Special Effects, CHENNAI V. ITO Non Corporate Ward 2(4), CHENNAI

ITA 2294/CHNY/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5028 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 19-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Section: 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, D (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.2294/MDS/2017 / ASSESSMENT YEAR : 2014-2015 M/S. SPECIAL EFFECTS, NO.778/68, MANDAVELI STREET, MANDAVELI, CHENNAI 600 028. [PAN AAWFS 6409H] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(4) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. Y. SRIDHAR, C.A. /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 02-01-2018 !' /DATE OF PRONOUNCEMENT : 04-01-2018 % / O R D E R ASSESSEE THROUGH THIS APPEAL, WHICH IS DIRECTED AG AINST AN ORDER DATED 30.06.2017 OF LD. COMMISSIONER OF INCOM E TAX (APPEALS)- 2, CHENNAI ASSAILS AN ADDITION OF B19,88,336/- MADE BY THE LD. ASSESSING OFFICER FOR DIFFERENCE IN FORM NO.26AS A ND INCOME ADMITTED IN THE RETURN FILED BY THE ASSESSEE. ITA NO.2294 /MDS/2017. :- 2 -: 2. FACTS APROPOS ARE THAT ASSESSEE AN INTERIOR DESIGNE R DOING INTERIOR WORK MAINLY FOR TELECOM COMPANIES, HAD F ILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF B22,20,790/-. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, IT WAS NOTED BY THE LD. ASSESSING OFFICER THAT CONTRACT RE CEIPTS OF THE ASSESSEE AS PER FORM NO.26AS CAME TO B3,53,68,385/ - AGAINST WHICH TDS U/S.194C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DEDUCTED BY ITS CLIENTS WAS B7,07,387/-. IT SEEMS THERE WAS A DISPARITY BETWEEN THE ABOVE AMOUNTS AND WHAT WERE SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME. ASSESSEE WAS REQ UIRED TO FILE A RECONCILIATION. SUCH RECONCILIATION WAS DULY FILED BY THE ASSESSEE. LD. ASSESSING OFFICER NOTED THAT VIZ-A-VIZ AMOUNTS SHOW N IN FORM NO.26AS AGAINST M/S. AIRTEL M COMMERCE SERVICES LTD, M/S. B HARATI TELEMEDIA LTD, M/S. BENNET PROPERTY HOLDING COMPANY LTD AND M /S. BHARATI AIRTEL LTD, ASSESSEE WAS UNABLE TO RECONCILE THE DIFFER ENCE. THE CORRESPONDING INCOME AND TDS IN RESPECT OF THESE PA RTIES CAME TO B19,88,336/- AND B39,826/- RESPECTIVELY. ADDITION OF B19,88,336/- WAS MADE AND ASSESSMENT COMPLETED. 3. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND LD. COMMI SSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- ITA NO.2294 /MDS/2017. :- 3 -: I FIND THAT THE ASSESSING OFFICER HAS BEEN FAIR A ND HAS TAKEN INTO ACCOUNT THE RECONCILIATION PRODUCED BY THE APPELLANT AND HAS EXCLUDED ALL THOSE CASES WHERE TH ERE IS NO DIFFERENCE AND THE TDS HAS BEEN FULLY RECONCI LED. IT WAS ONLY IN RESPECT OF 3 PARTIES WHEREIN IT WAS FOU ND THAT THE TDS WAS NOT RECONCILED AND ONE PARTY WHEREIN T HE TABLE OF RECONCILIATION ITSELF SHOWED THAT NO SUCH SALE HAD TAKEN PLACE, THAT THE ASSESSING OFFICER HAS ADDED B ACK THE RECEIPTS CORRESPONDING TO THE TDS, AMOUNTING T O RS. 19,88,336/-. IN FACT, IN RESPECT OF M/S BENNET PROPERTY HOLDING CO. LTD., WHEREIN THE APPELLANT HAS CLAIMED THAT NO SUC H SALE HAS BEEN MADE, BUT TDS HAS BEEN DONE, THE ASSESSING OFFICER HAS ADDRESSED A LETTER TO THE SAID CONCERN TO CONFIRM THE CONTRACTS EXECUTED BY THE ASSESSEE, PAYMENTS AND TDS DONE ON THE SAME, AND PENDING REPL Y FROM THE SAID PARTY, HAS ADDED BACK THE INCOME CORRESPONDING TO THE UNRECONCILED TDS OF RS. 7280/- . A PERUSAL OF THE CONCERNED ASSESSMENT FOLDER SHOWS TH AT M/S BENNET PROPERTY HOLDING CO. LTD. HAS FURNISHED A REPLY DT. 18.1.2017 (SUBSEQUENT TO PASSING OF ASSESSMENT ORDER) TO THE ASSESSING OFFICER, STATING AS FOLLOWS: SUBJECT: REQUEST FOR INFORMATION U/S. 133(6) OF THE IT ACT IN THE CASE OF M/S SPECIAL EFFECT (AAWFS6409H) REF: YOUR LETTER DATED 20.12.2016 WITH REFERENCE TO THE ABOVE SUBJECT, THIS IS TO INFORM YOU THAT THE CONTRACTS AMOUNTING TO RS. 24,44,659/- WERE CARRIED OUT BY THE ASSESSEE (TN/S SPECIAL EFFECT) AND TDS WAS DEDUCTED OF RS. 48,939/-. THE DIFFERENCE TDS OF RS. 7,280/- HAS BEEN DEDUCTED BY US ON A PROVISION OF RS.3,64,000/-. KINDLY FIND ENCLOSED HEREWITH THE LEDGER ACCOUNT OF THE ASSESSEE AS APPEARING IN OUR BOOKS OF ACCOUNTS IN VIEW OF THE FACTS CONTAINED IN THE REPLY, CONFIR MING THAT, CONTRACTS AMOUNTING TO RS. 24,44,654/- WERE ITA NO.2294 /MDS/2017. :- 4 -: ACTUALLY CARRIED OUT BY THE APPELLANT AND THE DIFFE RENTIAL TDS WAS DEDUCTED ON A PROVISION, THE ADDITION MADE BY THE ASSESSING OFFICER IS FOUND TO BE IN ORDER KEEPING IN VIEW THE FACT THAT THE METHODOLOGY FOLLOWED BY THE APPELLANT GOES AGAINST THE PRINCIPLE OF THE 'MATCHING CONCEPT' AS CLEARLY LAID DOWN IN RULE 37BA, AND THE FACT THAT THE ASSESSING OFFICER HAS FOLLOWED THE PRINCIPLE LAID. DOWN IN THE SAID RULE AND HAS ONLY ADDED BACK THE UNRECONCILED RECEIPTS, THE ENTIRE ADDITION IS UPHELD. . 4. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT MATCHING CONCEPT WOULD COME INTO PLAY ONLY WHERE ASSESSEE HA D NOT SHOWN INCOME CORRESPONDING TO THE TAX DEDUCTED AT SOURCE. ACCORDING TO HIM, ASSESSEE HAD SHOWN SUCH INCOME EITHER IN THE IMPUGNED ASSESSMENT YEAR OR IN SUBSEQUENT ASSESSMENT YEAR. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE CLI ENTS OF THE ASSESSEE HAD DEDUCTED TAX EVEN ON ADVANCE PAYMENTS AND EVEN ON CONTRACTS, ON WHICH ASSESSEE WAS STILL TO DO ANY WORK. FURTH ER, ACCORDING TO HIM, ASSESSEE WAS NOT GIVEN A PROPER OPPORTUNITY T O EXPLAIN THE DIFFERENCE. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.2294 /MDS/2017. :- 5 -: 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. AMONG THE FOUR PAR TIES, DIFFERENCE IN THE AMOUNTS OF WHICH WERE CONSIDERED FOR ADDITIONS BY THE LD. ASSESSING OFFICER, ASSESSEE HAS ACCEPTED THE DIFFE RENCE IN THE CASE OF M/S.BENNET PROPERTY HOLDING COMPANY LTD. THE SAID M/S. BENNET PROPERTY HOLDING COMPANY LTD HAD CLEARLY MENTIONED THAT THE CONTRACT WORK WORTH B24,44,659/- WAS CARRIED OUT BY THE ASS ESSEE AND THE DIFFERENCE OF B7,280/- IN TDS WAS ON A PROVISION OF B3,64,000/-. HOWEVER WITH REGARD TO OTHER THREE PARTIES M/S. AIR TEL M COMMERCE SERVICES LTD, M/S.BHARATI TELEMEDIA LTD, AND M/S. B HARATI AIRTEL LTD, ASSESSEE WAS UNABLE TO PRODUCE ANY RECONCILIATION. NOW THE CONTENTION TAKEN BY THE ASSESSEE WAS THAT IF GIVEN ONE MORE OPPORTUNITY IT CAN RECONCILE THE AMOUNTS SHOWN IN FORM 26AS WITH THE INCOME RETURNED BY THE ASSESSEE FOR THESE THREE PA RTIES ALSO. AS PER THE ASSESSEE CORRESPONDING INCOME IS REFLECTED IN I TS RETURN EITHER FOR THE IMPUGNED ASSESSMENT YEAR OR FOR THE SUCCEEDING ASSESSMENT YEAR. SINCE NO INCOME CAN BE TAXED TWICE, I AM OF THE OP INION THAT ASSESSEE HAS TO BE GIVEN ONE MORE OPPORTUNITY TO RECONCILE THE DIFFERENCE IN RESPECT OF THESE THREE COMPANIES. I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW WITH REGARD TO INCOME SHOWN BY THE ASSESSEE WITH RESPECT TO WORK DONE BY IT FOR M/S. AIRTEL M COMME RCE SERVICES LTD, M/S. BHARATI TELEMEDIA LTD, AND M/S. BHARATI AIRTEL LTD, ON WHICH TDS ITA NO.2294 /MDS/2017. :- 6 -: WAS DEDUCTED BY THEM, BACK TO THE FILE OF THE LD. A SSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 4TH DAY OF JANUARY, 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:4 TH JANUARY, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /1 / GF