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TMI Blog2018 (12) TMI 1488X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming addition of Rs. 5,00,000/-received Baroda Cricket Association under the head income from Profession under section 28 of the Income Tax Act,1961. 4. The learned CIT(A) failed to appreciate that Circular No.447 dated Jan 22, 1986 was effective when the return for the year under consideration was filed, which provided that impugned amounts will not be liable to tax. 5. The appellant craves to add, alter, modify or substitute any ground of appeal at the time of hearing." 2.1 Assessee also raised Additional ground and the same reads as under: "Whether on the facts and the circumstances of the case, the order of reassessment u/s.147 is valid in law when reasons recorded were not provided to the assessee and the opportunity to raise objections was not allowed to the assessee. The reassessment proceedings therefore become invalid in law for not complying with the mandatory procedure as laid down by Supreme Court in GKN Driveshaft (India) Ltd. Vs. ITO 259 ITR 19. It is respectfully submitted that the above ground of appeal is purely legal in nature and goes to the matter may kindly be admitted and decided on merits." 3. Briefly stated relevant facts of the assessee incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Governments for the specified purposes in public interest. Relevant provisions read as under : "(17A) any payment made, whether in cash or in kind,- (i) in pursuance of any award instituted in the public interest by the Central Government or any State Government or instituted by any other body. and approved by the Central Government in this behalf; or (ii) as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest;] CBDT issued Circular No.02/2014 (F.No.199/01/2014-ITA-I) u/s.10(17A) of the Act and also CBDT Circular No.447 (F.No.199/1/86-IT (A-1) dated 22-01-1986 and the same was clarified vide the Circular No.02/2014 that "awards received by a sportsman, who is not a professional, will not be liable to tax in his hands as the award will be in the nature of a gift and/or personal testimonial". 4. In the First Appellate proceedings, the CIT(A) confirmed the additions on the merits. Aggrieved with the order of CIT(A), the assessee is in appeal before the Tribunal with the grounds/additional grounds extracted above. 5. Before us, on the additional ground relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground challenging the validity of the reassessment proceedings by taking a contention that the reasons recorded for the reopening were not provided to the assessee and the opportunity to raise the objections was not allowed to the assessee by the AO. 3. In this regard it is humbly submitted that the above stated claim of the assessee is patently wrong and is in contradiction to the information available in the assessment records. The assessee during the assessment proceedings made a request to the AO vide letter dated 19.08.2015 to make him aware of the reasons recorded for the reopening of his case. In response to this request of the assessee the AO during the course of hearing on 28.08.2015 duly made him aware of the reasons for reopening and the same were noted down in writing by Sh. D.Y. Pandit, Advocate, the AR of the assessee. Furthermore during the course of hearing on 28.08.2015, the AR after noting down the reason and understanding them submitted his no objection to the reason recorded to the AO. These facts are duly noted in the order sheet entry dated 28.08.2015, (duly signed by the AR and the AO).The relevant part of the order-sheet entry is reproduced in verbati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we are of the opinion that the additional ground raised by the assessee is required to be admitted for adjudication by virtue of binding decisions on the same. 12. We heard both the parties on this limited issue of validity of reassessment proceedings and perused the orders of the Revenue. To start with, regarding furnishing of reasons recorded by the AO, we find there is evidence to demonstrate the fact of communicating the reasons to the assessee and the Ld. AR for the assessee acknowledged the same. In this regard, we find the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO and others (2002) Supp(4) SCR 359 has observed as under: "We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a spea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment, and does not mean a purely subjective satisfaction on the part of the ITO. Where live link between the material before the ITO, and the belief he was to form regarding escapement of income, is missing, such material was stated to be not sufficient for forming belief, and same view was taken in Gangasharan's case. Then, applying these judgments, it has been found, by the learned Tribunal, that one of the conditions necessary for issuance of notice under Sec.148, being under-statement of income of the assessee, is not fulfilled. It has been held, that in order to bring an item within the purview of Sec.147, it is of utmost importance, that the assessing officer should have reason to believe, based on relevant and cogent material, that such income has escaped assessment. It has been found, that there was no material direct or indirect, available with the assessing officer, which could show, that the receipt of donations, amounting to Rs. 30,16,598, was without any specific direction of corpus fund. The assessee has shown the receipts, as having been received in the corpus fund, coupled with the report of the auditor. The assessing officer had not inquired into the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of income. In the order of learned CIT(A), he has distinguished between the words "reward" and "award", of course with reference to Section 10(17A). We have already stated that Section 10(17A) is not applicable where the above Circular is applicable. We further state that if we read the Circular as a whole, it is clear that the purpose of the Circular is to encourage the sportsmen, especially those who are not professional sportsmen. 14. Coming back to the facts of the assessee's case, Shri Abhinav Bindra is the first person in the history of independent India to have won the Olympic Gold Medal. In a country whose population is more than 100 crores, if a sportsman who is not a professional sportsman has won the gold medal for the first time after 60 years of independence of the country and he has been given the awards/rewards/prizes mainly by various governments, local authorities, trusts and institutions and of course some corporate/individuals, a liberal construction of Circular No.447 is required. Considering the facts of the case and the nature and spirit of Circular No.447, we hold that in the case of the assessee, viz., Shri Abhinav Bindra, all the rewards/prizes/g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi Bench of the Tribunal in the case of Navab Mohd. Mansur All Khan [1975] Tax. 40(6)-21 was cited wherein it is held that an award given as "best batsman" did not amount to any professional income. The CBDT has, in a Circular No. 447 [F. No. 199/86- IT(A-I)] dated 22-1- 1986, clarified that awards received by a sportsman who is not a professional will not be liable to tax. As we have pointed out, cricket was not the profession of the assessee, but only a vocation. 9. It may be apposite to refer to the decision of the Madras High Court in the case of CIT v. M.Balamuralikrishna [1988] 171 ITR 447 wherein it is held that amounts received from admirers and fans of a musician in appreciation of his services rendered as a musician are not his taxable income. It has been held that the payment has no nexus to the profession. Here, the assessee was a professional musician. 10. The case of the assessee before us is on a better footing. He is not a professional cricketer. The amounts were given to him by the admirers or lovers of cricket in token of their appreciation of the qualities possessed by the assessee as a cricketer. In the circumstances, we are of the view that the amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bindra, all the rewards/prizes/gifts received by him are covered by Circular No.447 dated 22nd January, 1986 and, therefore, should not be treated as income in his hands. Accordingly, the addition of Rs. 63,10,601/- made by the Assessing Officer and the enhancement of Rs. 2,34,00,000/- made by the learned CIT(A) is deleted." 9. Further, we find that the AO has applied the provisions of section 56(2)(vii)(a) of the Act. The relevant provision of section 56(2)(vii)(a) of the Act reads as under:- "(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 5[but before the 1st day of April, 2017],-- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;" 10. The AO assessed the proceeds of benefit match of the assessee under section 56(2)(vii)(a) of the Act, which is brought in the statue book with effect from 01.10.2009. But we find that this amount represents the gratitude from the fans and followers by attending the benefit match conducting in honor of the assessee, who is a retired cri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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