The ACIT, Circle-5, Ahmedabad V. Paras Pharmaceuticals Ltd., Ahmedabad

ITA 2135/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0681 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 26-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHWIN C SHAH
• Keywords: Corroborative evidences
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA.NO.2135/AHD/2012 / ASSTT. YEAR: 2005-2006 ACIT, CIR.5 AHMEDABAD. VS PARAS PHARMACEUTICALS LTD. (IN WHICH NEEDWISE ADVERTISING P.LTD. WAS MERGED) 301, HIMADRI COMPLEX NR.TORAN DINING HALL ASHRAM ROAD AHMEDABAD 380 009. PAN : AAACN 5412 C ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI SANJAY KUMAR, SR.DR ASSESSEE BY : SHRI ASHWIN C. SHAH, AR / DATE OF HEARING : 19/07/2016 / DATE OF PRONOUNCEMENT: 02/09/2016 $%/ O R D E R PER RAJPAL YADAV, ACCOUNTANT MEMBER REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST TH E ORDER OF THE LD.CIT(A)-XI, AHMEDABAD DATED 5.7.2012 PASSED FOR T HE ASSTT.YEAR 2005-06. 2. THOUGH THE REVENUE HAS TAKEN FIVE GROUNDS OF APP EAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, THAT IS, THE LD.CIT (A) HAS ERRED IN DELETING ADDITION OF RS.3,59,37,419/-. ITA NO.2135/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 27.10.2005 DECLARING TOTAL INCOME AT RS.1,18,47, 751/-. THIS RETURN WAS PROCESSED UNDER SECTION 143(1), AND THEREAFTER ASSE SSMENT WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT ON 21.2.2011. THE LD.AO HAS OBSERVED THAT ON SCRUTINY OF THE TDS CERT IFICATE, IT REVEALED THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF 47,33,28,597/-. HOWEVER, IT HAS CREDITED A SUM OF RS.43,73,91,178 ONLY TO THE PROFIT & LOSS ACCOUNT. ACCORDING TO THE AO, THERE WAS A DIFFERENCE OF RS.3,59,37,419/-. TH E LD.AO HAS CONFRONTED THE ASSESSEE WITH SHOW CAUSE AS TO WHY THIS DIFFERE NCE SHOULD NOT BE ADDED IN THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAS EXPLAINED ITS POSITION AND POINTED OUT THAT SOME OF RS.2.96 CRORES WAS CHARGED AS SERVICE TAX CHARGE BY ITS BROADCASTER, AND ASSESSEE HAS ALSO RECOVERED TH IS AMOUNT FROM ITS CUSTOMERS. SIMILARLY, THE ASSESSEE HAS SUBMITTED T HAT AN AMOUNT OF RS.62,50,697/- IS ON ACCOUNT OF CASH PAYMENTS BY ME TRO PUBLICITY WHO WAS RECOGNIZING PAYMENT IN ITS ACCOUNTS ON CASH BASIS. THE ASSESSEE HAD RECEIVED PAYMENT IN F.Y.2004-05 AND TAX WAS DEDUCTED BY METR O PUBLICITY IN F.Y.2003-04. THE LD.AO WAS NOT SATISFIED WITH THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO SUBMIT DETAILS WHETHER AN EQUAL AMOUNT WAS ACCOUNTED BY THE BROADCASTER TOWAR DS SERVICE TAX CHARGES OR NOT. ACCORDINGLY, THE LD.AO HAS MADE ADDITION. 4. DISSATISFIED WITH ADDITION, ASSESSEE CARRIED THE MATTER IN APPEAL. IT HAS FILED WRITTEN SUBMISSION WHICH HAS BEEN REPRODUCED BY THE LD.CIT(A). IT IS PERTINENT TO TAKE NOTE OF THE SUBMISSIONS ALONG WIT H RECONCILIATION OF ITS ACCOUNTS. IT READS AS UNDER: 3.1 ON THIS ISSUE THE APPELLANT VIDE IT S LETTER DTD.28-5-2012 SUBMITTED AS UNDER: - '3. THE LEARNED AO MADE ADDITION OF RS. 3,59,37,419 ON THE GROUND THAT THE COPY OF ACCOUNT IS NOT GIVEN AND THAT THE SUPPORTING EVIDENCES FOR METRO PUBLICITY IS NOT GIVEN AND THAT THE EXPLA NATION IS NOT ITA NO.2135/AHD/2012 3 ACCEPTED SIMPLY BECAUSE THE DIFFERENCE IS RECONCILE D. IN THIS CONNECTION, IT MAY PLEASE BE NOTED THAT THE ASSESSE S, FILED THE LETTER DATED 23-08-2011 WITH THE RECONCILIATION STATEMENT, COPY OF ACCOUNT OF SERVICE TAX AND DETAILS OF METRO PUBLICITY. THE SAI D LETTER IS REPRODUCED FOR READY REFERENCE AS UNDER: 'IN THE COURSE OF HEARING, THE INQUIRY IS MADE ABOU T THE SERVICE TAX. IN THIS CONNECTION, IT MAY PLEASE BE NOTED THAT THE TV CHANNELS ARE CHARGING SERVICE TAX TO US. IN TURN, WE CHARGED SER VICE TAX TO CUSTOMERS. WE CHARGED THE SERVICE TAX IN OUR SALES BILL. HOWEVER, SALES ARE SEPARATELY CREDITED AND SERVICE TAX IS SEPARATE LY CREDITED BUT THE TDS IS MADE BY THE CUSTOMERS ON PAYMENT INCLUDING S ERVICE TAX. THEREFORE, IN THE RECONCILIATION WE HAVE GIVEN IN T HE EARLIER LETTER THAT IF THE SERVICE TAX INCLUDED IN THE SALES BILL IS EX CLUDED THEN THERE IS NO DIFFICULTY. WE ENCLOSE HEREWITH THE STATEMENT SHOWI NG THE SERVICE TAX CHARGED BY THE SUPPLIERS AND IN TURN PASSED ON TO T HE CUSTOMERS IN SALES. THE SERVICE TAX CHARGED BY THE SUPPLIER IS R S. 2,96,43,362 AND SERVICE TAX PASSED ON [RECOVERED] FROM THE CUSTOMER S ON SALE IS RS. 2,96,43,362 THEREFORE THERE IS NO IMPACT ON THE P & L A/C. SIMILARLY, WE ENCLOSE HEREWITH THE ACCOUNT OF METRO PUBLICITY, WHO IS DEDUCTING TAX ON CASH PAYMENT. BELOW THE SAID ACCOU NT, THERE IS A RECONCILIATION ACCORDING TO WHICH THE TAX IS DEDUCT ED ON CASH PAYMENT OF RS. 62,50,697. THE DIFFERENCE BETWEEN SALES AND TDS CERTIFICATES R S. 3,59,37,419 DIFFERENCE ON ACCOUNT OF SERVICE TAX AS STATED ABOVE 2,96,43,362 DIFFERENCE BECAUSE OF CASH PAYMENT BY METRO PUBLICITY 62,50,697 OTHER RECEIPTS STATED SEPARATELY IN P&LA/C. 43,360 RS.3,59,37,419 DIFFERENCE: RS. NIL ========= FROM THE ABOVE, IT MAY PLEASE BE SEEN THAT THERE IS NO DISCREPANCY AS IS POINTED OUT. THEREFORE, THERE IS NO QUESTION OF ESC APEMENT OF INCOME.' 4. THE COPY OF SERVICE TAX ACCOUNT AND THE DETAILS OF METRO PUBLICITY WERE ENCLOSED ALONG WITH THE ABOVE REFERRED LETTER. THE SAME ARE ENCLOSED HEREWITH AGAIN. ITA NO.2135/AHD/2012 4 5. IT MAY PLEASE BE NOTED THAT THE ASSESSEE HAS FUR NISHED THE COPY OF ACCOUNT OF SERVICE TAX GIVING THE PARTYWISE DETAILS WHO HAVE CHARGED THE SERVICE TAX AND FROM WHOM, THE SAME IS RECOVERE D. THE ACCOUNT IS DULY TALLIED. SIMILARLY, FROM THE DETAILS OF METRO PUBLICITY IT MAY PLEASE BE SEEN THAT THE METRO PUBLICITY DEDUCTS TAX AT SOU RCE ON PAYMENT BASIS, THEREFORE THERE IS A DIFFERENCE WHICH IS REC ONCILED AS PER THE ABOVE REFERRED LETTER. FURTHER, IT MAY PLEASE BE NO TED THAT THE LEARNED AO DOES NOT POINT OUT ANY MISTAKE IN THE RECONCILIA TION STATEMENT. IN OTHER WORDS, THE RECONCILIATION FURNISHED TO AO IS ACCEPTED. 6. SINCE THE DIFFERENCE BETWEEN TDS AMOUNT AN D P & L A/C. IS RECONCILED, THE QUESTION OF ADDITION DOES NOT ARISE . YOUR HONOUR IS THEREFORE PRAYED TO DELETE THE ADDIT ION AND ALLOW THE APPEAL.' 5. THE LD.CIT(A) WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND DELETED THE ADDITION BY OBSERVING AS UNDER: 3.2 I HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. IT IS SEEN THAT THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS SUBMITTED THAT DIFFERENCE IN SALES RECO RDED IN TDS CERTIFICATES AND SALES DECLARED IN THE PROFIT & LOS S ACCOUNT IS DUE TO TWO FACTORS (I) SERVICE TAX OF RS. 2,96,43,362/- (I I) DIFFERENCE IN RESPECT OF SALES RECEIPTS FROM M/S. METRO PUBLICITY A'BAD P VT. LTD. THESE DIFFERENCE HAS CROPPED UP DUE TO THE FACT THAT M/S. METRO PUBLICITY A'BAD PVT. LTD. IS MAINTAINING ITS ACCOUNTS ON CASH SYSTEM OF ACCOUNTING WHILE THE APPELLANT IS MAINTAINING ITS A CCOUNTS ON MERCANTILE SYSTEM OF ACCOUNTING. 3.3 THE A.O. HAS SPECIFICALLY MENTIONED THAT THE AP PELLANT HAS NOT FURNISHED COPY OF ACCOUNT OF SERVICE TAX AS APPEARI NG IN ITS BOOKS ACCOUNTS. DURING THE APPELLATE PROCEEDINGS THE APPE LLANT WAS REQUIRED TO FURNISH COPY OF SERVICE TAX ACCOUNT IN ITS BOOKS OF ACCOUNTS. THE SAME WAS FURNISHED BY THE APPELLANT VIDE ITS LETTER 27/6/2012. PERUSAL OF THIS ACCOUNT REVEALS THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAD PAID SERVICE TAX OF RS. 2,96,43,362/- . THE APPELLANT HAS ALSO CHARGED SERVICE TAX FROM ITS CUSTOMERS OF RS.2 ,96,43,362/-. IN VIEW OF THESE FACTS I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS INCURRED LIABILITY TOWARDS SERVICE TAX OF RS.2,96,4 3,362/-, WHICH WAS REFLECTED IN THE TDS CERTIFICATES AS PART OF TOTAL PAYMENTS. SINCE SERVICE TAX IS BEING SEPARATELY ACCOUNTED FOR IN THE BALANC E SHEET OF THE ITA NO.2135/AHD/2012 5 APPELLANT, ACCORDINGLY, ADDITION TO THE EXTENT OF R S. 2,96,43,362/- IS UNTENABLE AND THE SAME IS ORDERED TO BE DELETED. 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD. THE ASSESSEE HAS FILED COPY OF SERVICE TAX CHARGE ACCOUNT WHICH HAS BEEN PLACED ON PAGE NOS.2 TO 27 OF THE PAPER BOOK. IT HAS ALSO SUBMITTED RECONCILIATION STATEMENT OF METRO PUBLICITY. WE HA VE GONE THROUGH THESE RECORDS. WE ARE OF THE VIEW THAT THE ASSESSEE HAS DULY RECONCILED THE ALLEGED DIFFERENCE WORKED OUT BY THE AO. THE LD.AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE WITHOUT ASSIGNING ANY REFERENCE. T HE ASSESSEE HAS CONTENDED THAT A SUM OF RS.2,96,43,362/- WAS MEANT FOR SERVIC E TAX CHARGES. IT WAS AN AMOUNT WHICH WAS CHARGED BY THE BROADCASTER FROM TH E ASSESSEE, AND THE ASSESSEE HAS COLLECTED FROM THE CUSTOMERS. IF THE AO HAS ANY DOUBT ON THE CLAIM OF THE ASSESSEE, THEN SHE COULD HAVE VERIFIED FROM THE BROADCASTER, BUT WITHOUT CONDUCTING ANY SUCH INQUIRY, SHE SIMPLY REF USED TO ACCEPT THE EXPLANATION OF THE ASSESSEE. AFTER TAKING INTO CON SIDERATION ALL THESE FACTS AND CIRCUMSTANCES ON THE RECORD, WE DO NOT FIND ANY MER IT IN THIS APPEAL OF THE REVENUE. IT IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 2 ND SEPTEMBER, 2016 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 02/09/2016