KAUSHIK LAXMIDAS POPAT, MUMBAI V. ITO, WARD 29(2)(1), MUMBAI

ITA 1135/MUM/2023

AI Insights

The case involves Kaushik Laxmidas Popat, who appealed against the order of the Commissioner of Income Tax (Appeals) National Faceless Appeal Center, Delhi, concerning the assessment year 2014-15. The primary issue was the addition of \\u20b970,64,630 to the assessee's income, which was based on a discrepancy between the income reported in the assessee's books and the data available in Form 26AS/AIR. The Assessing Officer had noted a significant difference in the receipts reported by the assessee and those reflected in Form 26AS, particularly concerning payments from TBG, which were allegedly inflated to claim excessive advertisement expenditure. The Tribunal found merit in the assessee's argument that only the profit element from these receipts should be added to the income, not the entire amount received.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133783 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: H
• Next Hearing Date: 03-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 05-04-2023
• Other Referred Cases: ITO v/s Star Consortium, PCIT v/s Paharpur Cooling Towers Ltd., Sohan Lal Aggarwal v/s ACIT circle 62(1)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 44AB

Judgement Text

आयकर अपीलीय अिधकरण मुंबई पीठ “एच ”,मुंबई ी ि क अ ी, ियक ए ं ु ी प! "ी. ए , लेख क र के म& IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “ H”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& MS. PADMAVATHY.S, ACCOUNTANT MEMBER आअसं.1135/मुं/2023 (िन.व. 2014-15) ITA NO.1135/MUM/2023 (A.Y.2014-15) Kaushik Laxmidas Popat, 17, Ratnadeep, S.L.Road, Mulund (West), Mumbai – 400 080. PAN: AAQPP-6733-M ...... ' /Appellant बनाम Vs. ITO, Ward 29(2)(1), 201, Prtyakshkar Bhavan, C-10, BKC, Bandra (East), Mumbai – 400 051 ..... ) " /Respondent Assessee by : Shri Rajesh Athavale Revenue by : Ms. Usha Gaikwad सुनवाई की ितिथ/ Date of hearing : 04/07/2023 घोषणा की ितिथ/ Date of pronouncement : 22/09/2023 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals) National Faceless Appeal Center, Delhi [hereinafter referred to as “the CIT(A)”] dated 13.02.2023, for the assessment year 2014-15. 2. The solitary issue raised by the assessee in appeal is with respect to addition of ₹ 70,64,630/- on account of difference between books of the assessee and Form 26AS/AIR data. 2 ITA NO.1135/MUM/2023 (A.Y.2014-15) 3. Shri. Rajesh Athavale appearing on behalf of the assessee submitted that, the assessee is engaged in the business of advertisement under the proprietary concerns Om Shakti Outdoors. During the course of scrutiny assessment for the impugned assessment year, the Assessing Officer observed that the total receipts as per Form 26AS were ₹ 1,47,89,008/-, whereas, the assessee in return of income had shown gross receipts of ₹ 77,24,378/-. Thus, the AO held that the assessee was required to get its accounts audited u/s 44AB of the Income Tax Act, 1961 [hereinafter referred to as the Act’ ]. The assessee during scrutiny assessment proceedings explained that the assessee had received sum of ₹ 60,10,840/- only from the Tirupati Balaji Builders & Developers Pvt. Ltd.[ In short ‘TBG’]. TBG fraudulently with an intention to claim excessive advertisement expenditure deducted TDS on higher amount and deposited the same in the account of assessee. Thus, ₹ 1,41,98,100/- shown as payment to the assessee is excessive. The assessee had never received payment to that extent from TBG. The Ld. AR raised multiple prepositions in the defence. 3.1 The Ld. AR submitted that before making addition, the AO did not reject books of the assessee, hence, without rejecting books no addition could have been made. 3.2 Another argument made by Ld. AR is that addition cannot be made merely on the basis of Form 26AS. In support of this argument, he placed reliance on the decision in the case of ITO v/s Star Consortium 127 taxmann.com 681 (Kolkata Trib.). 3.3 The Ld. AR further submitted that it is only real income which should be taxed. To support this contention reliance was placed on the decision of 3 ITA NO.1135/MUM/2023 (A.Y.2014-15) Hon’ble Calcutta High Court in the case of PCIT v/s Paharpur Cooling Towers Ltd. 150 taxmann.com 238 (Culcutta). 3.4 The. Ld. AR made alternate prayer that instead of making addition of entire alleged receipts from TBG only the profit element should be added. The Ld. AR submitted that the GP of the assessee for the impugned assessment year is 10%. He placed reliance on Sohan Lal Aggarwal v/s ACIT circle 62(1), 130 taxmann.com 380 (Delhi Trib.) to buttress his alternate prayer. 4. Per contra, Ms. Usha Gaikwad representing the department vehemently defended the impugned order and prayed for dismissing the appeal of the assessee. 5. We have heard the submissions made by rival sides and have examined the orders of lower authorities. We have also considered the decisions on which reliance has been placed by the Ld. AR of assessee. The short issue in present appeal for our consideration is addition on account of difference between receipts declared in profit and loss account and 26AS statement. The assessee in his return of income has declared receipts of ₹ 77,24,378/- during the period relevant to the Assessment year under appeal, whereas 26AS statement shows that the assessee has received ₹ 1,41,98,100/- from TBG alone. It is an undisputed fact that the assessee has taken credit of entire TDS i.e. ₹ 1,41,981/- that has been deposited by TBG to the credit of assessee. This fact itself shows that the assessee has received payment in respect of which TDS was deducted and deposited in assessee’s PAN. Thus, in so far as argument of the assessee that TBG has deposited higher amount of TDS to claim higher expenditure and other peripheral arguments, we find no merit in the same. The AO has made addition of difference between amount reflected in 26AS statement and the amount disclosed by the assessee i.e. ₹70,64,630/- (₹147,89,008/- - ₹ 77,24,378/-). We are of considered view that the entire receipts cannot be added in the hands of the assessee as his income. It is only the profit element 4 ITA NO.1135/MUM/2023 (A.Y.2014-15) embedded in the receipts from TBG that can be brought to tax. We deem it appropriate to restore this issue to the AO to re-examine the issue and determine the profit element embedded in the receipts from TBG. The AO shall grant reasonable opportunity to the assessee to make submissions in accordance with law. 6. Consequently, the appeal of the assessee is allowed for statistical purpose in the terms aforesaid. Order pronounced in the open court on Friday the 22nd day of September, 2023. Sd/- Sd/- (PADMAVATHY. S ) (VIKAS AWASTHY) लेखाकार /ACCOUNTANT MEMBER /JUDICIAL MEMBER मुंबई/ Mumbai, िदनांक/Dated 22/09/2023 Vm, Sr. PS(O/S) ितिलिप अ ेिषतCopy of the Order forwarded to : 1. '/The Appellant , 2. ) " / The Respondent. 3. The PCIT 4. / 0 ) " ( , आ .अप .अ ., मुबंई/DR, ITAT, Mumbai 5. 0 12 3 4 /Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar)/Sr. Private Secretary ITAT, Mumbai