Smt. Chetnaben Jayeshbhai Patel, Ahmedabad V. The Income tax Officer,Ward-6(2), Ahmedabad

ITA 1996/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2108 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 10-04-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Keywords: Tangible material; Bad and doubtful debts; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO. 1996/AHD/2010 ASSESSMENT YEAR :2006-07 SMT. CHETNABEN JAYESHBHAI PATEL 53, TIRTHNAGAR SOCIETY VIBHAG -1, SOLA ROAD, GHATLODIA, AHMEDABAD V/S . THE INCOME TAX OFFICER WARD 6(2) AHMEDABAD PAN NO. A BC P P2425P (APPELLANT) .. (RESPONDENT) BY APPELLANT MS. URVASHI SODHAN, A.R. /BY RESPONDENT SHRI T. SANKAR, SR. D.R. /DATE OF HEARING 10.04.2013 /DATE OF PRONOUNCEMENT 10.05.2013 O R D E R PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. CIT(A)-XVI, AHMEDABAD, DATED 03.05.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE FACTS AS CULLED OUT FROM THE ORDERS ARE AS U NDER: 3. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM BUSINESS AS PARTNER OF A FIRM AND ALSO INCOME FROM OTHER SOURCE S. THE ASSESSEE FILED HER RETURN OF INCOME FOR A.Y. 06-07 ON 30.07.2006, DECL ARING TOTAL INCOME AT RS.7,38,355/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT VIDE OR DER DATED 05.12.2008 ITA NO. 1996/AHD/2010 A.Y. 06-07 PAGE 2 AND THE TOTAL INCOME WAS DETERMINED AT RS.9,13,510/ -. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). CIT(A), VIDE HIS ORDER DATED 03.05.2010, DISMISSED THE APPE AL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND RAISED FOLLOWING EFFECTIVE GROUNDS: (1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,75,152/- WHICH WAS WRONGLY ADDED TO THE INCOME DISCLOSED IN THE REVISED STATEMENT OF INCOME. (2) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,61,527/- BEING INTEREST FROM M/S. GANESH TRADI NG CO. WHICH IS NEVER RECEIVED. 4. BEFORE US, GROUND NO.1 IS WITH RESPECT TO ADDITI ON OF RS.1,75,152/-. THE LD. A.R. DID NOT PRESS HIS GROUND BUT HOWEVER SUBMI TTED THAT THE INCOME WAS OFFERED BY THE ASSESSEE AND IT SHOULD NOT BE CONSID ERED AS AN UNDISCLOSED INCOME. THEREFORE, THE GROUND IS DISMISSED AS NOT PRESSED. 5. GROUND NO.2 IS WITH RESPECT TO THE ADDITION OF R S.2,61,527/- :- DURING THE COURSE OF ASSESSMENT PROCEEDING ON VERIFICATION OF THE TDS VOUCHERS, THE A.O. NOTICED THAT THE ASSESSEE HAD RECEIVED INTERES T OF RS.64,058/- FROM KHODIDAS FAMILY TRUST AND INTEREST OF RS.6,20,511/- FROM NIRAV LAMINATION, BUT IN THE RETURN OF INCOME, THE ASSESSEE HAD DISCL OSED INTEREST OF RS.52,595/- FROM KHODIDAS FAMILY TRUST AND RS.4,56,916/- FROM N IRAV LAMINATION. THE A.O. ALSO NOTICED THE DISCREPANCY IN THE BANK INTER EST AS PER THE BANK STATEMENT AND AS SHOWN IN THE RETURN OF INCOME. TH E ASSESSEE WAS ASKED TO ITA NO. 1996/AHD/2010 A.Y. 06-07 PAGE 3 EXPLAIN THE DISCREPANCY. IN RESPONSE, THE ASSESSEE SUO MOTO REVISED THE TOTAL INCOME TO RS.6,91,980/- AS AGAINST RS.5,16,82 8/- FILED WITH THE RETURN OF INCOME . FURTHER THE ASSESSEE STATED THE INTEREST INCOME FROM M/S. GANESH TRADING CO. AT RS. NIL AS AGAINST RS 2,61,527/- SHO WN IN THE ORIGINAL RETURN OF INCOME THAT WAS FILED ON 30.07.2006. THE ASSESSEE S SUBMISSION FOR EXCLUDING THE INTEREST OF RS.2,61,527/- FROM M/S. G ANESH TRADING CO. WAS THAT THE AFORESAID INTEREST WAS IN FACT NOT RECEIVED BY THE ASSESSEE AND THEREFORE NO TAX WAS PAYABLE ON THE SAME. THE A.O. DID NOT A CCEPT THE CONTENTION OF THE ASSESSEE AND DETERMINED THE TOTAL INCOME AT RS. 9,13,510/-. AGGRIEVED BY THE ORDER OF THE A.O., ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). 6. BEFORE CIT(A), IT WAS INTER ALIA SUBMITTED THAT NO INTEREST WAS PAID BY M/S. GANESH TRADING CO. TO THE ASSESSEE AND THEREFO RE, THE INTEREST OF RS.2,61,527/- OFFERED IN THE ORIGINAL RETURN OF INC OME SHOULD NOT BE ASSESSED. IT WAS FURTHER SUBMITTED THAT M/S. GANESH TRADING C O. GOT ITS BOOKS OF ACCOUNT AUDITED U/S. 44AB AND THE TAX AUDIT REPORT SIGNED O N 26.12.2006 AND THE RETURN OF INCOME WAS FILED BY THE FIRM ON 22.12.200 6. WHILE FILING THE RETURN OF INCOME ON 30.07.2006, THE ACCOUNTANT OF THE ASSESSE E CALCULATED PROVISIONAL AMOUNT OF INTEREST RECEIVABLE AND OFFERED IT TO TAX WHEREAS IN REALITY, THE INTEREST WAS NOT DUE AND WAS ALSO NOT RECEIVED BY T HE ASSESSEE. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTAB LE BY THE CIT(A). HE UPHELD THE ORDER OF THE A.O. BY HOLDING AS UNDER: 5.1 I HAVE CONSIDERED THE SUBMISSIONS, I DO NOT AG REE WITH THE AUTHORISED REPRESENTATIVE THAT INCOME OF RS.2,61,52 7/- WAS WRONGLY ITA NO. 1996/AHD/2010 A.Y. 06-07 PAGE 4 SHOWN IN THE ORIGINAL RETURN OF INCOME AS RECEIVABL E FROM M/S.GANESH TRADING CO. THE FACT THAT THE APPELLANT HAS GIVEN LOANS AND ADVANCES OR CONTRIBUTED THE CAPITAL TO THIS FIR M HAS NOT BEEN DISPUTED BY THE APPELLANT. THE RATE OF INTEREST ON WHICH THE APPELLANT HAS BEEN RECEIVING INTEREST IN PAST HAS ALSO NOT BE EN DISPUTED BY THE AUTHORISED REPRESENTATIVE. ONLY CONTENTION OF THE A PPELLANT IS THAT SINCE DURING THE YEAR THE APPELLANT HAS NOT RECEIVE D THE INTEREST INCOME OF RS. 2,61,527/-, IT CANNOT BE TAXED AS A R EAL INCOME OF THE APPELLANT. AS STATED ABOVE, SINCE THE APPELLANT HAS GIVEN LOANS AND ADVANCE TO THIS FIRM AND IN THE PAST HAS RECEIVED I NTEREST INCOME FROM THIS FIRM AND THERE WAS NO SPECIFIC REASONS ME NTIONED BEFORE THE ASSESSING OFFICER OR BEFORE ME AS TO WHY THE IN TEREST INCOME HAS NOT ACCRUED TO THE APPELLANT DURING THE YEAR, I AGREE WITH THE ASSESSING OFFICER THAT THE CONTENTION OF THE APPEL LANT THAT INTEREST INCOME OF RS. 2,61,527/- IS NOT TAXABLE IS NOTHING BUT AN AFTER THOUGHT SO AS TO AVOID TAX LIABILITIES AND SUBSEQUE NT PENALTY PROCEEDINGS. WHY INCOME OF RS. 2,61,527/- IS NOT ACCRUED TO THE APPELLANT HAS NOT BEEN DISCUSSED ANY WHERE EITHER I N THE WRITTEN SUBMISSION OF THE AUTHORISED REPRESENTATIVE OR ARGU ED BEFORE ME AT THE TIME OF HEARING OR BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. MERE FACT THAT THE INTEREST PAYMENT WAS NOT MADE BY THE FIRM TO THE APPELLANT DURING THE YE AR DOES NOT MEAN THAT THE INTEREST INCOME HAS NOT ACCRUED TO THE APP ELLANT DURING THE YEAR. FURTHER THE APPELLANT HAS BEEN FOLLOWING MER CANTILE SYSTEM OF ACCOUNTING. THE INTEREST INCOME IS THEREFORE, TAXAB LE ON ACCRUAL BASIS. EVEN IF THE FINANCIAL CONDITION OF THE FIRM HAS BECOME BAD, THEN' ALSO THE AMOUNT OF INTEREST INCOME OFFERED BY THE APPELLANT IN THE ORIGINAL RETURN IS ASSESSABLE IN THE HANDS OF T HE APPELLANT. IN THAT CASE, IF THE APPELLANT WISH SO, HE COULD HAVE CLAIM ED THE AMOUNT OF BAD DEBTS IN SUBSEQUENT ASSESSMENT YEAR. BUT IN THE ASSESSMENT ITA NO. 1996/AHD/2010 A.Y. 06-07 PAGE 5 ORDER FOR A Y 2006-07 THE INTEREST INCOME OF RS. 2, 61,527/- IS ASSESSABLE. 5.2 FURTHER FOR REVISING THE INTEREST INCOME THE AP PELLANT SHOULD HAVE FILED THE REVISED RETURN OF INCOME AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD 284 IT R 323 (SC). SINCE IN THIS CASE, THE APPELLANT HAS NOT FILED ANY REVISED RETURN, BUT ONLY REVISED STATEMENT OF INCOME, THE ASSESSING OFF ICER WAS JUSTIFIED IN ASSESSING THE INCOME OF RS. 2,61,527/-. 5.3 THE ARGUMENT OF THE AUTHORISED REPRESENTATIVE T HAT THERE WAS BONAFIDE ERROR ON THE PART OF THE APPELLANT TO UNDE RSTATE THE INTEREST INCOME OF RS. 1,75,157/- FROM KHODIDAS FAMILY TRUST S. NIRAV LAMINATION AND OFFERING RS. 2,61,527/- AS INTEREST INCOME IN THE ORIGINAL RETURN OF INCOME IS NOT CONVINCING TO ME. IF THE APPELLANT CAME TO KNOW ABOUT THE CORRECT INTEREST AFTER THE A UDIT OF THE BOOKS OF ACCOUNTS OF THE FIRM IN DEC, 2006, THEN THE APPE LLANT COULD HAVE REVISED HER INCOME IMMEDIATELY BEFORE JAN, 2007. IN STEAD THIS EXPLANATION IS GIVEN BY THE APPELLANT ONLY AFTER TH E UNDERSTATEMENT OF INCOME HAS BEEN DETECTED BY THE ASSESSING OFFICE R DURING ASSESSMENT PROCEEDINGS IN OCTOBER, 2008. 7. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S NOW IN APPEAL BEFORE US. 8. BEFORE US, THE LD. A.R. SUBMITTED THAT IN THE OR IGINAL RETURN TO INCOME FILED BY THE ASSESSEE ON 30.07.2006, THE ASSESSEE H AD WRONGLY INCLUDED THE INTEREST FROM M/S. GANESH TRADING CO. LATER ON, DU RING THE COURSE OF ASSESSMENT PROCEEDING, IT CAME TO THE KNOWLEDGE OF THE ASSESSEE THAT NO INTEREST WAS RECEIVABLE FROM M/S. GANESH TRADING CO . AND THEREFORE, THE A.O. ITA NO. 1996/AHD/2010 A.Y. 06-07 PAGE 6 WAS REQUESTED TO EXCLUDE THE INTEREST FROM THE TOTA L INCOME. LD. A.R. FURTHER SUBMITTED THAT AT THE TIME OF FILING THE RETURN OF INCOME THE ACCOUNTANT OF THE ASSESSEE HAD CALCULATED PROVISIONAL AMOUNT OF INTER EST RECEIVABLE AND WAS OFFERED FOR TAX. HOWEVER, AS PER THE ACCOUNTS OF M /S. GANESH TRADING CO. (SIGNED BY AUDITOR ON 20.12.2006), NO INTEREST WAS PAYABLE TO THE ASSESSEE. THE LD. A.R. PLACED ON RECORD THE COPY OF THE BALAN CE SHEET OF M/S. GANESH TRADING CO. AND THE CAPITAL OF ASSESSEE AS APPEARIN G IN THE BOOKS OF ACCOUNT OF THE FIRM TO DEMONSTRATE THAT NO INTEREST WAS PAI D OR PAYABLE TO THE ASSESSEE FOR THE YEAR. IT WAS FURTHER SUBMITTED TH AT SINCE THE ASSESSEE HAD FILED RETURN BEFORE FINALIZATION OF THE AUDIT OF TH E FIRM, THE ASSESSEE WAS ENTITLED TO REVISE ITS ACCOUNT. THE LD. A.R. FURTH ER SUBMITTED THAT MERELY BECAUSE THE ASSESSEE HAD WRONGLY INCLUDED THE INCOM E IN ITS RETURN, IT CANNOT CONFER JURISDICTION ON THE DEPARTMENT TO TAX THAT I NCOME WHEN LEGALLY SUCH INCOME DID NOT PERTAIN TO THAT YEAR. FOR THIS PROP OSITION, RELIANCE WAS PLACED IN THE CASE OF CIT VS. BHARAT GENERAL REINSURANCE CO. LTD. (1971) 81 ITR 303 (DELHI). IT WAS, THUS, SUBMITTED THAT THE ADDITION MADE BE D ELETED. LD. SR. D.R., ON THE OTHER HAND, SUBMITTED THAT THE ASSESSE E SHOULD HAVE HELD REVISED RETURN AND SINCE THE ASSESSEE DID NOT FILE REVISED RETURN OF INCOME, THE CLAIM MADE BY THE ASSESSEE CANNOT BE ALLOWED. HE, THUS, SUPPORTED THE ORDER OF THE A.O. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE HAD SHOWN INTEREST RECEIPT OF RS.2,61,527/- FROM M/S. GANESH TRADING C O. IN THE RETURN OF INCOME ITA NO. 1996/AHD/2010 A.Y. 06-07 PAGE 7 THAT WAS FILED ON 30.07.2006. AS PER THE AUDITED B ALANCE SHEET AND THE TAX AUDIT DATED 28.12.2006 OF THE FIRM (M/S. GANESH TRA DING CO.) PLACED ON RECORD AT PAGE NOS. 16 TO 21 OF THE PAPER BOOK., IT IS SEEN THAT NO INTEREST HAS BEEN PAID TO THE ASSESSEE. THE SUBMISSION OF THE A SSESSEE THAT IT HAD CALCULATED THE INTEREST ON PROVISIONAL BASIS AND IN CLUDED IT IN THE RETURN OF INCOME HAS NOT BEEN CONTROVERTED BY THE REVENUE BY BRINGING ANY TANGIBLE MATERIAL ON RECORD. 10. IN THE CASE OF CIT VS. BHARAT GENERAL REINSURANCE CO. LTD. (SUPRA) , THE HONBLE HIGH COURT HAS HELD THAT IT IS INCUMBENT THAT INCOM E TAX DEPARTMENT TO FIND OUT WHETHER THE PARTICULAR INCOME WAS ASSES SABLE IN THE PARTICULAR YEAR OR NOT. MERELY BECAUSE THE ASSESSEE WRONGLY INCLUD ES THE INCOME IN ITS RETURN FOR THE PARTICULAR YEAR, IT CANNOT CONFER JURISDICT ION ON THE DEPARTMENT TO TAX THAT INCOME IN THAT YEAR EVEN THOUGH LEGALLY SUCH I NCOME DID NOT PERTAIN TO THAT YEAR. 11. WE FURTHER FIND THAT A.O. HAS NOT CONSIDERED O R GIVEN ANY FINDING AS TO WHETHER THE INTEREST IN THE CASE OF FIRM WAS ALLOWE D AS DEDUCTION. WE, THEREFORE, FEEL THAT THE MATTER BE REMITTED TO THE FILE OF THE A.O. SO THAT NECESSARY VERIFICATION CAN BE DONE AT HIS END AND T O VERIFY AS TO WHETHER THE INTEREST PAID BY THE FIRM TO ASESSEE WAS CLAIMED AS DEDUCTION BY THE FIRM. IF ON VERIFICATION IT IS FOUND THAT NO INTEREST WAS PAID TO THE ASSESSEE OR CLAIMED BY THE FIRM AS DEDUCTION, HE IS DIRECTED TO PASS T HE NECESSARY ORDER IN THE LIGHT OF DECISION IN THE CASE OF CIT VS. BHARAT GENERAL REINSURANCE CO. LTD. ITA NO. 1996/AHD/2010 A.Y. 06-07 PAGE 8 (SUPRA). THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURP OSE. 12. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 10.05.2013 SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;