Ritu Subash Cipy, Pune V. Assistant Commissioner Income-tax,

ITA 1816/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9510 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: D R BARVE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI RAJESH KUMAR, AM . / ITA NO . 1816 /P U N/201 4 / ASSESSMENT YEAR : 20 09 - 10 RITU SUBASH CIPY, PROP. : SPECIALITY COATINGS, T 127, MIDC BHOSARI INDUSTRIAL AREA, BHOSARI, PUNE PAN : AEHPC9667A . / APPELLANT VS. THE ASSISTANT COMMISSIONER OF I NCOME TAX, CIRCLE 8, PUNE . / RESPONDENT / APPELLANT BY : S HRI D.R. BARVE / RESPONDENT BY : MS. ANN KAPTHUAMA / DATE OF HEARING : 0 3 .05. 201 7 / DATE OF PRONOUNCEMENT: 05 . 0 5 .201 7 / ORDER PER RAJESH KUMAR, A M : TH E APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE DATED 30 - 06 - 2014 FOR THE ASSESSMENT YEAR 20 09 - 10 ARISING OUT OF ASSE SSMENT ORDER PASSED U/S. 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT). ITA NO . 1816/PUN/2014 2 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) , PUNE HAS ERRED IN CONTINUING THE ADDITION OF RS.1,96,346/ - ON ACC OUNT OF D IFFERENCE IN TURNOVER OF LARSEN & TOUBRO WITH REFERENCE TO 26AS W I T H O U T ACCEPTING AND APPRECIATING THE RECO N CIL I ATION S UB MITTED FOR THE Y EA RS 2 007 TO 2009 SHOWI N G THE TURNOVER AND RE L ATED TDS ARISING DUE TO MERCANTI L E SYS T EM FO LL OWE D BY THE APPE LL ANT . AS THE ADDITION IS ILL FO U NDED , THE SAME P L EASE B E CANCE LL ED . 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), PUNE HAS FURTHER ERRED IN CONTINUING THE ADDITION OF INCOME FROM BANK INTEREST AMOUNTING TO RS.31 , 427 / - DUE TO MIS - MATCH OF AMOUNTS W I T H REFERENCE TO 26AS DATA. 3) THE APPEL L ANT CRAVES LEAVE TO A D D, MOD I FY , EXPAND THE GROUND(S) OF APPEAL AND LAY / PRODUCE THE EVI D ENCE(S) AT THE T IME OF H EARI N G . 3. THE ISSUE S RAISED IN GROUND NO. 1 & 2 BY THE ASSESSEE ARE AGAINST THE CONFIRMATION OF A DDITION S OF RS. 1,96,346/ - IN RESPECT OF DIFFERENCE IN THE RECEIPTS FROM LARSON & TUBRO LTD AND RS. 31,427/ - ON ACCOUNT OF NOT SHOWING THE INCOME OF BANK INTEREST AS PER FORM 26AS. 4. THE B RIEF FACT S OF THE CASE ARE THAT , DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER PROVIDED THE ASSESSEE WITH A COPY OF ITS DATA AND CALLED UPON TO RECONCILE THE SAME WITH THE BOOKS OF ACCOUNT MAINTAIN ED BY HER. THE ASSESSEE AFTER RECONCILING THE SAME, SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE REC EIPTS FROM LARSON & TURBO LTD TO THE TUNE OF RS.11,07,726/ - , INTEREST FROM PUNJAB NATIONAL BANK RS.8,141/ - AND FROM INDIAN BANK RS.23,286/ - WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE DURING THE YEAR . THE ASSESSEE EXPLAINED THE DIFFE RENCE IN RECEIPTS FROM LARSON & TUBRO LTD TO BE ON ACCOUNT OF B ILL NO. 176/07 TO B ILL NO. 179/07 AGGREGATING TO RS.9,11,380 / - WHICH WERE ACCOUNTED FOR IN ASSESSMENT YEAR 2008 - 09 AT THE TIME OF RAISING THE BILL WHEREAS THESE BILLS WERE DEALT WITH AND ACCOU NTED FOR BY THE SAID COMPANY IN AY 2009 - 10 AND TDS WAS ALSO DEDUCTED ITA NO . 1816/PUN/2014 3 AND DEPOSITED ACCORDINGLY. THE ASSESSEE ALSO EXPLAINED THE SOME LAG OF TWO TO THREE MONTHS WHICH WAS NORMALLY TAKEN BY THE SAID COMPANY IN ATTENDING TO THE BILLS RAISED BY THE ASSESSEE. T HE REMAINING DIFFERENCE OF RS. 1,96,346/ - WAS ALSO ATTRIBUTED TO THE SAME PRACTICE FOLLOWED BY THE ASSESSEE AND THE PAYER. THE ASSESSING OFFICER ACCEPTED THE EXPLANATION OF THE ASSESSEE IN RESPECT OF 9,11,380/ - WHEREAS RS.1,96,346/ - WAS ADDED TO THE INCO ME OF THE ASSESSEE AS T HE SAME WAS NOT EXPLAINED. AS REGARDS INTEREST FROM BANKS THE ASSESSING OFFICER ADDED THE SAME TO THE INCOME OF THE ASSESSEE CITING THE REASONS THAT THE ASSESSEE DID NOT REPLY OR FILED ANY EXPLANATION FOR NOT SHOWING THE SAID INCOM E DURING THE YEAR . FINALLY, THE ASSESSMENT WAS FRAMED VIDE ORDER DATED 23 - 12 - 2011 PASSED U/S. 143(3) , ASSESSING THE INCOME AT RS.63,22,690/ - AS AGAINST THE RETURN ED INCOME OF RS.60,94,920/ - BY MAKING ADDITION OF RS.2,27,773/ - BEING DIFFERENCE IN ITS DA TA. 5. IN THE APPELLATE PROCEEDINGS THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THAT DESPITE SEVERAL OPPORTUNITIES THE ASSESSEE COULD NOT RECONCI LE THE DIFFERENCE WHICH PERTAINED TO SINGLE PARTY I.E. LAR SON & TURBO LTD. AND AS REGARDS THE SECOND ITEM FOR ADDITION OF RS.31,427/ - BEING INTEREST FROM BANKS THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSEE WAS SU PPOSED TO OFFER THE BANK INTEREST FOR TAXATION ON THE ACCRUAL BASIS BY REJECT IN G THE PLEA OF THE ASSESSEE THAT THE INTEREST IS BEING ACCOUNTED FOR MATURITY BASIS. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER O BSERVED THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE, THE INTEREST SHOULD HAVE BEEN OFF ERED FOR TAXATION ON THE SAID BASIS AND ACCORDINGLY, DISMISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND ALSO. ITA NO . 1816/PUN/2014 4 6. THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT SO FAR AS THE GROUND NO. 1 QUA THE ADDITION OF RS.1,96,346/ - IS CONCERNED THE ASSESSEE HAS B EEN ACCOUNTING FOR THE AMOUNT RECEIVABLE FROM LARSON AND TURBO LTD. ON THE BASIS OF BILLS RAISED AND WHEREAS AS A MATTER OF FACT THE SAID COMPANY WAS ACCOUNTING THESE BILLS AFTER A GAP OF 2 - 3 MONTHS WHICH HAS INEVITABLY RESULTING INTO DIFFERENCE IN THE RECEIPTS AS PER ASSESSEES RECORDS AND AS PER ITS DATA. THIS IS BECAUSE OF THE FACT THAT THE BILLS RAISED BY THE ASSESSEE TOWARDS THE END OF THE YEAR WERE ACCOUNTED FOR IMMEDIATELY BEFORE THE YEAR END WHEREAS THESE WERE TAKEN INTO ACCOUNT BY THE LARSON & TUBRO LTD IN THE NEXT YEAR. THE LD. AR TOOK US THROUGH RECONCILIATION STATEMENT OF THREE YEARS OF TOTAL RECEIPTS FROM L&T LTD AS PER ASSESSEES BOOKS OF ACCOUNT NAMELY ASSESSMENT YEARS 2007 - 08, 20 08 - 09 AND 2009 - 10 VIS - - VIS ITS DATA. AS PER THE SAID RECONCILIATION THE TOTAL RECEIPTS FROM L & T LTD WERE RS.94,32,187/ - WHEREAS AS PER ITS DATA WERE RS.89,07,230/ - WHICH MEANS THAT RS. 5,24,957/ - / - WAS MORE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS COMPARED TO THE BOOKS OF ACCOUNT OF L&T AND ITS DATA. T HE LD COUNSEL FOR THE ASSESSEE ARGUED THAT THERE WAS NO DIFFERENCE IN THE RECEIPTS FROM L&T LTD . AND WHATEVER DIFFERENCE IS THERE THAT IS DUE TO ACCOUNTING OF RECEIPTS IN DIFFERENT YEAR. AS REGARDS THE SECOND GROUND THE LD. AR SUBMITTED THAT THOUGH THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BUT IN RESPECT OF THE INTEREST FROM BANKS THE ASSESSEE WAS OFFERING TO SAME FOR TAXATION ON MATURITY BASIS WHICH HAS CONSISTENTLY BEEN FOLLOWED BY THE ASSESSEE OVER THE YEARS AND ACCEPTED BY THE REVENU E. FINALLY, THE LD. AR PRAYED THAT THE ADDITION SO CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD BE DELETED AS THE SAME WOULD RESULT INTO DOUBLE TAXATION AS IT WAS NOT A CASE OF NON - TAXATION BUT A CASE THE INCOME WAS OFFERED IN THE DIFFEREN T YEARS AND NOT IN THE YEAR WHEN IT APPEARED IN THE ITS DATA. ITA NO . 1816/PUN/2014 5 7. THE LD. DR ON THE OTHER HAND RELIED STRONGLY ON THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL PLACED ON RECORD INCLUDING THE ORDE RS OF AUTHORITIES BELOW . WE FIND THAT A SUM OF RS. 1,96,346/ - WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE BETWEEN THE BOOKS OF THE ASSESSEE AND THE ITS DATA. AS REGARDS THE INTEREST FROM BANKS THE ASSESSING OF FICER MADE ADDITION SINCE NO EXPLANATION WAS SUBMITTED. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORDER OF ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE FAILED TO RECONCILE THE AMOUNT RECEIVED FROM L&T WHEREAS QUA THE SECOND ISSUE THE COMMISS IONER OF INCOME TAX (APPEALS) CAME TO THE CONCLUSION THAT THE INTEREST SHOULD BE OFFERED ON THE ACCRUAL BASIS AS PER SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. BEFORE US THE LD. AR EXPLAIN ED THAT THE ASSESSEE FOLLOWING THE ACCRUAL SYSTEM OF ACCOUNTING IN RESPECT OF RECEIPTS EXCEPT THE INTEREST FROM BANKS WHICH WAS RETURNED ON MATURITY BASIS. UPON PERUSAL OF RECONCILIATION STATEMENT OF BOOKS OF ACCOUNT OF THE ASSESSEE AS PER L&T AND ITS DATA IN RESPECT OF THREE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 200 7 - 08, 2008 - 09 AND 2009 - 10 FILED AT PAGE NO 14 OF THE PAPER BOOK, WE FIND THAT TOTAL RECEIPTS OF 3 YEARS WERE RS.94,32,187/ - WHEREAS TOTAL PAYMENTS AS PER L&T AND ITS DATA WERE RS.89,07,230/ - MEANING THEREBY THAT THE TURNOVER AS PER BOOKS OF ACCOUNT OF THE ASSESSEE WAS MORE BY RS. 5,24,957/ - . IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE FIND MERIT IN THE CASE OF THE ASSESSEE. A S REGARDS THE INTEREST RECEIVED FROM BANKS, THE ASSESSEE HAS CONSISTENTLY BEEN FOLLOWING THE SYSTEM OF RETURNING THE INCOME ON MATURI TY BASIS WHICH WAS BEING ACCEPTED BY THE DEPARTMENT. I N VIEW OF THESE FACTS WE ARE UNABLE TO AGREE WITH THE CONCLUSION DRAWN BY THE COMMISSIONER OF INCOME ITA NO . 1816/PUN/2014 6 TAX (APPEALS) QUA THE DIFFERENCE IN ITS DATA. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER WITH A DI RECTION TO AO TO DELETE THE ADDITIONS OF RS. 2,27,773/ - . 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2017. SD/ - SD/ - ( SUSHMA CHOWLA ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE ; DATED : 5 TH MAY, 201 7 . RK / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - V , PUNE ; 4. / THE CIT - V, PUNE; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE