Nitin Appasaheb Patil, Nashik V. Deputy Commissioner of Income-tax,

ITA 1329/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9576 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 09-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Search and seizure
• Section: 143(3); 153A; 133(6)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / I TA NO. 1329 /PUN/20 15 / ASSESSMENT YEAR : 2008 - 09 NITIN APPASAHEB PATIL, ROYAL APARTMENT, CANADA CORNER, SHARANPUR ROAD, NASHIK .... / APPELLANT PAN : AAMPP6471E / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, NASHIK / RESPONDENT A SSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI ANIL CHAW A RE / DATE OF HEARING : 17 . 04 .201 7 / DATE OF PRONOUNCEMENT: 28 .04 .201 7 / ORDER PER SUSHMA CHOWLA , JM THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A) - 12, PUNE, DATED 07.08.2015 RELATING TO ASSESSMENT YEAR 2008 - 09 AGAINST THE OR DER PASSED UNDER SECTION 143(3) R.W.S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO. 1 329 /PUN/201 5 NITIN APPASAHEB PATIL 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS.16,31,520/ - TO THE TOTAL INCOME OF APPELLANT FOR A.Y.2008 - 09 BEING THE TAX DEDUCTED AT SOURCE BY M/S C &M FARMING LTD FROM COMMISSION OF RS. 1,44,00,0 00/ - PAYABLE TO APPELLANT. 1.1 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT APPELLANT WAS FOLLOWING CASH SYSTEM OF ACCOUNTI NG AND HE HAS NOT RECEIVED ANY PART OF THE SAID COMMISSIONER DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2008 - 09 AND HENCE HE HAD NOT CLAIMED CREDIT FOR THE SAID TDS OF RS. 16,31,520/ - IN THE RETURN OF INCOME FILED BY HIM FOR A.Y. 2008 - 09 AND HENCE THE ADDI TION OF RS. 16,31,520/ - IS NOT JUSTIFIED. 1.2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT APPELLANT OFFERED FOR TAX THE PORTION OF COMMISSIONER IN THE SUBSEQU ENT YEARS ON RECEIPT BASIS AND CLAIMED CREDIT FOR PROPORTI ONATE PORTION OF TDS OUT OF RS. 16,31,520/ - DEDUCTED AND PAID BY M/S C&M FARMING LTD AND HENCE THE ADDITION OF RS. 16,31,520/ - MADE BY HIM FOR A.Y.2008 - 09 AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOM E AND HENCE THE ADDITION IS UNWARRANTED. 2) THE APPELLANT PRAYS THAT THE ADDITION OF RS. 16,31,520/ - BEING UNWARRANTED AND UNJUSTIFIED MAY KINDLY BE DELETED. 3) THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL OR TAKE A FRESH GROUND OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3. THE ASSESSEE HAS RAISED THE ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER: - 1] THE ASSESSEE SUBMITS THAT IN CASE, IT IS HELD THAT THE AMOUNT OF RS.16,31, 520/ - BEING THE TAX DEDUCTED AT SOURCE BY C & M FARMING LTD. IS TREATED AS AN INCOME OF THE ASSESSEE IN A.Y. 2008 - 09, IN THAT EVENT, THE ASSESSEE SUBMITS THAT THE CREDIT FOR TDS OF THE ENTIRE AMOUNT OF RS.16,31,520/ - SHOULD BE GIVEN AS AGAINST RS.1,84,851/ - GIVEN BY THE LEARNED A.O. 4. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE ACTION WAS CONDUCTED AT THE OFFICE PREMISES OF THE ASSESSEE IN NASHIK ON 31.10.2009 AND ALSO AT THE RESIDENTIAL PREMISES. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED THE RETURN OF INCOME OF RS.3,09,000/ - . THE ORDER UNDER SECTION 143(3) R.W.S. 153A OF THE ACT WAS PASSED ON 30.12.2011 ASSESSING THE 3 ITA NO. 1 329 /PUN/201 5 NITIN APPASAHEB PATIL TOTAL INCOME AT RS.5,20,198/ - , WHEREIN CASH RECEIPTS FOUND DURING THE COURSE OF SEARCH TO THE TUNE OF RS.2,11,200/ - WERE OF FERED TO TAX. THE COMMISSIONER, NAGPUR VIDE ORDER PASSED UNDER SECTION 263 OF THE ACT, DATED 27.03.2014 SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSMENT TO BE COMPLETED DE NOVO ON CERTAIN ISSUES MENTIONED IN THE SAID ORDER. THEREAFTER, CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY AND THE ASSESSEE FILED THE DETAILS. THE ASSESSING OFFICER ALSO ISSUED THE LETTERS TO M/S. C & M FARMING LTD. AND M/S. PENINSULA MEGA TOWNSHIP DEVELOPERS PVT. LTD. CALLING FOR INFORMATION UNDER THE PROVISO TO SECTION 133(6) OF THE ACT . DURING THE COURSE OF HEARING, THE ASSESSEE HAS SHOWN THE REPLIES RECEIVED FROM THE SAID CONCERNS. THE ASSESSEE STATED THAT HE HAD NOTHING MORE TO OFFER. THE ASSESSEE IN A NOTE TO THE COMPUTATION OF TOTAL INCOME HAD MENTIONED THAT M/S . C & M FARMING LTD . HAD CREDITED THE ASSESSEE WITH COMMISSION PAYABLE TO THE TUNE OF RS.1,44,00,000/ - AND DEDUCTED TAX TO THE TUNE OF RS.13,61,520/ - THEREON. THE ASSESSEE FOLLOWED CASH SYSTEM OF ACCOUNTING AND SINCE NO PART OF THE COMMISSION WAS ACTUALLY RECEIVED DURING THE YEAR, NO INCOME WAS OFFERED TO TAX. THE ASSESSEE DID NOT CLAIM ANY CREDIT FOR THE TDS DEDUCTED. THE COMMISSIONER WAS OF THE VIEW THAT THE ASSESSEE SHOULD HAVE OFFERED TO TAX THE TDS OF RS.16,31,520/ - , IN TERMS OF PROVISIONS OF SECTIO N 198 OF THE ACT. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE IN THIS REGARD AND WAS ASKED TO SUBMIT AS TO WHY SUM OF RS.1,44,00,000/ - SHOULD NOT BE ASSESSED AS HIS INCOME FOR THE YEAR UNDER CONSIDERATION. IN REPLY, THE ASSESSEE REITERATED THAT SINCE IT WAS FOLLOWING CASH SYSTEM OF ACCOUNTING AND COMMISSION INCOME FROM THE SAID PARTY WAS OFFERED TO TAX IN THE YEARS IN WHICH THE SAME HAD BEEN RECEIVED AND PROPORTIONATE CREDIT FOR TDS WAS CLAIMED IN THE SAID Y EARS. SINCE NO AMOUNT WAS RECEIVED DURING THE YEAR, THEREFORE, NO AMOUNT WAS OFFERED TO TAX AND NO CREDIT FOR THE TDS WAS 4 ITA NO. 1 329 /PUN/201 5 NITIN APPASAHEB PATIL CLAIMED. THE ASSESSEE ALSO EXPLAINED THAT THE AMOUNT HAD BEEN OFFERED TO TAX IN THE RESPECTIVE YEARS WHEN IT WAS RECEIVED ALONG WITH PROPORTIONATE TDS THEREON. THE ASSESSING OFFICER ALSO SOUGHT INFORMATION UNDER SECTION 133(6) OF THE ACT FROM M/S. C & M FARMING LTD ., WHO IN THEIR REPLY CLEARLY CONFIRMED THE DETAILS OF PAYMENTS, TALLIED WITH THE DETAILS FILED BY THE ASSESSEE. SINCE M/ S. C & M FARMING LTD. HAD DEDUCTED THE TAX AT SOURCE DURING THE YEAR AND ISSUED THE TDS CERTIFICATE TO THAT EFFECT, TO THE ASSESSEE . T HE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAME HAS TWO IMPLICATIONS ; F IRSTLY, M/S. C & M FARMING LTD. SHOULD BE APPEA RING AS DEBTOR IN THE BALANCE SHEET OF THE ASSESSEE TO THE TUNE OF RS.1,27,68,480/ - I.E. RS.1,44,00,000/ - ( - ) TDS OF RS.16,31,520/ - AND SECONDLY, THE ASSESSEE AS PER THE PROVISIONS OF SECTION 198 OF THE ACT SHOULD HAVE OFFERED SUM OF RS.16,31,520/ - , TO TAX . ACCORDINGLY, SUM OF RS.16,31,520/ - WAS BROUGHT TO TAX BY THE ASSESSING OFFICER UNDER SECTION 198 OF THE ACT. FURTHER, THE ASSESSING OFFICER DIRECTED THAT THE CREDIT FOR TDS AS PER THE PROVISIONS OF SECTION 199 OF THE ACT RELEVANT TO THE INCOME ASSESSED IN THE YEAR UNDER CONSIDERATION COMES TO RS.1,84,851/ - AND HENCE, THE SAID CREDIT FOR TDS WAS GRANTED FOR THE YEAR UNDER CONSIDERATION AND PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. 5. THE CIT(A) HAS REPRODUCED THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AT PAGES 5 TO 8 OF THE APPELLATE ORDER. THE CIT(A) WAS OF THE VIEW THAT WHERE THE ASSESSEE HAD PROCURED ONE CUSTOMER FOR BUYING THE LAND BELONGING TO M/S. C & M FARMING LTD ., AND IN THE BOOKS OF THE SAID CONCERN, COMMISSI ON OF RS.1,44,00,000/ - WAS RECORDED AS PAYABLE TO THE ASSESSEE AND THE TDS CERTIFICATE OF RS.16,31,520/ - WAS ISSUED IN FORM NO.16A , THE SAME IS TO BE ADDED IN THE HANDS OF ASSESSEE . THE CIT(A) HAS ALSO TABULATED YEAR - WISE 5 ITA NO. 1 329 /PUN/201 5 NITIN APPASAHEB PATIL DETAILS OF AMOUNT RECEIVED FROM M /S. C & M FARMING LTD . INCLUDING THE MODE OF RECEIPT. THE CIT(A) ALSO NOTED THAT APART FROM THE PAYMENTS MADE DIRECTLY TO THE ASSESSEE, M/S. C & M FARMING LTD. ALSO CREDITED TDS PAID OF RS.16,31,520/ - TO THE ACCOUNT OF ASSESSEE FOR FINANCIAL YEAR 2007 - 08 . THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING AND WAS OFFERING INCOME ON ITS RECEIPTS. THE CIT(A) NOTED THAT THE DISPUTE WAS WHETHER THE AMOUNT PAID BY THE DEDUCTOR TO THE EXCHEQUER AFTER DEBITING THE SAME TO THE ACCOUNT OF THE ASSESSEE BE CONSID ERED AS RECEIPT FOR THE ASSESSEE IN CASH SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE CIT(A) WAS OF THE VIEW THAT THE COMMISSION HAD BECOME DUE AND DURING THE YEAR, PART OF THE AMOUNT WAS DEPOSITED WITH THE INCOME TAX DEPARTMENT ON BEHALF OF THE ASS ESSEE . THE CREDIT ON SUCH TAX DEDUCTED CAN BE CLAIMED BY THE ASSESSEE SUBJECT TO THE PROVISIONS OF SECTION 199 OF THE ACT. SINCE THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING, CREDIT FOR TDS, AS PER THE CIT(A), COULD NOT BE CLAIMED DURING THE YEAR . HOWEVER, SINCE THE SAME WAS APPEARING AS CREDIT IN 26AS STATEMENT OF THE ASSESSEE, THE SAME WAS TREATED AS ADVANCE TAX PAYMENT TO THE DEPARTMENT. THE CIT(A) ALSO REFERRED TO THE PROVISIONS OF SECTION 198 OF THE ACT, ACCORDING TO WHICH, TAX DEDUCTED BEC OME DEEMED RECEIPT IN THE HANDS OF ASSESSEE. IN VIEW THEREOF, THE ORDER OF ASSESSING OFFICER WAS UPHELD BY THE CIT(A). 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SINCE THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING, N O INCOME WAS OFFERED DURING THE YEAR UNDER CONSIDERATION AND NO TDS WAS CLAIMED AGAINST 6 ITA NO. 1 329 /PUN/201 5 NITIN APPASAHEB PATIL THE SAID COMMISSION INCOME. HE FURTHER STATED THAT THE PAYER WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND HENCE, HAD DEBITED THE COMMISSION PAYABLE TO THE ASSESSEE TO THE TUNE OF RS.1,44,00,000/ - AND DEDUCTED TAX TO THE TUNE OF RS.13,61,520/ - . HE FURTHER STATED THAT THE SAID COMMISSION INCOME HAS BEEN OFFERED TO TAX ON RECEIPT BASIS IN THE SUBSEQUENT YEA RS. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A). 9. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL CONTENTIONS, THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE ASSESSABILITY OF TAX DEDUCTED AT SOURCE AT RS.16,31,520/ - DURING THE YEAR OUT OF COMMISSION RECEIVABLE BY THE ASSESSEE TO THE TUNE O F RS.1,44,00,000/ - . THE ASSESSEE WAS CONSISTENTLY FOLLOWING CASH SYSTEM OF ACCOUNTING AND HAD NOT INCLUDED ANY PART OF THE COMMISSION IN ITS INCOME FOR THE YEAR SINCE NO SUCH COMMISSION WAS PAID DURING THE YEAR UNDER CONSIDERATION. FURTHER, THE ASSESSEE HAD ALSO NOT CLAIMED THE CREDIT FOR TDS IN TERMS OF SECTION 199 OF THE ACT. THE ASSESSEE HAD OFFERED THE INCOME IN THE SUBSEQUENT ASSESSMENT YEAR IN WHICH THE AMOUNT WAS RECEIVED AND PROPORTIONATE TDS WAS ALSO OFFERED AS PART OF THE RECEIPTS AND THE CREDI T FOR THE SAME WAS CLAIMED IN THE RESPECTIVE YEARS. THE LIMITED ISSUE WHICH ARISES IN THE PRESENT APPEAL IS IN SUCH CIRCUMSTANCES, WHERE THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING AND HAD NOT OFFERED THE COMMISSION INCOME DURING THE YEAR, CAN THE TDS DEDUCTED OUT OF SUCH ACCRUAL OF COMMISSION INCOME TAXED IN THE HANDS OF ASSESSEE IN THE INSTANT ASSESSMENT YEAR. 7 ITA NO. 1 329 /PUN/201 5 NITIN APPASAHEB PATIL 10. THE PRE - AMENDED PROVISIONS OF SECTION 199 OF THE ACT PROVIDES THAT ANY DEDUCTION MADE IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE OR THE OWNER OF SECURITY, DEPOSIT, PROPERTY, UNIT HOLDER, SHAREHOLDER, ETC. AS THE CASE MAY BE AND THE CREDIT SHALL BE GIVEN IN THE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. SUB - SECTION (2) PROVIDES THAT ANY SUM REFERRED TO IN SUB - SECTION (1A) OF SECTION 192 OF THE ACT AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS THE TAX PAID ON BEHALF OF THE PERSON IN RESPECT OF WHOSE INCOME SUCH PAYMENT OF TAX HAD BEEN MADE. UNDER SECTION 198 OF THE ACT, IT IS PROVIDED THAT ALL SUMS DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII SHALL FOR THE PURPOSE OF COMPUTING THE INCOME OF THE ASSESSEE, BE DEEMED TO BE INCOME RECEIVED. 11. IN THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAD NOT OFFERED ANY INCOME DURING THE YEAR UNDER CONSIDERATION, SINCE THE SAME WAS NOT ASSESSABLE IN THE HANDS OF ASSESSEE ON ACCRUAL BASIS, BUT HAD TO BE ASSESSED ON RECEIPT BASIS, WHERE THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING; THEN THE CREDIT FOR TDS IS ALLOWABLE TO THE ASSESSEE IN THE YEAR IN WHICH SUCH INCOME IS OFFERED TO TAX . CONSEQUENTLY, THE AMOUNT OF TAX D EDUCTED AT SOURCE IS TO BE INCLUDED AS PART OF RECEIPTS IN THE YEAR IN WHICH THE AMOUNTS ARE RECEIVED. IN THE CASE OF ASSESSEE, THE SAID AMOUNTS HAVE BEEN RECEIVED OVER A PERIOD OF YEAR S AFTER THE INSTANT ASSESSMENT YEAR AND CONSEQUENTLY, THERE IS NO MERI T IN THE ORDER OF ASSESSING OFFICER IN INCLUDING THE TAX DEDUCTED AT SOURCE BY THE PAYER AS INCOME IN THE HANDS OF ASSESSEE, FOR THE INSTANT ASSESSMENT YEAR. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF 8 ITA NO. 1 329 /PUN/201 5 NITIN APPASAHEB PATIL RS.16,31,520/ - . THE GRO UNDS OF APPEAL AND THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 2 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON THIS 28 TH DAY OF APRIL , 201 7 . SD/ - ( SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE; / DATED : 28 TH APRIL , 2017 . GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) - 12, PUNE 4. THE CIT (CENTRAL), NAGPUR. 5. , , - , / DR, ITAT, SMC BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ASSISTANT REGISTRAR , / ITAT, PUNE