Sri. Venkataswamy Manjunath, Bangalore V. Income Tax Officer, Ward- 4(3)(1), Bangalore

ITA 2323/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2965 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 08-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: STANDING COUNCIL
• Assessee Lawyers: GANESH RAJ
• Keywords: Recovery proceedings; Opportunity of being heard; Onus to prove; TDS; Set aside; FORM 26AS
• Section: 201; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH, BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO. 2323 / BANG /201 9 : ASST.YEAR 2016 - 2017 SRI.VENKATASWAMY MANJUNATH NO.1,KRISHNA LAYOUT, NYNAPPANAHALLI MAIN ROAD DEVARACHICKKANAHALLI BANGALORE 560 076 PAN : AURPM7892B . VS. THE INCOME TAX OFFICER WARD 4(3)(1) BANGALORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI. GANESH RAJ,CA RESPONDENT BY : SRI.GANESHR.GHALE, STANDING COUNCIL FOR DR DATE OF HEARING : 20 .0 2 .2020 DATE OF PRONOUNCEMENT : 13 .0 3 .2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 09.09.2019 . THE RELEVANT ASSESSMENT YEAR IS 201 6 - 201 7 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. THE IMPUGNED ORDER DATED 09.09.2019 OF THE CIT (A) CONFIRMING THE ORDER OF THE AO RESULTING IN AN ADDITION OF RS. 25,03,534/ - TO THE REPORTED INCOME IS LIABLE TO BE SET ASIDE AS IT IS ILLEGAL, ARBITRARY AND OPPOSED TO THE FACTS OF THE CASE AND WITHOUT PROP ER APPLICATION OF MIND. 2. THE ADDITION TO THE REPORTED INCOME IS MADE SOLELY ON THE BASIS OF GROSS CREDIT REFLECTED IN THE FORM 26AS WITHOUT CAUSING ANY ENQUIRY TO BE MADE ON THE TAX DEDUCTOR M/ S. SERENDIPITY INFOLABS PVT LTD ( ALSO KNOWN AS 'TAXI FOR SURE ' ) TAN NO: BLRS38442F TO ESTABLISH WHETHER THE GROSS CREDITS OF RS. 2.06 CRORES AS SHOWN IN THE FORM 26AS WAS PAID TO THE ITA NO. 2323 / BANG /201 9 SRI. VENKATASWAMY MANJUNATH . 2 APPELLANT. MERELY BECAUSE THE AO FAILED TO RECEIVE ANY RESPONSE TO THE NOTICE ISSUED U/ S 133 (6) DATED 02.07.2019 TO M / S.SERENDIPI TY INFOLABS PVT LTD CANNOT BE THE BASIS FOR REJECTING THE APPELLANTS PLEA THAT IT IS NOT HIS TURNOVER. 3. THE CIT (A) FAILED TO TAKE COGNIZANCE THAT THERE IS NO MATERIAL PLACED ON RECORD BY THE ASSESSING OFFICER THAT THE APPELLANT WAS IN RECEIPT OF THE ALLEGED INCOME AS IMPUTED FROM THE FORM 26AS. 4. THE CIT(A) ALSO FAILED TO TAKE COGNIZANCE OF THE FACT THAT THE APPELLANT OWNED ONLY FOUR TAXI CABS AND BY NO STRETCH OF IMAGINATION THE APPELLANT WOULD NOT HAVE MADE A TURNOVER OF RS. 2.06 CRORES FROM THES E FOUR TAXI CABS. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING WITH THE PERMISSION OF THE BENCH. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. IT IS PRAYED THAT THE ARBITRA RY ADDITION OF RS.25,03,534/ - MAY PLEASE BE DELETED. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CAB OWNER / DRIVER. THE ASSESSEE PURCHASED FOUR CARS AS TAXI WHICH WERE PURCHASED THROUGH LOANS FROM BANKS / NBFC AND OPERATED THESE TAXIS AS A CAB OPERATOR UNDER THE TRADE NAME OF MANIKANTA TOURS & TRAVELS. LATER A BUSINESS OPPORTUNITY AROSE AND HE FACILITATED A TAXI AGGRE GATOR BY NAME SERENDIPITY INFOLABS PRIVATE LIMITED WHO OPERATED A VIRTUAL MARKET PLACE PORTAL UNDER THE BRAND NAME TAXI FOR SURE BY INTRODUCING OTHER CAB OWNERS AND BRINGING THEM UNDER THE NETWORK OF TAXI FOR SURE, FOR WHICH THE ASSESSED RECEIVED A C OMMISSION. THE ASSESSEE APPROXIMATELY INTRODUCED ABOUT 350 CABS TO TAXI FOR SURE DURING THE PERIOD UNDER ITA NO. 2323 / BANG /201 9 SRI. VENKATASWAMY MANJUNATH . 3 CONSIDERATION. THE ASSESSEE WAS ENTITLED TO A COMMISSION AT THE RATE OF 4.5% FROM 'TAX FOR SURE' FOR THE TAXI HIRE CHARGES GENERATED FROM ALL THE CAB S INTRODUCED BY HIM TO 'TAXI FOR SURE'. THE BUSINESS MODEL OF 'TAX FOR SURE' IS BRIEFLY SUMMARIZED AS UNDER: THE ENTIRE CAB FARE WAS COLLECTED BY 'TAX FOR SURE' THROUGH THEIR MOBILE/INTERNET BASED APP. OUT OF EVERY RS . 100 GENERATED FROM THE CAB DRIVE A SUM OF RS. 85 IS PAID TO THE CAB OWNERS / DRIVERS BY 'TAX FOR SURE' AS TAXI OPERATING AND HIRE CHARGE. A SUM OF RS. 10.5 OUT OF THE RS.100 IS RETAINED BY 'TAX FOR SURE' AS THEIR COMMISSION FOR PROVIDING THE BOOKING PLATFORM AS TAXI AGGREGATOR FEE. THE BALANCE OF RS. 4.5 WAS PAYABLE TO THE APPELLANT AS COMMISSION FOR INTRODUCING THE CABS TO 'TAX FOR SURE'. IN ADDITION HE ALSO RECEIVED ADDITIONAL INCENTIVES FROM 'TAX FOR SURE' FOR REACHING TARGETS EACH MONTH BASED ON USAGE OF CABS INTRODUCED BY HIM. 3 . 1 DURING THE ASSESSMENT YEAR 2016 - 17, 'TAX FOR SURE' (OWNED BY SERENDIPITY INFOLABS PVT LTD) FILED THEIR TDS RETURN AND HAVE DISCLOSED THE ENTIRE BUSINESS GENERATED FROM THE TAXI HIRED RELATING TO ALL THE CAB'S THAT WERE INTRODUCED AND ATTACHED TO THE A SSESSEE AS HIS GROSS INCOME, INSTEAD OF SHOWING ONLY THE COMMISSION AMOUNT RECEIVED BY HIM WHICH ITA NO. 2323 / BANG /201 9 SRI. VENKATASWAMY MANJUNATH . 4 AMOUNTED TO 4.5% AS EXPLAINED ABOVE AND THE ADDITIONAL INCENTIVES. THIS THUS RESULTED IN A MISMATCH IN THE GROSS AMOUNT AS PER FORM 26AS AND THE INCOME RETURNE D BY THE ASSESSEE . THE TOTAL COMMISSION AND INCENTIVE FOR ACHIEVING THE TARGET RECEIVED FROM TAX FOR SURE' DURING THE ASSESSMENT YEAR 2016 - 17 IS ONLY RS . 10,50, 590 . HOWEVER GROSS CREDIT AS PER FORM 26AS WAS DISCLOSED AS RS. 2.06 CRORES. THIS AMOUNT OF RS. 2.06 CRORES WAS THE TOTAL TAXI HIRE CHARGES IN RESPECT OF ALL THE 350 TAXI CABS INTRODUCED TO 'TAX FOR SURE' BY THE ASSESSEE . THE ASSESSEE DURING THE ASSESSMENT YEAR 2016 - 17 OWNED ONLY 4 BANK ACCOUNTS. THE TOTAL CREDIT SUMMATION IN ALL THESE FOUR BANK ACCOUNTS AGGREGATED TO RS. 38.53 LAKHS ONLY. IN ADDITION THE ASSESSEE HAS ALSO RECEIVED CERTAIN AMOUNTS IN CASH AND THUS THE TOTAL GROSS INCOM E IN HIS HANDS FOR THE ASSESSMENT YEAR 2016 - 17 IS ONLY RS. 53.75 LAKHS. AFTER MEETING EXPENSES THE NET PROFIT AMOUNTED TO RS. 7.44 LAKHS ONLY. THE MODEL UNDER WHICH THE 'TAXI FOR SURE' OPERATED WAS BROUGHT TO THE ATTENTION OF THE LD. AO. HOWEVER THE AO CA ME TO THE CONCLUSION THAT THE GROSS CREDIT AS SHOWN IN THE FORM 26AS BY TAXI FOR SURE IS THE ASSESSEES OWN INCOME AND BROUGHT TO TAX THAT CREDITS AT THE RATE OF 13.85%. ( IE., NET PROFIT DECLARED IN IT RETURN OF RS. 7.44 LAKHS / GROSS RECEIPTS DECLARED IN THE IT RETURN OF RS. 53 . 75 LAKHS ) 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE VIEW TAKEN BY THE ASSESSING OFFICER. 5. I HAVE HEARD THE RIVAL SUBMISSIONS THE PERUSED THE ITA NO. 2323 / BANG /201 9 SRI. VENKATASWAMY MANJUNATH . 5 MA TERIAL ON RECORD. I FIND THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE ITAT MADRAS BENCH IN THE CASE OF SHRI P.K.RAJASEKAR V. ITO IN ITA NO.121/MDS/2016. THE TRIBUNAL VIDE ORDER DATED 15.09.2016 HELD AS FOLLOWS: - 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT THE CREDIT OF `58,36,556/ - SAID TO BE GIVEN ON 01.07.2010 IS A WRONG ENTRY AND THE COMPANY, NAMELY, M/S TULIP TELECOM P. LTD. FAILED TO RECTIFY THE TDS RETURN FILED ELECTRONICALLY. THE REVENUE CLAIMS THAT THE LETTER ADDRESSED TO M/S TULIP TELECOM P. LTD. WAS NOT RESPONDED. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT ESTABLISHED THE CLAIM. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE PARTICULARS CONTAINED IN FORM 26AS AS GENUINE AND THE DIFFERENCE OF RS. 61,99,459/ - , AS PER THE CREDIT SHOWN IN FORM 26AS, WAS TAKEN AS UNDISCLOSED RECEIPT BY THE ASSESSEE. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE CREDIT ENTRY FOUND ON 01.07.2010 TO THE EXTENT OF RS. 58,36,556/ - IS A WRONG ENTRY. 5. UNDER THE SCHEME OF INCOME - TAX ACT, THE ASSESSEE IS EXPECTED TO PAY TAX AFTER COMPLETION OF ASSESSMENT. IN ORDER TO ENSURE THE RECOVERY OF TAX, THE INCOME - TAX ACT PROVIDES PAYMENT OF TAX IN ADVANCE, B EFORE COMPLETION OF ASSESSMENT AND ALSO PROVIDES FOR DEDUCTION OF TAX AT SOURCE. WHEN THE PAYER DEDUCTED THE TAX AS PER THE SCHEME OF THE INCOME - TAX ACT IN RESPECT OF THE PAYMENT MADE BY THEM, THE AMOUNT DEDUCTED BY THE PAYER TOWARDS TDS HAS TO BE TREATED AS PAYMENT OF TAX. IF THE ASSESSEE CLAIMS THAT THERE WAS WRONG ENTRY AND WRONG CREDIT, THE ASSESSING OFFICER HAS TO EXAMINE THE SAME WITH OPEN MIND AND FIND OUT WHETHER THERE WAS A GENUINE CREDIT AS FOUND IN FORM 26AS. M/S TULIP TELECOM P. LTD. IS ALSO A T AX PAYER IN THIS COUNTRY. THEREFORE, THE REVENUE CANNOT SHIFT THE BURDEN TO THE ASSESSEE ON THE GROUND THAT M/S TULIP TELECOM P. LTD. COULD NOT BE CONTACTED. M/S TULIP TELECOM P. LTD. IS A COMPANY REGISTERED UNDER THE PROVISIONS OF COMPANIES ACT AND THE DI RECTORS CAN VERY WELL BE CONTACTED BY THE ASSESSING OFFICER AND FIND OUT WHAT IS THE ERROR IN TDS RETURN. 6. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT EVEN THOUGH THE BURDEN OF PROOF IS INITIALLY ON THE SHOULDER OF THE ASSESSEE, THE ASSESSING OFFI CER IS ALSO EQUALLY RESPONSIBLE TO FIND OUT WHETHER THE CREDIT ENTRY FOUND ON 01.07.2010 IS GENUINE OR NOT. THE ASSESSING OFFICER CANNOT TAKE ADVANTAGE OF THE IGNORANCE OR HANDICAP OF THE ASSESSEE AND SAY THAT THERE WAS UNDISCLOSED RECEIPT BY THE ASSESSEE. WHEN THE ASSESSEE CLAIMS THAT THE ENTRY AS ON 01.07.2010 IS A WRONG ENTRY, THE ASSESSING OFFICER IN ALL FAIRNESS HAS TO EXAMINE THE SAME AND FIND OUT WHETHER THERE WAS GENUINE ITA NO. 2323 / BANG /201 9 SRI. VENKATASWAMY MANJUNATH . 6 ENTRY OR NOT. THE ASSESSING OFFICER WAS CONFERRED THE POWER OF CIVIL COURT TO E XAMINE AND FIND OUT THE REAL NATURE OF TRANSACTION. IF THE ASSESSING OFFICER COULD NOT EXERCISE THE POWER CONFERRED ON HIM, IT IS NOT KNOWN HOW THE INDIVIDUAL CITIZEN OF THIS COUNTRY WILL BE ABLE TO FIND OUT THE GENUINENESS OF THE TRANSACTION. THEREFORE, I N ORDER TO MEET THE ENDS OF JUSTICE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO FIND OUT THE ADDRESS OF M/S TULIP TELECOM P. LTD. AND ITS DIRECTORS AND THEREAFTER FIND OUT WHETHER SOCALLED CREDIT OF RS. 58,36,556/ - SAID TO BE GIVEN ON 01.07.2010 IS A GENUINE TRANSACTION OR IT IS A WRONG ENTRY. THEREAFTER, THE ASSESSING OFFICER HAS TO DECIDE THE SAME IN ACCORDANCE WITH LAW. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE - EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. SINCE THE FACTS AND CIRCUMSTANCES OF THE ABOVE CASE CONSIDERED BY THE ITAT MADRAS BENCH ARE SIMILAR TO THAT OF THE ISSUE UNDER CONSIDERATION, RESPECTFULLY FOLLOWING T HE SAME, I REMIT THE ENTIRE ISSUE UNDER DISPUTE TO THE FILES OF THE ASSESSING OFFICER , WITH A DIRECTION TO MAKE PROPER INQUIRY WITH THE PAYEE OF THE HIRE CHARGES, AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 13 TH DAY OF MARCH , 2020 . SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER BANGALORE ; DATED : 13 TH MARCH , 2020 . DEVADAS G * ITA NO. 2323 / BANG /201 9 SRI. VENKATASWAMY MANJUNATH . 7 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A) - 4 , BENGALURU. 4. THE PR.CIT - 4 , BENGALURU. 5. THE DR, ITAT, BENGALURU. 6. GUARD FILE. ASST.REGISTRAR/ITAT, BANGALORE