R D CHADHA Y D SEHGAL S N SIKKA AND P C SACHDEV Vs. COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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R.L. Segel, Judicial Member -
(1.) THESE appeals by the assessees, Shri R.D. Chadha [IT Appeal No. 340 of 1979], Shri Y.D. Sehgal [IT Appeal No. 341 of 1979], Shri S.N. Sikka [IT Appeal No. 342 of 1979] and Shri P.C. Sachdev [IT Appeal No. 343 of 1979], directed against different orders of the Commissioner, Delhi-I, and Commissioner, Agra, under Section 263 of the Income-tax Act, 1961 ('the Act'), respectively, dated 28-11-1978, 29-11-1978, 2-12-1978 and 25-11-1978, have been consolidated, heard together and are being disposed of by a common order for the sake of convenience. The years of assessments involved in these appeals are 1972-73 in the case of the assessee, Shri R.D. Chadha, 1975-76 in the case of the assessee, Shri Y.D. Sehgal, 1976-77 in the case of the assessee, Shri S.N. Sikka, and 1975-76 in the case of the assessee, Shri P.C. Sachdev for which the respective previous years ended 31-3-1972, 31-3-1975, 31-3-1976 and 31-3-1975.
(2.) The assessees are the employees of the Food Corporation of India, a public sector undertaking of the Central Government. The assessees were working in different departments of the Government of India and they retired from the Government service on account of their respective permanent absorptions in the Food Corporation of India. The assessee, Shri R.D. Chadha, retired with effect from 30-12-1971, the assessee, Shri Y.D. Sehgal, retired in 1972, the assessee, Shri S.N. Sikka, retired with effect from 9-4-1975 and the assessee, Shri P.C. Sachdev, retired in 1974. On their retirement from the Central Government, each of the assessees received from the Central Government diverse amounts on account of commuted value of one-third pension due to each one of them plus terminal benefit calculated at twice the amount of the commuted value of the pension. When the said payments were made to each of the assessees, no income-tax was deducted from the amount paid to him in respect of the commuted value of one-third pension. Tax was, however, deducted from the amount of terminal benefit paid to each one of the said assessees.
In the income-tax returns filed by the assessees for the years concerned under consideration, each one of them in addition to the income from salary received from the Food Corporation of India in the year concerned returned the amount of the terminal benefit as part of the total income. On the basis of these returns, the ITO concerned completed the assessments of the assessees under Section 143(1) of the Act on the basis of the returns filed. Later on, on the applications made by the assessee under Section 154 of the Act, the ITO concerned passed rectification orders under Section 154 wherein it was held that the entire value of the commuted pension and the terminal benefit paid to each of the assessees was exempt from inclusion in their respective total incomes.
(3.) LATER on, the Commissioners concerned being satisfied that the aforesaid orders passed by the ITO under Section 154 were erroneous in so far as they were prejudicial to the interests of the revenue, issued show cause notices to the assessees as to why the said orders be not revised under Section 263. After cause was shown and the assessees concerned were heard, the Commissioners passed the respective orders under Section 263, wherein it was held that the orders of the ITO under Section 154 were clearly erroneous and prejudicial to the interests of the revenue. Under the powers vested in them the Commissioners under Section 263 cancelled the orders of the ITO under Section 154 and thereby restored the original assessment orders passed by the ITO against the assessees.;
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