SHANKAR MAHAL CO OP HSG SOCIETY LTD, MUMBAI V. ITO 16(1)(3), MUMBAI

ITA 1599/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8889 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI P.K. BANSAL (VP ) AND SHRI RAM LAL NEGI (JM) ITA NO. 1599 /MUM/20 1 6 ASSESSMENT YEAR: 20 11 - 12 M/S SHANKAR MAHAL CO - OPERATIVE HOUSING SOCIETY LTD., SOPHIA COLLEGE LANE, BREACH CANDY , MUMBAI - 400026 PAN: AAAAS7573B VS. THE ITO 16(1)(3), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI PURUSHOTTAM KUMAR ( SR. DR) DATE OF HEARING: 11 /10 /201 7 DATE OF PRONOUNCEMENT: 23 / 10 /201 7 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 14/01/2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 3 0 , MUMBAI , FOR THE A S S ESSMENT YEAR 2011 - 12 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE A CO - OPERATIVE HOUSING SOCIETY HEAVING INCOME FROM OTHER SOURCES MAINLY FROM INTEREST INCOME SUCH AS INTEREST RECEIVED FROM COOPERATIVE BANK AND NON - COOPERATIVE BANKS TRANSFER FEES RECEIVED ETC., FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 3,25,930/ - . THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICES UNDER SECTION 143 (2) AND 142(1) 2 ITA NO. 1599 / MUM /2016 ASSESSMENT YEAR: 2011 - 12 OF THE ACT WERE ISSUED. IN RESPONSE THEREOF THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO AND FURNISHED THE REQUISITE DETAILS. ON THE BASIS OF SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND THE DETAILS SUBMITTED THE AO MADE INTER ALIA ADDITION OF RS. 4,41,000/ - ON THE BASIS OF A AIR INF ORMATION WHICH REVEALED THAT THE ASSESSEE RECEIVED AN AMOUNT OF RS. 11,61,000/ - FROM VODAFONE ESSAR LTD. ON WHICH TAX AT SOURCE (TDS) WAS DIRECTED HOWEVER , THE ASSESSEE OFFERED ONLY RS. 7.20.000/ - . 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER AND CONTENDED THAT THE AO HAS WRONGLY ADDED THE AMOUNT OF REFUNDABLE DEPOSIT TAKEN AS SECURITY FOR FUTURE DAM AGE AS COULD POSSIBLY BE CAUSED BY THE TENANT (VODAFONE) HAVING NO REVENUE IMPLICATION. WITHOUT PREJUDICE TO ABOVE, MERELY BECAUSE VODAFONE INADVERTENTLY DEDUCTED TAX AT SOURCE REVENUE RECOGNITION CANNOT BE PRESUMED AUTOMATICALLY IN THE HANDS OF THE APPELL ANT. THE LD CIT(A) AFTER HEARING THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE AO. 4 . AGGRIEVED BY THE ORDER OF LD. CIT (APPEAL S ), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUND : - 1. ADDITION ON ACCOUNT OF AL LEGED REFUNDABLE SECURITY DEPOSIT ACCEPTED AGAINST FUTURE DAMAGE NO REVENUE IMPLICATION NO ADDITION RS/ 4,41,000/ - . (A) THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION WITHOUT APPRECIATING THAT THE AMOUNT OF REFUNDABLE DEPOSIT TAKEN AS SECURITY FOR FU TURE DAMAGE AS COULD POSSIBLY BE CAUSED BY THE TENANT (VODAFONE) HAS NOT REVENUE IMPLICATION. THEREFORE, WHEN THE REPAIR AMOUNT INCURRED ON THE DAMAGE CAUSED BY VODAFONE EXCEEDS THE DEPOSIT AMOUNT, NO ADDITION THEREOF IS AT ALL CALLED FOR. (B) WITHOUT PREJUDI CE TO ABOVE, MERELY BECAUSE VODAFONE INADVERTENTLY DEDUCTED TDS, REVENUE RECOGNITION CANNOT 3 ITA NO. 1599 / MUM /2016 ASSESSMENT YEAR: 2011 - 12 BE PRESUMED AUTOMATICALLY IN THE HANDS OF THE APPELLANT, THEREFORE THE LD. CIT (A) IS WRONG TO CONFIRM THE ADDITION AND THE SAME MAY BE DELETED. 2. LEVY OF PENAL INT ERESTS THE APPELLANT, ON MERITS, DENIES ITS LIABILITY TO PENAL INTEREST. 5. THIS CASE WAS FIXED FOR HEARING FOR 11.10.17. WHEN THE CASE WAS CALLED FOR HEARING NEITHER THE ASSESSEE NOR THE AUTHORIZED REPRESENTATIVE APPEARED. WE NOTICED THAT ON THE EARLI ER DATES OF HEARING EITHER THE ASSESSEE DID NOT APPEAR OR ADJOURNMENTS WERE SOUGHT ON BEHALF OF THE ASSESSEE. SO, WE ARE CONVINCED THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING ITS APPEAL. HENCE, WE DECIDED TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATER IAL ON RECORD AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE (DR) . ACCORDINGLY, WE ALLOWED THE LD. DR TO ADVANCE ARGUMENTS ON BEHALF OF THE REVENUE. 6. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ORDER OF THE LEARNED CIT(A) SUBMITT ED THAT SINCE THE ASSESSEE HAD CLAIMED TDS OF RS. 1,16,100/ - THE ASSESSEE WAS ASKED AS TO WHY THE DIFFERENCE OF RS. 4,41,000/ - SHOULD NOT BE ADDED TO THE TOTAL INCOME AND SINCE THE ASSESSEE COULD NOT EXPLAIN THE SAME , THE LEARNED CIT(A) HAS RIGHTLY UPHELD T HE ADDITION MADE BY THE AO. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE ENTIRE MATERIAL ON RECORD. THE ONLY GRIEVANCE OF THE A SSESSEE IS THAT THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE ADDITION MADE BY THE AO. WE NOTICE THAT THE ASSESSEE HAS CONTENDED BEFORE THE AUTHORITIES LD. CIT(A) THAT IT HAD ENTERED INTO AN AGREEMENT WITH VODAFONE FOR EXTENDING CERTAIN SPACE FACILITY FOR WHICH THE COMPANY AGREED TO PAY RENT OF RS. 60,000/ - PER 4 ITA NO. 1599 / MUM /2016 ASSESSMENT YEAR: 2011 - 12 MONTH AND BESIDES THAT DEPOSIT FOR SECURITY PURPOSE. OUT OF THE TOTAL REC EIPT OF R S 11,61,000/ - TOTAL REVENUE WAS RS 7,20,000/ - WHICH HAS BEEN OFFERED TO TAX. DUE TO SOME DISPUTE THE SAID AMOUNT WAS NOT RETURNED AND DEPOSITED IN THE BANK. SINCE , VODAFONE HAD DEDUCTED AN AMOUNT OF R S 1,16,000/ - AS TDS , IT CLAIMED THE CREDIT BALANCE OF RS 4,41,000/ - . THE LD. CIT(A) HAS AFFIRMED THE ADDITION MADE BY THE AO HOLDING AS UNDER AS UNDER: 9.3 PERUSED THE RIVAL CONTENTIONS ON THE ISSUE UNDER APPEAL. THE AO ADDED THE AMOUNT OF R S. 4,41,000/ - WHICH IS THE DIFFERENCE OF AMOUNT RECEIVED FROM VO DAFONE OF R S. 11,61,000/ (MINUS) RS. 7,20, 000/ - FOR THE REASON THAT THE AMOUNT IS NOT OFFERED TO TAX THOUGH THE TDS IS DEDUCTED ON THE ENTIRE AMOUNT. WHEREAS THE APPELLANT SAYS THAT BALANCE AMOUNT IS FOR THE PURPOSE OF DEPOSIT FOR SECURITY PURPOSE AND IS A BALANCE SHEET ITEM AND CANNOT BE ADDED AS REVENUE RECEIPT. THE APPELLANT TRIES TO RECONCILE THE BALANCE IN THE LIABILITIES AND SAYS THAT AN AMOUNT OF R S. 15,896/ ONLY REMAINS UN SUBSTANTIATED FROM THE BALANCE SHEET ITEMS. HOWEVER HE COULD NOT RECONCILE TH E SAME PROPERLY. IN THE SUBMISSIONS IT IS STATED THAT AN AMOUNT OF R S 3 , 00 , 104 UNDER THREE DIFFERENT HEADS IN THE BALANCE SHEET AS MENTIONED IN PARA 8.2. AGAIN AFTER THAT THE APPELLANT DISCUSSED THE AMOUNT OF RS 4,41,000/ AND THE TDS AMOUNT OF 10% ON SUCH AMOUNT AND NET FIGURE IS ARRIVED AT R S 3,96,000/ - . WHEREAS AN AMOUNT OF R S 1, 16,000/ IS DIRECTED AS TDS ON THE TOTAL AMOUNT OF R S 11 , 61 , 000/ . AT THAT POINT THE APP ELLANT SAYS THAT AN AMOUNT OF RS 96,796/ IS NOT IN A POSITION TO EXPLAIN. BUT LATER IT I S BROUGHT DOWN TO RS 15, 896/ . WITH ALL THESE THINGS IT IS CLEAR THAT THE APPELLANT TRIES TO RECONCILE THE BALANCE WITH THE LIABILITY SHOWN IN THE B/S WHICH HE HAS MISERABLY FAILED TO DO SO. ON VERIFICATION OF THE BALANCE SHEET FURNISHED FOR THE YEAR ENDI NG MARCH, 2011 IT IS NOTICED THAT THE BALANCES IN THE LIABILITIES , CLAIM TO HAVE BEEN OF THE DEPOSITS FROM THE AMOUNTS RECEIVED FROM VODAFONE ARE BROUGHT FORWARD BALANCES FROM THE EARLIER YEAR. APART FROM THAT, AS PER THE AGREEMENT THERE IS NO MENTION OF A MOUNT OF R S 1,75,000/ WHICH IS SHOWN UNDER THE HEAD LIABILITIES. IN VIEW OF THE ALL THESE DISCREPANCIES AND ALSO THE APPELLANT COULD NOT ABLE TO RECONCILE THE 5 ITA NO. 1599 / MUM /2016 ASSESSMENT YEAR: 2011 - 12 BALANCE AMOUNT OF R S 4, 41,000/ WHICH WAS NOT OFFERED TO TAX, THE CONTENTIONS OF THE APPELLANT IS NOT FOUND TO BE IN ORDER AND FOR THIS REASON IT IS HELD THAT THE AO IS RIGHT IN CONSIDERING THE ENTIRE AMOUNT FOR TAXATION AND ACCORDINGLY THE TOTAL AMOUNT RECEIVED FROM VODAFONE LTD OF R S 11 , 61 , 000/ IS TREATED AS REVENUE RECEIPT OF THE CURRENT YEAR AN D IS TO BE ASSESSED. THE GROUND NUMBER 4 IS DISMISSED AND APPELLANT FAILS ON THIS GROUND. 8. FROM THE OBSERVATIONS OF THE LD. CIT(A) THESE FACTS EMERGE THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH VODAFONE FOR EXTENDING CERTAIN SPACE FACILITY AND THE SAID COMPANY AGREED TO PAY THE RENT OF RS. 60,000/ - PER MONTH BESIDES SECURITY DEPOSIT. ACCORDING TO THE ASSESSEE OUT OF RS. 11,61,000/ - RECEIVED FROM VODAFONE, RS. 7,20,000/ - WAS RECEIVED TOWARDS RENT WHICH WAS OFFERED TO TAX AND THE REMAINING AMOUNT WAS RECEIVED TOWARDS SECURITY . THE AUTHORITIES BELOW HAVE TREATED THE REMAINING AMOUNT AS REVENUE RECEIPT FOR THE REASON THAT THE ASSESSEE HAD CLAIMED TDS OF RS. 1,16,100/ - IN COMPUTATION OF INCOME. AS PER THE AO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FAILED TO EXPLAIN AS TO WHY THE COMPANY VODAFONE DEDUCTED THE TAX AT SOURCE ON THE ENTIRE PAYMENT IF THE PART OF IT WAS TOWARDS SECURITY . ON THE OTHER HAND THE LD. CIT(A) AFFIRMED THE ACTION OF AO HOLDING THAT THE ASSESSEE HAS FAILED TO RECONCILE THE BALA NCE WITH THE LIABILITY SHOWN IN THE BALANCE SHEET TO SUBSTANTIATE ITS PLEA . SO, I N OUR CONSIDERED VIEW BEFORE MAKING ADDITION OF THE AMOUNT IN QUESTION , AO SHOULD HAVE VERIFIED THE FACTS TO ESTABLISH THAT THE ENTIRE AMOUNT WAS REVENUE RECEIPT. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT FURTHER VERIFICATION OF THE FACTS BY THE AO IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE IS NECESSARY. HENCE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE ISSUE BACK TO THE FILE OF AO TO D ECIDE THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE PLEA OF THE ASSESSEE . NEEDLESS TO SAY THAT AO SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 6 ITA NO. 1599 / MUM /2016 ASSESSMENT YEAR: 2011 - 12 IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2011 - 2012 I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER , 2017 . SD/ - SD/ - ( P.K. BANSAL ) ( RAM LAL NEGI ) VICE - PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED: 23 / 10 / 2017 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI