same receipt. The Statement of Facts recorded that two policies had yielded maturity amounts of ₹39,17,322 and ₹79,62,500, totalling ₹1,18,79,822, on which TDS of ₹1,18,798 had been deducted. The policies had originally been taken by Esquire Finvest and Trading Private Limited and Shree Jhalaria Dealers Private Limited. The assessee stated that he had paid the surrender value, the policies were transferred to his name, and the difference between the maturity amount and acquisition cost was shown under the salary head.
The Department relied upon the appellate order but did not oppose the assessee’s request for remand. Considering the submissions, record and circumstances, the Tribunal held that, in the interest of justice and fair play, the assessee should receive a proper opportunity to substantiate his claim. It accordingly set aside the orders of both the Addl/JCIT(A) and Assessing Officer and remanded the issue to the AO for de novo computation after considering the assessee’s explanation and evidence concerning the alleged addition of the same income twice. The AO was also directed to recompute consequential interest. The assessee was to receive a reasonable opportunity of being heard and was directed not to seek unnecessary adjournments. The grounds were partly allowed for statistical purposes, and consequently the appeal was partly allowed for statistical purposes.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT KOLKATA
This appeal filed by the assessee is against the order of the Addl/JCIT(A)- 1, Guwahati [hereinafter referred to as Ld. ‘Addl/JCIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 25.07.2025.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. That Ld. Assessing Officer has erred in treating the proceeds received from LIC under the income head “Income from Salary” and “Income from Other Sources”. Same Income has been taxed twice. The same needs to be corrected and due relief be granted.
2. The interest u/s 234A, B and C should also be deleted which are in nature consequential effect of the wrong addition made on account of maturity proceeds of the insurance policies.
3. The Appellant craves leave to add, alter and submit further explanations and documents at the time of hearing of Appeal Petition.”
3. Brief facts of the case are that the assessee had filed the return of income for AY 2017-18 originally on 04.12.2017 and revised the return of income on 07.07.2018 declaring total income at ₹50,07,740/-. The Centralized Processing Centre processed the return u/s 143(1) of the Act and computed the total income at ₹1,68,83,670/- after making an addition of ₹1,18,75,930/- towards LIC maturity proceeds of “Keyman Insurance Scheme” under the head of income from other sources, despite the assessee claiming that the proceeds had already been offered to tax under the head of income from salary. The Assessing Officer (hereinafter referred to as Ld. ‘AO’) subsequently passed a rectification order u/s 154 of the Act dated 30.01.2020, but made no changes to the aforementioned addition. Aggrieved with the rectification order, the assessee filed an appeal before the Ld. Addl/JCIT(A), who observed that the assessee did not furnish corroborative evidences along with the copy of Form No. 26AS to substantiate the claim, and noted that no regular income from salary had been shown. Accordingly, the Ld. Addl/JCIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.
4. Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.
5. Rival contentions were heard and the submissions made have been examined. The Ld. AR requested that the issue may be remanded to the Ld. AO. for examination as the assessee had already included the maturity proceeds Keyman insurance policy under the head “Income from salary” and the sale proceeds have again been added under the “Income from Other Sources”, thereby resulting in double taxation of the same receipt.
6. The Ld. DR relied upon the order of the Ld. Addl/JCIT(A) and requested that the same may be upheld.
7. We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). In the Statement of Facts filed with Form No. 36, the assessee has mentioned as under:
“Assessee is the Director of Two company Esquire Finvest and Trading Private Limited and Shree Jhalaria Dealers Private Limited. Return of Income for the Assessment Year 2017-18 originally submitted on 04-12-2017. Due to mismatch notice, Return of Income revised on 07.07.2018 declaring an income of Rs. 50,07,740/-. During the relevant Assessment Year, the appellant received LIC maturity of two policies Rs. 39,17,322/- and 79,62,500/- totaling to Rs 11879822 on which TDS of Rs 118798 was deducted. The appellant had received this policy under Key man policy from Companies namely Esquire Finvest and Trading Private Limited and Shree Jhalaria Dealers Private Limited. The proceeds received have been shown under Income from Salary and due tax has been computed and paid. Ld. Assessing Officer has considered our computation of taxable income and taken the maturity amount under the income head “Income from other sources”. AO has also imposed surcharge as applicable due to addition exceeded one crore limit of income. In this process the maturity amount has been taxed twice. Hence, Assessee aggrieved and appeal.”
8. Before the Ld. CIT(A), the assessee had submitted that the two companies had taken two Key Man policies in his name in December 2011, the assessee paid the surrender value and transferred the same in his name. The maturity amount had been received and the difference between the maturity amount and the cost of acquisition was shown under the head of Salary but the CPC, Bengaluru added the same against the Income from Other Sources on the basis of Form No. 26AS. It was submitted that the rectification application filed was also not allowed. It was requested to remand the mater before the Ld. AO so that proper explanation could be filed. The Ld. DR relied upon the order of the Ld. CIT(A) but did not oppose the request of the assessee.
9. We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). In the interest of justice and fair play it was considered by the Bench that the request of the assessee to set aside order of the Ld. CIT(A) and remand the matter before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, both the orders of the Ld. Addl/JCIT(A) as well as the Ld. AO are set aside and the issue is remanded before the Ld. AO for making computation of the income de novo after considering the explanation/evidence of the assessee relating to the same income being added twice and consequently, recompute the interest levied. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission he wants to make in support of his grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.
10. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 8th September, 2026.
