M/s. Gensys Technologies Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 1(2), Pune

ITA 14/PUN/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1681 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 14-05-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 07-01-2019
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NOS.13 & 14/PUN/2019 / ASSESSMENT YEARS : 2013-14 & 2012-13 M/S. GENSYS TECHNOLOGIES PVT. LTD., 4 TH FLOOR, DEVGIRI, PLOT NO.14, S.NO.17/1B, KOTHRUD, PUNE 411 038 PAN : AACCG5346C VS. DCIT, CIRCLE-1(2), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY THE ASSESSEE RELATE TO ASSESSMENT YEARS 2012-13 AND 2013-14 INVOLVING A COMMON ISSUE. T HAT IS WHY, I HAVE CLUBBED THEM FOR DISPOSAL BY A CONSOLIDATED O RDER. 2. THERE IS A DELAY OF 428 DAYS IN PRESENTING THESE APPEA LS BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED AN AFFIDAVIT IN SUPPORT OF THE REASONS WHICH LED TO THE FILING OF THE INSTANT APPEALS BELATEDLY. I AM SATISFIED WITH THE REASONS. AS SUCH, THE DE LAY IS CONDONED AND THE APPEALS ARE ADMITTED FOR DISPOSAL ON ME RITS. APPELLANT BY SHRI M.K. KULKARNI RESPONDENT BY SHRI RAJESH GAWALI DATE OF HEARING 14-05-2019 DATE OF PRONOUNCEMENT 15-05-2019 ITA NOS.13 & 14/PUN/2019 GENSYS TECHNOLOGIES PVT. LTD., 2 3. BRIEFLY STATED, THE FACTS FOR THE A.Y. 2013-13 ARE THA T THE ASSESSEE IS ENGAGED IN PROVIDING STRUCTURAL DESIGN ENGINEERIN G SERVICES. ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, THE ASSESSING OFFICER (AO) OBSERVED THAT RECEIPTS FROM PRO FESSION WERE SHOWN AT RS.3,28,05,321/-. AS AGAINST THAT, RECEIPTS IN FORM NO.26AS WERE REFLECTED TO THE TUNE OF RS.3,67,55,78 2/-. ON BEING CALLED UPON TO EXPLAIN THE REASONS AS TO WHY THE DIFFERENTIAL AMOUNT WAS NOT OFFERED FOR TAXATION, THE ASSESSE E SUBMITTED EXPLANATION ABOUT A SUM OF RS.11,03,000/- WHICH WAS ACCOUNTED FOR IN THE SUCCEEDING ASSESSMENT YEAR. IT FURTH ER SUBMITTED THAT SERVICE TAX OF RS.32,55,463/- WAS SHOWN SEPARATELY. THE AO GOT CONVINCED WITH THE ASSESSEES SUBMISSIONS TO THIS EXTENT. THE BALANCE AMOUNT OF RS.5,8 5,303 [RS.3,67,55,782 MINUS RS.3,61,70,479 (RS.3.18 CR AS DECLARED BY THE ASSESSEE + SERVICE TAX SHOWN SEPARATELY AT RS.32.55 LA KH + RECEIPTS SHOWN IN THE SUCCEEDING YEAR RS.11.03 LAKH)] WAS ADDED TO THE ASSESSEES TOTAL INCOME, WHICH CAME TO BE CONFIRMED AT THE HANDS OF THE LD. CIT(A). THE ASSESSEE IS AGGRIEVED BY THE CONFIRMATION OF THE ADDITION. ITA NOS.13 & 14/PUN/2019 GENSYS TECHNOLOGIES PVT. LTD., 3 4. I HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE LD. AR FAIRLY SUBMITTED THAT A SUM O F RS.5,85,303/- WAS, IN FACT, NOT RECORDED IN THE TOTAL RECE IPTS. HE, HOWEVER, CLAIMED THAT ONLY THE PROFIT ELEMENT EMBEDDED IN THIS AMOUNT SHOULD BE CHARGED TO TAX AND NOT THE ENTIRE AMOUNT OF RECEIPT. FOR THIS PROPOSITION, HE RELIED ON A JUDGMENT DATED 12.12.2017 OF THE HONBLE GUJARAT HIGH COURT IN CIT VS. HEMA MAHENDRA PACHCHIGAR 2018 TAXPUB (DT) 0218 (GUJ-HC) . HE FURTHER SUBMITTED THAT SLP AGAINST THIS JUDGMENT HAS BEEN DISMISSED. 5. IN THAT CASE, THE DIFFERENCE AROSE IN THE AMOUNT O F RECEIPTS AS PER FORM 26AS, WHICH WAS ADDED BY THE AO. THE TRIB UNAL HELD THAT ONLY THE PROFIT ELEMENT SHOULD BE ADDED ON THE AMOUN T OF SUCH RECEIPTS. IT IS BUT NATURAL THAT A RECEIPT CANNOT BE CHARGED TO TAX AND ONLY PROFIT ELEMENT IS TO BE INCLUDED IN THE TOTAL INCOME. THE RATIONALE BEHIND THIS PROPOSITION IS THAT THE EXPENSES INCURRED FOR EARNING A PARTICULAR REVENUE SHOULD BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME. IF IN A PARTICULA R SITUATION, THE ASSESSEE HAS NOT RECORDED RECEIPT AND ALSO NO T SHOWN THE CORRESPONDING EXPENSES AGAINST THAT RECEIPT, OBVIOUSLY, ONLY THE PROFIT ELEMENT IN THE RECEIPT WILL BE CHARGED ITA NOS.13 & 14/PUN/2019 GENSYS TECHNOLOGIES PVT. LTD., 4 TO TAX. ON THE OTHER HAND, IF ALL THE EXPENSES ARE ACTUALL Y CLAIMED AS DEDUCTION BUT ONLY A PART OF THE RECEIPT IS NOT SH OWN, THAT WOULD CALL FOR INCLUSION OF THE AMOUNT OF RECEIPT IN THE TO TAL INCOME BECAUSE THE MATCHING EXPENSES HAVE ALREADY BEEN TA KEN INTO CONSIDERATION IN THE DETERMINATION OF TOTAL INCOME. 6. ADVERTING TO THE FACTS OF THE INSTANT CASE, I FIND THAT THERE IS A NET DIFFERENCE IN THE RECEIPTS TO THE TUNE OF RS.5,85,303/ -. IT IS NOT THE CASE OF THE ASSESSEE THAT IT WAS CARRYING ON SOME B USINESS OUTSIDE THE BOOKS OF ACCOUNT AND THE DIFFERENTIAL AMOUNT ADDE D BY THE AUTHORITIES, IS A PART OF SUCH BUSINESS AND THE PAR ALLEL EXPENSES AGAINST SUCH RECEIPT WERE ALSO NOT RECORDED. HA D THIS BEEN THE SITUATION, THE ASSESSEE WOULD HAVE BEEN CERTAINLY ENTITLED TO DEDUCTION FOR EXPENSES INCURRED AGAINST SUCH UNACCOUNTED RECEIPTS, IN WHICH CASE ADDITION OF PROFIT RATE WO ULD HAVE BEEN WARRANTED. PER CONTRA, THE INSTANT SITUATION IS THAT THE ASSESSEE WAS NOT CARRYING OUT ANY BUSINESS OUTSIDE THE BO OKS OF ACCOUNT. ALL THE RECEIPTS AND EXPENSES WERE RECORDED. BY MISTAKE, A PART OF THE RECEIPT REMAINED TO BE INCORPORATED IN THE BOOKS OF ACCOUNT. THE LD. AR HAS NOT DRAWN MY ATTENTION TOWARDS ANY MATERIAL TO INDICATE THAT SOME UNDECLARED EXPENSES WERE ALSO INCURRED AGAINST SUCH UNRECORDED RECEIPT. SINCE THE ITA NOS.13 & 14/PUN/2019 GENSYS TECHNOLOGIES PVT. LTD., 5 EXPENSES RELATING TO SUCH UNDECLARED RECEIPT OF RS.5,85,30 3/- WERE ALREADY ACCOUNTED FOR IN THE TOTAL EXPENSES CLAIMED AND ALLOWED, THERE CAN BE NO RATIONALE IN ALLOWING FURTHER DEDUCTION TOWARDS EXPENSES QUA THIS RECEIPT FOR THE PURPOSE OF INCLUSION IN THE TOTAL INCOME. I, THEREFORE, HOLD THAT THE DECISION RELIED O N BY THE LD. AR IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE AN D THE DECISION OF THE AUTHORITIES BELOW IN THIS REGARD IS UNIMPEACHABLE. 7. THE FACTS FOR THE A.Y. 203-14 ARE MUTATIS MUTANDIS SIMILAR. FOR THIS YEAR, THE ASSESSEE RECORDED RECEIPTS IN ITS BOOKS OF ACCOUNT AT RS.3,95,55,918/-. THE AMOUNT OF GROSS RECE IPTS AS PER FORM 26AS WAS RS.4,01,27,152/-. THE ASSESSEE WAS CO NFRONTED WITH THE DIFFERENCE OF RS.5,75,234/-. THE ASSESSEE AGR EED FOR ITS MISTAKE AND OFFERED THE DIFFERENTIAL AMOUNT OF RS.5,75,234 /- FOR TAXATION. THE LD. CIT(A) ECHOED THE ASSESSMENT ORDER ON THIS POINT, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEF ORE THE TRIBUNAL. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL O F RELEVANT MATERIAL ON RECORD, I FIND THAT THE FACTS OF THE ADD ITION FOR THE INSTANT YEAR ARE SIMILAR TO THOSE OF THE PRECEDING Y EAR, THE ITA NOS.13 & 14/PUN/2019 GENSYS TECHNOLOGIES PVT. LTD., 6 APPEAL FOR WHICH HAS BEEN DISPOSED OFF HEREINABOVE. FOLLO WING MY VIEW, I UPHOLD THE ADDITION OF RS.5,75,234/- IN THE TOTAL INCOME OF THE ASSESSEE. 9. IN THE RESULT, BOTH THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY, 2019. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 15 TH MAY, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-1, PUNE 4. THE PR. CIT-1, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NOS.13 & 14/PUN/2019 GENSYS TECHNOLOGIES PVT. LTD., 7 DATE 1. DRAFT DICTATED ON 14-05-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14-05-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *