COMMISSIONER OF INCOME TAX Vs. A K KHOSLA

JUDGEMENT

(1.) The appellant/revenue has filed the above Tax Case Appeal against the order of the Income Tax Appellate Tribunal, 'A' Bench, Chennai, dated 27.04.2007 in ITA.No.1862/Mds/2004.

(2.) When the appeal came up for admission on 09.03.2010, this Court admitted the same on the following substantial questions of law:

(3.) The brief facts arising out of the case are as under: The assessee/respondent is an individual. He is highly qualified, experienced and an eminent Chartered Electrical Engineer. The assessee/respondent was employed as Chief Executive Officer with the General Electric Company of India Limited, New Delhi. The assessee retired from the above Company on 31.01.2001 on attaining the age of 70. After his retirement, he took up the profession of consultancy. The relevant assessment year is 2001-2002 and the corresponding accounting year ended on 31.03.2001. He has also admitted the income from house property, other sources and long term capital gain. The assessee filed a return of income of Rs.32,13,540/- and also claimed exemption of Rs.22,00,000/- being non-compete fee of a capital nature. The said return was processed under Section 143(1) of the Income Tax Act on 17.03.2003. The assessing officer has also sent intimation under Section 143(1) determining the refund of Rs.8,98,673/- and the same was not granted. Later, the assessing officer enquired the nature of the retirement benefit and sent letter dated 25.07.2003. The appellant also sent reply on 29.07.2003, in which it was stated that the amount of Rs.22,00,000/- received from his former employer was exempted and the same was not taxable. The explanation was not accepted and therefore, the assessing officer was of the view that there is an escape of income and has also issued a notice under Section 148 on 01.08.2003. The assessee has also filed a reply on 15.09.2003 requesting the assessing officer to treat the return filed on 28.06.2001 in response to the notice under Section 148 of the Act. The assessing officer did not accept the contention that the amount of Rs.22,00,000/- was exempted and therefore, held that the same was assessable under Section 147 of the Act. The assessing officer completed the assessment under Sections 143(3) and 147 of the Act determining the total income at Rs.57,28,140/-. While determining the said total income, the assessing officer assessed a sum of Rs.22,00,000/- under the head "salaries" and also estimated the professional income at Rs.4,00,000/- under the head "profession". Aggrieved by that, the assessee has filed an appeal before the Commissioner of Income Tax (Appeals). The said commissioner has dismissed the appeal confirming the order of the assessment. Aggrieved by that, the assessee has filed an appeal before the Income Tax Appellate Tribunal questioning the re-opening as well as the merits of the case. The Tribunal accepting the contention of the assessee, allowed the appeal on merits and upheld the re-opening. The assessee has not filed an appeal challenging the re-opening of the assessment. The revenue alone has filed the present appeal.