Shri Kaushik K. Chokshi, Baroda V. The Income Tax Officer, Ward-1(2), Baroda

CO 335/AHD/2014

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3749 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 23-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: PARIN SHAH HEARING; S N SOPARKAR
• Section: 143(3)

Judgement Text

ITA NO.3104/AHD/2014 & CO NO. 335/AHD/2014 ASSESSMENT YEAR: 2011-12 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MADHUMITA ROY JM] ITA NO.3104/AHD/2014 ASSESSMENT YEAR: 2011-12 INCOME TAX OFFICER, WARD 1(2)(4) (OLD WARD 2(4), BARODA. .....APPELLANT VS. KAUSHIK K CHOKSI, .RESPONDENT A-2, JYOTIKUNJ SOCIETY, NEAR MAHESHWARI SOCIETY, HARI NAGAR WATER TANK ROAD, GOTRI ROAD, BARODA 390 021. [PAN : ABEPC 2725 K] C.O. NO.335/AHD/2014 (IN ITA NO.3104/AHD/2014) ASSESSMENT YEAR: 2011-12 KAUSHIK K CHOKSI, .....APPELLANT A-2, JYOTIKUNJ SOCIETY, NEAR MAHESHWARI SOCIETY, HARI NAGAR WATER TANK ROAD, GOTRI ROAD, BARODA 390 021. [PAN : ABEPC 2725 K] VS. INCOME TAX OFFICER, WARD 1(2)(4) (OLD WARD 2(4), BARODA. .RESPONDENT APPEARANCES BY V.K. SINGH FOR THE REVENUE S.N. SOPARKAR & PARIN SHAH FOR THE ASSESSEE HEARING CONCLUDED ON: 09.05.2018 ORDER PRONOUNCED ON : 17.05.2018 O R D E R PER PRAMOD KUMAR, AM: ITA NO.3104/AHD/2014 & CO NO. 335/AHD/2014 ASSESSMENT YEAR: 2011-12 PAGE 2 OF 4 1. THIS APPEAL FILED BY THE ASSESSING OFFICER, AS A LSO CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST LEARNED CIT(A)S ORDE R DATED 26 TH AUGUST 2014, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE IN COME TAX ACT 1961, FOR THE ASSESSMENT YEAR 2011-12. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER ARE A S FOLLOWS: - 1 (A). ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT (APPEALS) MISDIRECTED HIMSELF IN HOLDING THAT AMOUN T RECEIVED DURING THE YEAR AS ADVOCATE FEE IS NOT TAXABLE DURING THE YEAR BY RELY ING ON CASE LAWS ENTIRELY ON DIFFERENT FACTS. 1(B). THE LD. CIT (APPEALS) HAS ERRED IN NOT APPREC IATING THAT IN ALL CASES RELIED UPON BY HIM AMOUNTS RECEIVED WERE IN THE NATURE OF ADVANCE, WHILE IN THE INSTANT CASE THE AMOUNT RECEIVED WAS IN THE NATURE OF FEES AND NEVER MEANT TO BE RETURNED AND IN FACT WERE NEVER RETURNED AS NOTED B Y THE ID. CIT(A) HIMSELF AND THESE ACCRUED AS INCOME AT THE TIME OF RECEIPT. 1(C). WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT(A) ALSO ERRED IN NOT APPRECIATING THAT DEFINITION BY CASH SYSTEM OF ACCOUNTING MEANS THAT ACCRUAL OF INCOME IS BASED ON RECEIPT OF THE SAME AND ASSESSEE CANNOT FO LLOW CASH SYSTEM AND YET NOT ACCOUNT IN THE YEAR OF RECEIPT ON SOME PRESUMED ACCRUAL IN FUTURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (APPEALS) ERRED IN DELETING THE ENTIRE ADDITION OF RS.30,82,286/- MADE ON ACCOUNT OF SUPPRESSION OF RECEIPTS WITHOUT APPRECIATING THE FACT THAT THE BALANCE AMOUNT OF RS.16,85,500/- (30,82,236 - 16,85,500) HAS NOT B EEN OFFERED TO TAX IN SUBSEQUENT YEARS AND THEREBY RESULTING INTO NOT-OFF ERING OF INCOME FOR TAXATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 17,03,564/- OUT OF TOTAL ADDITION OF RS.23,33,564/- ERRONEOUSLY HOLDING IT TO BE ADVA NCE FEES RECEIVED WITHOUT APPRECIATING THE PROPER FACTS OF THE CASE. 3. IN ITS CROSS OBJECTION THE ASSESSEE HAS RAISED T HE FOLLOWING GRIEVANCE:- LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.6,30,000/- MADE BY AO TOWARDS ADVANCE FEES AS IN COME OF THE YEAR UNDER CONSIDERATION THAT IS ACCOUNTED FOR AS ADVAN CE FEES RECEIVED BY THE APPELLANT ADVOCATE. LD. CIT(A) FAILED TO APPREC IATE THAT THE APPELLANT OFFERED SAID ADVANCE FEES TO TAX ON FINALIZATION OF COURT PROCEEDINGS IN THE RELEVANT YEARS. LD. CIT (A) OUGHT TO HAVE HELD THAT ADVANCES RECEIVED FOR FUTURE SERVICES TO BE RENDERED CANNOT TAKE CHARACTE R OF INCOME IN THE YEAR OF ADVANCE ITSELF SIMPLY ON THE BASIS OF FILING OF COURT CASES. IT BE SO HELD NOW. ITA NO.3104/AHD/2014 & CO NO. 335/AHD/2014 ASSESSMENT YEAR: 2011-12 PAGE 3 OF 4 4. WE WILL TAKE UP ALL THESE GRIEVANCES TOGETHER. 5. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE US IS A LAWYER AND HE IS FOLLOWING CASH SYSTEM OF ACCOUNT ING. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THERE IS DISCREPANCY IN FIGURES OF PROFESSIONAL RECEIPTS AS PER 26 AS DETAI LS VIS-A-VIS THE PROFESSIONAL RECEIPTS DISCLOSED BY THE ASSESSEE. THE PLEA OF THE ASSESSEE THAT HE IS ACCOUNTING FOR RECEIPTS ON CASH BASIS WAS REJECTED ON FACTUAL ASPECT AS ALS O ON THE GROUND THAT THE ASSESSEE MUST HAVE CLAIMED THE EXPENSES INCURRED BUT HAS NOT OFFERED THE RELATED INCOME TO TAX. ACCORDINGLY, RS.30,82,286/- WAS ADDED TO THE INCOME RETURNED BY THE ASSESSEE AND CLAIMED TO THE SUPPRESSED RECEIPT. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS SHOWN LIABILITY OF RS.23,33,564/- AS O N 31.03.2011 UNDER THE HEAD ADVANCE FEES RECEIVED OUT OF WHICH RS.6,30,000/ - WAS SHOWN TO HAVE BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER NOTED THAT THESE MONIES HAVE NOT BEEN OFFERED TO TAX EVEN AS RECEIPT BASIS AND IT IS NOT PLAUSIBLE, AS THE ASSESSEE CLAIMS, THAT THESE MONIES WILL BE RETURNED TO THE CLIENTS. HE THUS ADDED THE AMOUNT OF RS.23,33,564/- TO THE INCOME OF THE ASSES SEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AS REGA RDS THE ALLEGED SUPPRESSION OF RECEIPTS OF RS.30,82,286/- THE LEARNED CIT(A) DELE TED THE SAME BY ACCEPTING THE RECONCILIATION OFFERED BY THE ASSESSEE AND AS RS.13 .96,786/- WAS ANYWAY OFFERED TO TAX IN SUBSEQUENT YEARS ON RECEIPT CASH. IT WAS ALSO NO TED THAT ACCORDING TO THE ASSESSEE THE AMOUNT RECEIVED AS ADVANCE CANNOT BE BROUGHT TO TAX IN THE YEAR OF RECEIPT AS THE RELATED SERVICES WERE NOT RENDERED AND THE AMOUNT W AS NOT REALLY EARNED. HOWEVER, SINCE, IN THE OPINION OF THE CIT(A), IT IS NOT A CASE WHERE NO SERVICES ARE RENDERED AND THE ASSESSEE COULD NOT SHOW THAT SUCH ADVANCE WAS EVER REFUNDED TO THE CLIENT. HE THUS UPHELD RS.6.30,000/-, RECEIVED IN THE CURRENT YEAR, AS BEING BROUGHT TO TAX. HOWEVER, SO FAR AS THE OPENING BALANCE OF RS.17,03, 563/- WAS CONCERNED, HE DELETED THE SAME AS IT COULD NOT BE BROUGHT TO TAX IN THIS YEAR. NONE OF THE PARTIES IS SATISFIED. WHILE THE ASSESSEE IS AGGRIEVED OF THE ADDITION OF RS.6,30,000/- BEING RETAINED, THE ASSESSING OFFICER IS AGGRIEVED OF THE DELETION OF A DDITIONS OF RS.17,03,563/- AND OF RS.30,82,286/-. BOTH THE PARTIES ARE IN APPEAL BEFO RE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. ITA NO.3104/AHD/2014 & CO NO. 335/AHD/2014 ASSESSMENT YEAR: 2011-12 PAGE 4 OF 4 7. WE FIND THAT THE ASSESSEE IS ALL ALONG MAINTAINI NG HIS BOOKS OF ACCOUNTS ON RECEIPT BASIS AND TO THE EXTENT THE FEE IS WITH RES PECT TO FUTURE WORK, AS AN ADVANCE, THE SAME HAS BEEN EXCLUDED FROM THE INCOME CHARGEABLE T O TAX IN THE YEAR OF RECEIPT. THIS TREATMENT IS CONSISTENT IN ALL THE YEARS AND HAS BE EN DULY ACCEPTED BY THE REVENUE AUTHORITIES. SO FAR AS THE ADDITION OF RS.30,82,286 /- IS CONCERNED, THE ASSESSEE HAS FURNISHED A RECONCILIATION, EXPLAINING VARIATIONS B ETWEEN 26AS DETAILS VIS-A-VIS INCOME DISCLOSED BY THE ASSESSEE AND LD. CIT(A) HAS DULY A CCEPTED THE SAME. NO DEFECTS HAVE BEEN POINTED BEFORE US EITHER. WE THUS SEE NO NEED TO DISTURB THE WELL REASONED FINDINGS OF THE LD. CIT(A) IN THIS REGARD. AS REGAR DS OPENING BALANCE OF RS.17,03,563/- THERE IS NO DISPUTE THAT IT DOES NOT REPRESENT RECE IPT OF THE CURRENT YEAR AND, THEREFORE, BY ANY STRETCH OF LOGIC THIS AMOUNT CANNOT BE TREAT ED AS INCOME OF THE CURRENT YEAR. THERE IS NO INFIRMITY IN DELETION OF THIS ADDITION OF RS.17,03,563/- EITHER. THAT LEAVES US WITH RS.6,30,000/- RECEIVED BY THE ASSESSEE AS ADVA NCE DURING THE CURRENT YEAR. ONCE IT IS NOT IN DISPUTE THAT IT IS IN THE NATURE OF AD VANCE AND THAT THE RELATED WORK HAS NOT COMMENCED IN RESPECT OF THE SAME, AS IS UNDISPUTED POSITION IN THIS CASE, THERE CANNOT BE ANY JUSTIFICATION FOR BRINGING IT TO TAX IN THIS YEAR. WE, ACCORDINGLY, CONFIRM THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS OF RS.30,82 ,286/- AND RS.17,03,563/- AND WE FURTHER DIRECT THE ASSESSING OFFICER TO DELETE THE REMAINING ADDITION OF RS.6,30,000/- AS WELL. 8. IN THE RESULT, WHILE APPEAL OF THE ASSESSING OFF ICER IS DISMISSED, THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. PRONOUNCED I N THE OPEN COURT ON THIS 17 TH DAY OF MAY, 2018. SD/- SD/- MADHUMITA ROY PRAMOD KUMAR JUDICIAL MEMBER) (ACCOUNTANT MEMB ER) DATED: 17 TH MAY, 2018. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD