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TMI Blog2025 (4) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... arly visible. The petitioner is deprived of an opportunity to present its case not only before the respondent no. 2 but also subsequently before the ITAT. In not affording a reasonable opportunity to the petitioner to present its case had perpetuated from the ex-parte order passed by respondent no. 2 which in our opinion was not noticed by the ITAT in passing the impugned order. 22. It is not disputed that the jurisdictional assessing officer, i.e., respondent no. 2 under the faceless regime passed an ex-parte assessment order, without affording an opportunity to the petitioner of being heard. Thus, evaluation of assessment of the petitioner's income and rejecting the submissions of the petitioner was undertaken also ought to have been appropriately undertaken by following the natural rules of fairness adhering to the principles of natural justice and such infirmity at least should have been addressed by the ITAT in passing the impugned order. 23. A perusal of the impugned order of the ITAT makes it clear that it proceeded to deal with the case of the petitioner on merits as is evident from paragraph 5 of its order. The petitioner submitted that considering the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition in terms of prayer clause (a). 27. We accordingly remand the proceedings to the ITAT, i.e., respondent no. 1 for de novo hearing of the petitioner's appeal filed before it. ITAT shall after hearing the parties, pass fresh orders on merits and in accordance with law, as expeditiously as possible not later than within six weeks from the date of this order made available to the ITAT." 4. Since the assessee in the meantime has expired, the Hon'ble High Court vide order dated 13.03.2025 passed the following order: "1. By this application, the applicant has prayed that she be permitted to bring on record as the legal heir of the deceased petitioner - Vijay Shrinivasrao Kulkarni, who expired on 11 December 2024, during the pendency of this petition when the matter was closed for judgment. 2. Having perused the averments as made in the petition, it is in the interest of justice that the application is allowed. It is accordingly allowed in terms of prayer clause (b). Necessary amendments be carried out during the course of the day. 3. Consequent to the present Interim Application being allowed, the title of the judgment dated 4 February 2025 passed by us, is also requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Co. & has erred in not considering that the payments were made de hors any contract of employment & was paid voluntarily & towards loss of source of income for premature termination of Appellant's employment & the Appellant was legally entitled to change the nature of his claim form Profits in lieu of Salary to the same being Capital Receipts in the course of assessment proceedings. 6. The CIT(A) has erred in completing a balanced assessment impartial of any assumptions & presumption, he is required to co-relate the factual parameters & the legal framework in tandem & decide by his wisdom & uphold rule of law, as he is being a quasi-judicial officer. 7. The Appellant Craves Leave to add, Alter, or amend any of the Grounds of the Appeal, before or during hearing of the Appeal. 7. The Ld. Counsel for the assessee at the outset submitted that the assessee is an employee in the capacity of General Manager with M/s. Pfizer Healthcare India Pvt. Ltd. He filed his return of income on 01.08.2019 declaring total income of Rs. 57,84,740/- after claiming deduction of Rs. 13,22,187/- u/s 89(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). The case was selec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee in rejoinder submitted that since the assessee has already expired and being represented by his wife as legal heir and since the issue is covered in favour of the assessee by various decisions of the Tribunal, therefore, the matter need not be restored to the file of the Ld. CIT(A) / NFAC and a decision should be taken here itself. 14. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We find the Assessing Officer in the instant case rejected the claim of relief u/s 89(1) of the Act of Rs. 13,22,187/- on the income of Rs. 61,59,739/-. A perusal of the full and final settlement calculation / computation of Rs. 37,21,803/- shows that the same consist of Rs. 15,37,387/- in the nature of Ex-gratia (Severance Pay) Rs. 12,00,000/- as Other payments (early bird and group participation incentives) Rs. 7,04,317/- as notice period payout (3 months x monthly gross considered for scheme calculation) and Rs. 2,19,449/- under other earnings. 15. We find identical issues had come up before the Tribunal in the case of other employees of M/s. Pfizer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by the assessee have been examined. As the assessee has submitted corroborative and binding judicial pronouncements in support of his claim that the amount of Rs. 30,49,176/- received by him from his employer at the time of cessation of his employment due to closure of the manufacturing unit was a capital receipt, not subject to tax. The assessee has also placed reliance on various case laws, in support of his above claim, and court has held as under "The amounts received were due to loss of employment & not recurring in nature & are not paid in lieu of any salary hence it does not come under the preview of sec. 17(3)(i) as amount of compensation. The said amounts have not been paid against any services of the assessee. Hence the same is not compensation as contemplated under the provisions of sec. 17(3)(i)." As the various courts have allowed the claim that the amount received at the time of cessation of his employment due to closure of the manufacturing unit as capital receipt during assessment proceedings in the cases referred by the assessee, the AO's has duly accepted the above claims of the respective assessee, which are very similar cases as that of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said that the amount in question was profits in lieu of salary within the meaning of Clause (3) of Section 17. It was not taxable as such. The finding of the Tribunal that the amount was a capital receipt or that it was payment of a casual and non-recurring nature was in the circumstances not necessary. We, hence, do not express any opinion on it. 7. The question of law referred to us in this case, namely : "Whether, on the facts and in the circumstances of the case, the amount of Rs. 24,933 received by the assessee could be treated as income under the charging section or under the section dealing with the computation of income of the assessee ?" 8. is answered in the negative, in favour of the assessee and against the Department." 27. We find the Delhi Bench of the Tribunal in the case of ITO vs. Avirook Sen (supra) at para 12 of the order has observed as under: "12. As the payment of ex-gratia compensation was voluntary in nature without there being any obligation on the part of employer to pay further amount to assessee in terms of any service rule. it would not amount to compensation in terms of section 17(3)(i) of the Act. The impugned addition was rightly delet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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