Arguments for both sides?
Ritika Verma, is an air hostess in NDLR Airlines of Tanda Group. As per the service agreement, the employer agreed not to deduct tax at source on salary payable to her and in lieu of the fact that she would be promoting the business of NDLR Airlines. During the previous year, her basic salary eas Rs 50,000 pm and DA of Rs 60,000 pm. She was given a 3BHK bungalow by the employer along with HRA of Rs 15,000 pm. While working with the Airline, the assessee had also received a sum of Rs 60,000 as an incentive bonus.
Ritika was always on the air due to her job and she hardly got time to fulfil her obligation under Income Tax Laws. On 31st June, she was in Milan on duty and could not file the ITR on time.
The Assessing officer issued a notice under Sec142(1) of the act, After getting the notice, she requested her employer Gopal Tanda to file the Income tax return for her. On 30th October, Gopal filed the same and signed on her behalf. Since the ITR cannot be filed without PAN card details, Gopal mentioned his own PAN card details.
The Assessing officer on the basis of the ITR filed by Ritika filed under Sec142(1) again served a notice under Sec142(1) to Ritika asking her to report to his office and clarify her positions on various claims and discrepancies in ITR.
Ritika missed the meeting with the Assessing officer claiming a tax exemption for HRA and that the incentive bonus is not taxable under the head of income from salary and further claimed a deduction of Rs 24,560 as expenditure incurred for earning the incentive bonus. She remained silent about her employer filing the ITR on her behalf and quoting his PAN card number in the return.
The Assessing officer went for the Best judgement under sec 144 and rejected all claims of the assesse and imposed a heavy penalty of Rs 20,000 along with 3 months imprisonment.
Gopal Tanda was to pay Rs 10,000 with 6 months imprisonment, Aggrieved, the assessee and others filed an appeal before the Commissioner of Appeals.