DCIT, CIR-8(1), KOLKATA, Kolkata V. M/s Mercury Travels Ltd., Kolkata

ITA 1160/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0673 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHTTACHARJEE
• Assessee Lawyers: ASIM CHOUD HURY
• Keywords: Corroborative evidences

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1160/KOL/2015 ASSESSMENT YEAR:2006-07 DCIT, CIRCLE-8(1), P-7, CHOWRINGHEE SQUARE, 5 TH FLOOR, KOLKATA-69 / V/S . M/S MERCURY TRAVELS LTD., 4, MANGOE LANE KOLKATA-700 001 [ PAN NO. AABCM 7139 E ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI ARINDAM BHTTACHARJEE, ADDL. CIT-DR /BY RESPONDENT SHRI ASIM CHOUDHURY, ADVOCATE /DATE OF HEARING 23-10-2017 /DATE OF PRONOUNCEMENT 26-12-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS REVENUE HAS FILED THIS APPEAL FOR THE ASSESSME NT YEAR 2006-07 OF COMMISSIONER OF INCOME-TAX (APPEALS)-8, KOLKATA ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED ON FACTS IN ACCEPTING THAT THE ASSESSEE HAS BEEN ABLE TO RECONCILE THE DIFFERENCE IN INCOME AS PER ITS DE TAILS AND THE INCOME SHOWN BY THE ASSESSEE IN ITS COMPUTATION OF INCOME. 2. THE LD. CIT(A) HAS ERRED ON FACTS BY ACCEPTING T HAT THE INCOME OF RS.2,11,53,391/- & INCOME OF RS.17,88,917/- FALL UN DER THE CATEGORY OF INCOME OF TOURS & FREIGHT & OUT BOUND TOURS WITHOUT THE AS SESSEE PROVIDING ANY CORROBORATIVE EVIDENCES. 3. FURTHER THE CIT HAS ERRED ON FACTS BY ACCEPTING ASSESSEE CONTENTION THAT IT HAS NOT EARNED ANY RENTAL INCOME WHEN THE EVIDENCES AS PER ITS DETAILS CONTRARY. ITA NO.1160/KOL/2015 A.Y. 2 006-07 DCIT CIR-8(1) KOL. VS. M/S MERCURY TRAVELS LTD. P AGE 2 4. THAT HE APPELLANT RESERVES THE RIGHT TO AMEND, A LTER OR ADD TO ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPE AL. SHRI ARINDAM BHATTACHARJEE, LD. DEPARTMENTAL REPRES ENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI ASIM CHOWDHURY, LD. ADVOCATE APPEA RED ON BEHALF OF ASSESSEE. 2. THE COMMON ISSUE RAISED BY REVENUE IN THIS APPE AL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER FOR 2,11,53,391/- AND 17,88,917/- AND 1,30,500/- ON ACCOUNT OF MISMATCH BETWEEN THE AUDI TED PROFIT AND LOSS ACCOUNT AND ITS DETAILS. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A LIMITED COMPANY AND ENGAGED IN BUSINESS OF TRAVEL AGENCY, TOUR OPERATOR AND DEALIN G IN FOREIGN EXCHANGE. THE ASSESSEE IS ALSO A MEMBER OF INTERNATIONAL AIR TRANSPORT ASS OCIATION AND TRAVEL AGENT ASSOCIATION OF INDIA. THE ASSESSEE IS ACTING AS AGE NT ON VARIOUS AIR LINES FOR DOMESTIC AND INTERNATIONAL BOOKINGS. THE ASSESSEE OPERATES T HROUGH ITS BRANCHES IN ALMOST ALL THE MAJOR CITIES AND PLACES OF TOURIST INTEREST IN INDIA. 4. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN GS ON THE BASIS OF ITSS DETAILS OBSERVED THAT ASSESSEE HAS NOT SHOWN FOLLOW ING INCOME IN ITS BOOKS OF ACCOUNT:- I) CONTRACTUAL RECEIPTS 2,11,53,391- II) RENTAL INCOME OF 1,30,500/- III) PROFESSIONAL FEE OF 17,88,917/- ACCORDINGLY, AN EXPLANATION WAS SOUGHT FOR BY THE A O ABOUT THE NON-DISCLOSURE OF AFORESAID INCOME. THE ASSESSEE IN COMPLIANCE THERET O SUBMITTED:- A) IT HAD NO RENTAL INCOME. B) THE PROFESSIONAL INCOME HAS BEEN SHOWN IN THE INCOM E OF OUT BOUND TOURS OF 58,39,190/- WHICH HAD BEEN SHOWN UNDER THE SCHEDULE 14 OF OTHER INCOME IN THE AUDITED FINANCIAL STATEMENT. C) IT HAS SHOWN AN INCOME OF 4,49,98,847/- UNDER THE HEAD TOURS IN ITS AUDITED FINANCIAL STATEMENT. THUS, THE CONTRACTUAL RECEIPT FOR 2,11,53,391/- HAS ALREADY INCLUDED IN SUCH INCOME. HOWEVER, THE PARTY HAS WRONGLY DEDUCTED TAX ON BEHA LF OF ASSESSEE U/S 194-I OF THE INCOME TAX, ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). HOWEVER, THE ITA NO.1160/KOL/2015 A.Y. 2 006-07 DCIT CIR-8(1) KOL. VS. M/S MERCURY TRAVELS LTD. P AGE 3 CORRESPONDING INCOME HAS ALREADY BEEN INCLUDED IN T HE GROSS INCOME AS DECLARED IN THE AUDITED FINANCIAL STATEMENT. IN VIEW OF ABOVE, ASSESSEE SUBMITTED THAT ALL THE INCOME HAS SHOWN IN ITS DETAILS HAVE BEEN DULY DISC LOSED IN ITS INCOME TAX RETURN. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE FAILED T O MAKE SPECIFIC SUBMISSION AS WELL AS RECONCILIATION OF THE INCOME BETWEEN THE IT S DETAILS VIZ-A-VIZ FINANCIAL STATEMENT. THEREFORE, THE ADDITION WAS MADE FOR 1,30,500/- TO 2,11,53,391/- AND 17,88,917/- ON ACCOUNT OF RENT, CONTRACTUAL AMOUNT AND PROFESSIONAL SERVICES RESPECTIVELY AND ADDED TO THE TOTAL INCOME OF ASSES SEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT A DETAILED RECONCI LIATION WAS FILED BEFORE THE AO FOR THE INCOME AS PER ITS DETAILS AND THE INCOME SHOWN IN THE INCOME TAX RETURN. A PARTY- WISE RECONCILIATION WAS FILED RECONCILING ALL THE E NTRIES EXCEPT A FEW MISMATCH. AS PER THE ITS DETAIL THE INCOME WAS AT 8,92,07,466/- WHEREAS THE ASSESSEE HAS DECLARED ITS GROSS INCOME AT 12,65,18608/- IN ITS PROFIT AND LOSS ACCOUNT. THUS, THE INCOME DECLARED BY ASSESSEE IS HIGHER THAN THE INCOME AS P ER ITS DETAILS. THE ASSESSEE IN SUPPORT OF ITS CLAIM HAS RELIED ON THE ORDER OF HON 'BLE MUMBAI TRIBUNAL IN THE CASE OF M/S AF FERGSON & CO. C/O DELOITTE HASKINA & SELLS V . JCIT & ACIT-11(2),MUMBAI 5037/MUM/2012 & ITA NO.437/MUM/2013. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE CITED CASE LAW HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- 8. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT IN THE BACKDROP OF THE AO'S ACTION IN MAKING THE IMPUGNED ADDITIONS TOTALLING 2,30,72,808/-. I HAVE ALSO GONE THROUGH THE VARIOUS RELEVANT DETAILS AND DOCUMENTS FILED AND PLACED ON RECORD. BASICALLY IT IS THE CONTENTION OF THE AR OF THE APPELLANT THAT RECONCILIATION WAS PROVIDED T O THE AO AND ALMOST ALL THE ENTRIES WERE RECONCILED AND MOREOVER RETUNED INCOME AS PER P&L A/C FAR EXCEEDED THE ITS DETAILS FOR WHICH NO ADVERSE CONCL USION COULD BE DRAWN IN THIS REGARD. THIS PROPOSITION OF THE APPELLANT WAS BACKED BY THE DECISION OF THE ITT, MUMBAI AS IN THE FOREGOING, WHEREIN IT WAS HEL D THAT ADDITION SOLELY ON THE BASIS OF AR INFORMATION WAS NOT SUSTAINABLE. FU RTHER, I FIND THAT AS PER LETTER DATED 18.02.2011, THE ASSESSEE HAD EXPLAINED TO THE AO THE FACTUAL DETAILS WITH RESPECT TO THE IMPUGNED MATTERS THAT ( A) THERE WAS NO RENTAL INCOME ACTUALLY RECEIVE DAS PER THE BOOKS DURING TH E YEAR UNDER CONSIDERATION AND (B) WITH REGARD TO PROFESSIONAL RECEIPT U/S 119 4J AND RECEIPTS U/S. 194C, RECONCILIATION STATEMENT PARTY-WISE WERE ALSO SUBMI TTED BEFORE THE AO. THESE SAME SUBMISSIONS ARE BEFORE ME AS WELL. THE AO HAS NOT REBUTTED THE ITA NO.1160/KOL/2015 A.Y. 2 006-07 DCIT CIR-8(1) KOL. VS. M/S MERCURY TRAVELS LTD. P AGE 4 EXPLANATIONS OF THE APPELLANT WITH ANY COUNTER ARGU MENTS BACKED WITH ANY COGENT MATERIALS. IN SUCH A SCENARIO, I FIND FORCE IN THE SUBMISSION OF THE APPELLANT THAT ULTIMATELY ADDITIONS MADE ON THE BAS IS OF AIR INFORMATION WOULD NOT HOLD GOOD SINCE THE RETURNED AMOUNT WAS MORE TH AN THE AIR INFORMATION WHICH SHOULD NOT CALL FOR ANY ADVERSE DECISION AS S PELT OUT IN THE ITATS DECISION, SUPRA, IN THE CASE OF S. GANESH VS. ACIT, ITA NO. 527/MUM/2010 DATED 08.12.2010 . FOLLOWING THE JUDICIAL PRECEDENCE ON THE PERTINEN T ISSUES INVOLVED IN THE APPELLANTS CASE AS DISCUSSED IN TH E FOREGOING, IMPUGNED ORDER HAVE NO HESITATION IN HOLDING THAT THE ADS MADE BY THE AO DO NOT MERIT ANY SUSTENANCE T THE APPELLATE STAGE AND THE SAME ARE D IRECTED TO BE DELETED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 6. BEFORE US LD. DR HEAVILY RELIED ON THE ORDER OF AO WHEREAS LD. AR FOR THE ASSESSEE FILED PAPER BOOK WHICH IS RUNNING PAGES FR OM 1 TO 38 AND FURTHER SUBMITTED THAT THE RECONCILIATION WAS DULY FILED BEFORE THE A O AND NO DEFECT WAS POINTED OUT THEREIN. LD. AR IN SUPPORT OF ASSESSEES CLAIM DREW OUR ATTENTION ON PAGES 2 AND 4 OF THE PAPER BOOK WHERE THE RECONCILIATION STATEMENT W AS PLACED. LD. AR CITED VARIOUS CASE LAWS IN FAVOUR OF ASSESSEES CLAIM AND RELIED ON THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THR OUGH THE ORDERS OF THE LOWER AUTHORITIES AND THE CASE LAWS RELIED UPON BY THE AS SESSEE. IN THE CASE ON HAND THE ADDITION WAS MADE BY THE AO ON THE GROUND THAT THE INCOME SHOWN IN ITS DETAILS OF THE ASSESSEE WAS NOT DISCLOSED IN THE INCOME TAX RE TURN. HOWEVER, ON PERUSAL OF AUDITED FINANCIAL STATEMENT WE NOTE THAT THE ASSESS EE HAS SHOWN GROSS TOTAL INCOME OF 12,65,18,608/- AS EVIDENT FROM THE AUDITED PROFIT A ND LOSS ACCOUNT WHICH IS PLACED ON PAGE 22 OF THE PAPER BOOK. THUS, THE ALLEGATION OF THE AO THAT ALL THE INCOME SHOWN IN THE ITS DETAILS HAS NOT BEEN DECLARED IN INCOME TAX RETURN DOES NOT HOLD GOOD. THE AO HAS NOT BOUGHT ANYTHING ON RECORD ABOUT THE NAME OF PARTIES IN RESPECT OF WHICH THE ASSESSEE FAILED TO DISCLOSE INCOME IN ITS INCOME TA X RETURN. THUS, WE FEEL THAT NO ADDITION CANNOT BE SUSTAINED IN THE GIVEN FACTS AND CIRCUMSTANCES. 7.1 WE ALSO NOTE THAT THE ADDITIONAL INCOME DECLARE D BY ASSESSEE IN ITS INCOME TAX RETURN VIS--VIS IN ITS DETAILS EXCEEDS THE INCOME SHOWN IN ITS DETAILS. ONCE THE INCOME SHOWN BY THE ASSESSEE IS GREATER THAN THE IT S DETAILS THEN NO ADDITION CAN BE MADE ON ACCOUNT OF NON-DISCLOSURE OF INCOME. IN HOL DING SO, WE FIND SUPPORT AND GUIDANCE OF HON'BLE MUMBAI TRIBUNAL IN THE CASE OF M/S AF, FERGUSON & CO. C/O ITA NO.1160/KOL/2015 A.Y. 2 006-07 DCIT CIR-8(1) KOL. VS. M/S MERCURY TRAVELS LTD. P AGE 5 DELOITTE HASKINS & SELLS VS. JCIT & ACIT IN ITA NO.5037/MUM/2012 AND ITA NO.437/MUM/2013 DATED 13.10.2014, WHEREIN IT WAS HE LD AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE L D. REPRESENTATIVES OF THE PARTIES. IT IS AN UNDISPUTED FACT ON THE FILE THAT THE PROFESSI ONAL FEES SHOWN BY THE ASSESSEE IN ITS P&L ACCOUNT FAR EXCEEDS THAN THE AMOUNT SHOWN IN TH E AIR INFORMATION. EVEN THE ASSESSEE HAS RECONCILED THE MAJOR PORTION OF THE RE CEIPT. IT HAS NOT BEEN DENIED BY THE REVENUE AUTHORITIES THAT FULL AND COMPLETE DETAILS OF THE PARTIES ARE NOT MENTIONED IN THE AIR INFORMATION. THE ADDITION IN THIS CASE HAS BEEN MADE BY THE LOWER AUTHORITIES SOLELY ON THE BASIS OF AIR INFORMATION. IN OUR VIEW , THE ADDITION, MADE SOLELY ON THE BASIS OF AIR INFORMATION, ESPECIALLY IN THE ABSENCE OF FULL DETAILS OF PARTIES AND WHEN THE PROFESSIONAL RECEIPTS DECLARED BY THE ASSESSEE FAR EXCEEDS THAN THE AMOUNT MENTIONED IN THE AIR INFORMATION, IS NOT SUSTAINABL E IN THE EYES OF THE LAW OR ABOVE VIEW IS FORTIFIED WITH THE DECISION OF THE BANGALOR E BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SHREE G. SELVA KUMAR IN ITA NO.868/BANG/12 DECIDED ON 22.10.10 AND ANOTHER IN THE CASE OF MRS. ARATI RMAN VS. CIT IN ITA NO.245/BANG/12 DECIDED ON 05.10.12 WHEREIN IT HAS BEEN HELD THAT T HE ASSESSMENT ORDER BASED ONLY ON THE AIR INFORMATION WOULD NOT STAND IN THE EYES OF LAW. IF THE ASSESSEE DENIES THAT HE I IN RECEIPT OF INCOME FROM A PARTICULAR SOURCE, IT I S FOR THE ASSESSING OFFICER TO PROVE THAT THE ASSESSEE HAS RECEIVED INCOME AS THE ASSESS EE CANNOT PROVE THE NEGATIVE. RELIANCE CAN ALSO BE PLACED ON THE DECISION OF MUMB AI BENCH OF TRIBUNAL IN THE CASE OF SHRI S. GANESH VS. ACIT IN ITA NO.527/M/2010 DE CIDED ON 08.12.10=2011/TIOL- 87-ITT-MUM WHEREIN THE TRIBUNAL HAS HELD THAT IN TH E ABSENCE OF ANY MATERIAL BROUGHT BY THE REVENUE AUTHORITIES THAT THE ASSESSE E HAS RECEIVED AMOUNT MORE THAN THE PROFESSIONAL FEES WHICH HAS BEEN DECLARED BY HI M IN THE P&L ACCOUNT AND WHEN THE PROFESSIONAL INCOME DECLARED BY THE ASSESSEE FA R EXCEEDS THE PROFESSIONAL FEES SHOWN IN THE AIR INFORMATION, THAN ADDITIONS SOLELY BASED ON THE AIR INFORMATION ARE NOT SUSTAINABLE. 7. IN VIEW OF OUR ABOVE OBSERVATIONS AND IN THE FAC TS AND CIRCUMSTANCES OF THE CASE, TO ADDITIONS MADE BY THE REVENUE SOLELY BASED ON THE A IR INFORMATION ARE NOT SUSTAINABLE AND THE SAME ARE HEREBY ORDERED TO BE D ELETED. WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF TH E TRIBUNAL DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT AND ACCORDINGLY THE GROUND TAKEN BY THE REVENUE IS REGRETTED. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 26/12/2017 SD/- SD/- ( % ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ) - 26/12/2017 / KOLKATA ITA NO.1160/KOL/2015 A.Y. 2 006-07 DCIT CIR-8(1) KOL. VS. M/S MERCURY TRAVELS LTD. P AGE 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIR-8(1), P-7, CHOWRINGHEE SQUARE, KOLKATA-69 2. /RESPONDENT-M/S MERCURY TRAVELS LTD., 4, MANGOE LAN E KOLKATA-700001 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . %%, , , / DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO ,,