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TMI Blog2017 (8) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... la [2015 (9) TMI 80 - DELHI HIGH COURT], no addition could have been made in the year under consideration. The ground No. 1 of the appeal is accordingly allowed. Addition for various deductions claimed by the assessee out of gross salary - Held that:- Regarding the pension, the Ld. CIT-A held that it will give direct benefit to the employee as deduction cannot be called as diversion of income, accordingly upheld the addition in respect of deduction towards pension. Regarding the other deductions like cantonal tax, insurance etc, the Ld. CIT-A has directed the Assessing Officer to examine whether those deductions will directly benefit the employee and decide accordingly whether it is diversion of income. The ld. CIT-A has laid benefit test to determine the diversion of income and directed the AO to verify the facts and decide the matter accordingly. In our opinion, finding of the Ld. CIT-A on the issue in dispute is well reasoned and no further interference on our part is required. Moreover, the finding of the Ld. CIT-A on the issue in dispute in assessment year 2011-12 has not been challenged by the assessee before the Tribunal. Thus, the rule of consistency also demands that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,35,951.00 to the salary income of the assessee on the merits of the case. 3. That without prejudice to the above grounds of appeal, on the facts and in the circumstances of the case, the learned CIT (A) is not justified in law in confirming the charge of interest u/s 234B. The appellant craves leave to add, alter, amend or vary from the grounds of appeal at or before the time of hearing. 3. The facts in brief of the case as culled out from the order of the lower authorities are that a search and seizure action under section 132 of the Income-tax Act, 1961 (in short the Act ) was carried out at the premises of the assessee on 21/01/2011 and notice under section 153A of the Act was issued on 09/01/2012. In response, the assessee filed return of income on 24/01/2012, declaring total taxable income of ₹ 70,86,640/- including income from salary. In the scrutiny proceedings, the Assessing Officer observed that, the assessee received gross salary of CHF 46,144/- from M/s San Lorenzo AG, Switzerland and the employer made deduction of federal pension, Social Security charges, accidental insurance, group health insurance, cantonal pension, personal tax and fixed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 153A proceedings for the year under consideration. However, the Ld. CIT-A held that if there is incriminating evidence for one assessment year covered under search assessment, the Assessing Officer has power to assess total income under section 153A in respect of all assessment years covered under search assessment, following the decision of the Hon ble Delhi High Court in the case of Anil Kumar Bhatia in ITA No. 1626, 1632, 1998,2006, 2019 2020 of 2010 dated 07/08/2012. 3.4 As far as merit of the issue is concerned, the Ld. CIT-A followed his finding in assessment year 2011-12, wherein it is held as under: The case laws relied upon by the learned AR is in respect of social insurance deduction in case of all French National in the case Gallotti Raoul and Citizen tax in the case of NHK Japan Broadcasting corporation. Both the deductions are made for the benefit of all the citizen of the respective country. No benefit accrues to the employee from these deductions directly. In those circumstances, it has been held that it is diversion at source, therefore, not taxable. In present case, first narration for deduction is contribution for pension fund. Contribution for pens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2011-12 and submitted that the Ld. CIT-A deleted the addition for unexplained investment in jewellery and sustained 10% of the unexplained investment towards making charges, which has also been deleted by the Tribunal and now no addition stands towards unexplained jewellery. 7. We have heard the rival submission and perused the relevant material on record. We note that decision of the Hon ble Delhi High Court in the cases of Anil Bhatia (supra) and Filatex India (supra) were considered by the Hon ble Delhi High Court in the case of Kabul Chawla (supra) and after considering other cases on the issue in dispute, the Hon ble Delhi High Court summarizes the legal position as under: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was pending has not been disputed by the Ld. CIT(DR). The only dispute is with regard to incriminating material. We find that no addition in respect of unexplained jewellery was made during the year and the addition made in respect of assessment year 2011-12 has already been deleted by the Tribunal in para-No. 8.3 of order in ITA No. 5296 and 5369/Del/2013 for assessment year 2011-12. The Ld. CIT(DR), however, contested that fact of benefit in respect of pension was unearthed during search proceedings, however he could not substantiate his statement with documentary evidence. The Assessing Officer has also not mentioned any document found during the course of search evidencing that assessee obtained benefit of pension out of the salary income. We observe that the fact of deduction reduced out of the gross salary was came to the notice of the Assessing Officer in assessment proceeding only and thus it cannot be said that addition made in respect of deductions claimed by the assessee, was on the basis of any incriminating material unearthed during the course of search. Thus, respectfully following the decision of the Hon ble Delhi High Court in the case of Kabul Chawla, no addition c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion contribution in the year under consideration would amount to double taxation. 14.2 The Ld. CIT(DR), on the other hand, relied on the order of the Ld. CIT-A. 14.3 We have heard the rival submission and perused the relevant material on record. On the issue in dispute in the year under consideration, the Ld. CIT-A has followed his finding in assessment year 2011-12. The Ld. CIT-A in assessment year 2011-12, after considering the submission of the assessee in the cases relied upon has decided the issue in dispute as under: 33 Findings:- I have considered the assessment order, written submissions and oral arguments of Ld. AR. He has argued that the deductions are on account of federal pension, social security charges, accidental insurance, group health scheme, cantonal pension, personal and fixed annual cantonal tax. These charges are overriding charges and diversion at source and not application of Income. He argued that these statutory levies are non returnable. In support of his arguments, he relied upon the decision of Galloti Roul Vs ACIT 61 ITD 453 (Prom) and NHK-Japan Broad Casting Corporation Vs. CIT 101 TTJ 292 (Del) approved by Hon ble Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction will directly benefit the employee if so, it is not diversion of income, if not then it is diversion of income. In case, it is diversion of income, addition should be deleted. As a result, this ground of appeal is partly allowed. 14.4 In the year under consideration, the Ld. CIT-A also considered other arguments of the assessee and held as under: I have given the findings that if the appellant derives benefit from such statutory deduction, then the same is not diversion of income. The Ld. AR has argued for reconsideration of the decision mainly on the ground that such deduction are in voluntary, non returnable and go to foreign government and not for exclusive advantage of the assessee. I do not think that there is any scope for reconsideration of my earlier decision. In my view if the appellant derives any benefit from such deduction which may be in future as per the plan of foreign government, then such deduction cannot be said diversion of income. Ld. AR's argument of double taxation once now and other time at the time of availing such benefit is also misplaced as term of such benefit and quantum is not known. Accordingly, I direct the ld. Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed upto High Court in favour of assessee and the same was reversed by hon ble Supreme Court. In that perspective, the decision was delivered. In present case, the facts are not similar as the issue of addition on account of statutory deduction has not proven to be on the basis of change of opinion. Second arguments of Ld. AR is that as per section 234B(3) interest cannot be charged in view of the decision of hon able ITAT. Hon able ITAT has given the verdict in view of provisions of section 234B(3) i.e. interest is chargeable from the date of regular assessment while completing the assessment u/s 153A or 147. With great respect, in my view, where the reassessment is made u/s 147 or u/s 153A is made for the first time, the interest u/s 234B is covered by 234B(1), the same should be regarded as regular assessment. This vies is supported by Explanation 2 to section 234B(1) reproduced as under: Explanation 2- Where, in relation to an assessment year, an assessment is made for the first time under section 14710 [or section 153A], the assessment so made shall be regarded as a regular assessment for the purpose of this section. Accordingly, the interest u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and in the circumstances of the case, a) the learned CIT (A) has erred in law in not deleting the charge of the interest u/s 234A (mentioned as 244A) and b) is not justified in law in confirming the charge of interest u/s 234B. The appellant craves leave to add, alter, amend or vary from the grounds of appeal at or before the time of hearing. 18. The facts in brief of the case are that a search and seizure action under section 132 of the Act was carried out on 21/01/2011 at the premises of the assessee and in response to notice under section 153A of the Act issued by the Assessing Officer on 09/01/2012, the assessee filed return of income on 24/02/2012 declaring total income of ₹ 76,07,621/- including the income from salary. The assessee received gross salary of CHF 65831 from M/s San Lorenzo AG Switzerland and M/s Baba International AG. In the return of income the assessee declared net salary of CHF 56413. In assessment proceeding, the assessee contested that CHF 9418 deducted by the employer against federal pension, Social Security charges, accidental insurance, group health insurance, cantonal pension, personal tax on fixed annual cantonal tax wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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