Sahyog Foundation, New Delhi V. ITO, New Delhi

ITA 3257/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3301 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JIWANI
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 3257 /DEL/201 7 [A.Y. 20 13 - 14 ] SAHYOG FOUNDATION VS. THE I . T .O G - 4 , C BLOCK WARD 22 ( 2 ) COMMUNITY C ENTRE , NEW DELHI NARAINA VIHAR, NEW DELHI PAN : AA NCS 9116 K [ ASSESSEE ] [RESPONDENT] DATE OF HEARING : 2 1 . 0 2 .201 8 DATE OF PRONOUNCEMENT : 08 .0 3 .201 8 ASSESSEE BY : SHRI SATYEN SETHI, ADV REVENUE BY : SHRI JIWANI , SR. DR ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LD. CIT(A) - 15, NEW DELHI VIDE ORDER DATED 27.02.2017 FOR THE ASSESSMENT YEAR 2013 - 14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME - TAX (APPEALS) - 15, NEW DELHI [THE 2 ITA NO. 3257 /DEL/201 7 CIT(A)] HAS ERRED IN UPHOLDING THE ASSESSMENT AT THE TOTAL I NCOME OF RS.29,44,620/ - AS AGAINST DECLARED INCOME OF RS.4,13,910/ - . THE APPELLANT DENIES HIS LIABILITY TO BE ASSESSED AT INCOME OF RS.29,44,620/ - . 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN UPHOLDING THE ADDIT ION OF RS.25,30,712/ - ON ACCOUNT OF EXCESS AMOUNT BILLED TO STATE BANK OF INDIA (SBI) SUBSEQUENTLY RECTIFIED BY ISSUING CREDIT NOTES OF RS.25,30,712/ - . 2.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IN UPHOLDING THE ADDITION DI D NOT APPRECIATE THE BUSINESS MODEL BETWEEN THE APPELLANT AND SBI. 3. BRIEF FACTS OF THE CASE AS EMANATING AT PAGES 1 TO 4 OF AOS ORDER ARE REPRODUCED HEREINBELOW: 4.1. ON PERUSAL OF RECORDS, IT IS SEEN THAT THE ASSESSEE COMPANY HAS SHOWN THE TOTAL REV ENUE FROM OPERATIONS IN P & L ACCOUNT OF RS.3,54,55,636/ - ON ACCOUNT OF COMMISSION INCOME. HOWEVER AS PER THE SERVICE TAX RETURN FILED BY THE ASSESSEE COMPANY TOTAL SERVICE TAX RECEIPTS HAVE BEEN SHOWN AT RS.3,98,11,347/ - . THE ASSESSEE COMPANY HAS BEEN S PECIFICALLY ASKED TO EXPLAIN THE DIFFERENCE AMOUNT OF RS.43,55,711/ - . 4.2. THAT AR OF THE ASSESSEE COMPANY HAS FILED REPLY VIDE ITS LETTER DATED 30.09.2015 STATED AS UNDER: 3 ITA NO. 3257 /DEL/201 7 ASSESSEE HAD AN AGREEMENT WITH STATE BANK OF INDIA (`SBI) IN PROVIDING COOPERATI ON, ASSISTANCE TO UNDER PRIVILEGED AND TO PROVIDE KIOSK/MINI BANKING OPERATIONS TO NON - BANKED AND UNDER BANKED MASSES OF INDIA. FURTHER SAHYOG HAD AN AGREEMENT WITH OXIGEN SERVICES (INDIA) PVT. LTD. (`OXIGEN) FOR TAKING AN INTEGRATED PLATFORM FOR PERFORM ING THE SERVICE FOR SBI. SAHYOG PAYS 99.5% OF THE INCOME EARNED FROM SBI TO OXIGEN. SAHYOG HAD EARLIER BOOKED REVENUE OF INR 33,308,515/ - IN ITS BOOKS ON ACCOUNT OF SBI. THE SAME WAS ALSO REFLECTED IN ITS SERVICE TAX RETURN FOR THE PERIOD APRIL, 2012 TO JULY 2012. AS THE BUSINESS OF SAHYOG WITH SBI WAS DISCONTINUED AFTER JULY 2012, IT WAS REALIZED THAT AN EXCESS BILLING WITH INR 2,530,712/ - HAS BEEN DONE TO SBI. TO RECTIFY THE SAME, A CREDIT NOTE OF INR 2530712/ - WAS RAISED TO SBI IN MARCH, 2013. THE ADJUSTMENT OF CREDIT NOTE WAS DULY MADE IN THE BOOKS OF ACCOUNT WHEREIN NET REVENUE OF INR 30777803/ - WAS BOOKED. DUE TO LACK OF PROVISION IN SERVICE TAX RETURN FOR THE ADJUSTMENT OF CREDIT NOTE AS REVENUE CANNOT BE SHOWN AS NEGATIVE, THE SERVICE TAX AMOU NT OF INR 284444/ - ON THE CREDIT NOT WAS BOOKED AS CENVAT CREDIT UNDER THE RULE 6(4A) OF THE SERVICE TAX RULES. 4 ITA NO. 3257 /DEL/201 7 CONSEQUENT TO THE CREDIT NOTE RAISED TO SBI, SAHYOG RAISED A DEBIT NOTE TO OXIGEN FOR INR 2518057 I.E. 99.5% OF INR 2530712/ - (AS PER THE TERMS OF AGREEMENT) (COPY OF DEBIT NOTES DULY ACKNOWLEDGEMENT BY OXIGEN ARE ENCLOSED AS ANNEXURE C). FOR THE ADJUSTMENT OF THE DEBIT NOTE RAISED TO OXIGEN, THE AMOUNT WAS ERRONEOUSLY SHOWED AS REVENUE IN THE SERVICE TAX RETURN RATHER THAN ADJUSTING THE SAME UN DER RULE 6(4A) OF THE SERVICE TAX AMOUNT OF INR 283,022/ - ON THE DEBIT NOTE WAS PAID THROUGH THE AVAILABLE CENVAT CREDIT BALANCE. FURTHER SAHYOG REVERSED THE CENVAT CREDIT OF INR 283,022 BOOKED EARLIER ON INVOICES OF OXIGEN IN THE BOOKS OF ACCOUNT. 4.3 IN ORDER TO CROSS EXAMINE THE ABOVE FACTS A REQUEST LETTER WAS SENT TO STATE BANK OF INDIA, MUMBAI, TO PROVIDE THE DETAILS OF CREDIT NOTES. IN RESPONSE TO THE SAME A REPLY WAS RECEIVED FROM STATE BANK OF INDIA, MUMBAI, ON 28.12.2015 BY MENTIONING THAT AS PER OUR RECORDS, WE HAVE NOT RECEIVED ANY INVOICE OR CREDIT NOTE FOR RS.12,97,077/ - , RS.8,16,902/ - AND RS.7,01,177/ - . 4.4. AFTER RECEIVING OF REPLY FROM THE STATE BANK OF INDIA, MUMBAI, A SHOW CAUSE NOTICE U/S 142(1) WAS ISSUED ON 30.12.2015 TO THE ASSES SEE COMPANY IN WHICH THE ASSESSEE COMPANY HAS BEEN SPECIFICALLY ASKED TO EXPLAIN THAT AS PER RECONCILIATION STATEMENT FILED BY YOU ON 09.09.2015 REGARDING THE DIFFERENCE OF AMOUNT RECORDED IN BOOKS OF 5 ITA NO. 3257 /DEL/201 7 ACCOUNT AND SERVICE TAX RETURN, IT HAS BEEN SUBMITTED B Y YOU THAT YOU HAVE EARNED COMMISSION INCOME FROM SBI AND THE BUSINESS OF ASSESSEE WITH SBI WAS DISCONTINUED AFTER JULY 2012, IT WAS REALIZED THAT AN EXCESS BILLING WORTH OF RS.25,30,712/ - HAS BEEN DONE TO SBI. TO RECTIFY THE SAME, A CREDIT NOTE OF INR 25,30,712/ - WAS RAISED TO SBI DURING THE MONTH OF MARCH, 2013. THE SAME WAS DULY ADJUSTED IN BOOKS OF ACCOUNTS. IN ORDER TO CROSS EXAMINE THE ABOVE FACTS, A REQUEST LETTER WAS SENT TO SBI TO PROVIDE THE DETAILS OF CREDIT NOTES AND IN RESPONSE TO THE SAM E A REPLY WAS RECEIVED FROM SBI ON 28.12.2015 BY MENTIONING THAT AS PER OUR RECORDS, WE HAVE NOT RECEIVED ANY INVOICE OR CREDIT NOTE FOR RS.12,97,077/ - , RS.8,16,902/ - AND RS.7,01,177/ - . IN THIS CONNECTION YOU ARE REQUIRED TO SHOW CAUSE WHY AN AMOUNT OF RS.25,30,712/ - SHOULD NOT BE ADDED TO YOUR TOTAL INCOME. 4.6. THE SUBMISSIONS OF THE ASSESSEE COMPANY HAVE BEEN PLACED ON RECORD BUT ARE NOT ACCEPTABLE IN THE LIGHT OF REPLY RECEIVED FROM STATE BANK OF INDIA, MUMBAI IN WHICH IT IS CLEARLY MENTIONED THAT N O INVOICE OR CREDIT NOTE WAS RECEIVED FROM SAHYOG FOUNDATION REGARDING THE EXCESS BILLING OF RS.25,30,712/ - . THEREFORE, AN ADDITION OF RS.25,30,712/ - ON ACCOUNT OF DIFFERENCE IN RECEIPTS AS SHOWN IN P /L ACCOUNT AND SERVICE TAX RETURN IS BEING MADE TO TH E TOTAL INCOME. 6 ITA NO. 3257 /DEL/201 7 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 5. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACTS AS STATED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE AO AND THE LD. DR HAS ALSO NOT REBUTTED THE SAME. HOWEVER IN ORDER TO CROSS EXAMINE THE FACTS AS NARRATED BY THE LD. COUNSEL FOR THE ASSESSEE A LETTER WAS SENT TO SBI, MUMBAI TO PROVIDE THE DETAILS OF CREDIT NOTES. THE REPLY FROM THE SAID BANK WAS RECEIVED THAT THEY HAVE NOT RECEIVED ANY INVOICE OR CREDIT NOTE. THE SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE WHERE THE EXPLANATION WAS THE SAME AS STATED ABOVE. IT IS NOT IN DISPUTE AS MENTIONED EARLIER THAT ASSESSEE PAYS 99.5% OF THE INCOME EARNED FROM SBI TO OXIGEN SERVI CES INDIA (P) LTD. IT IS 0.5% I.E. AN AMOUNT OF RS.25,30,712/ - WHICH IS IN DISPUTE FOR WHICH THE SBI HAS NOT RECEIVED ANY CREDIT NOTE. REGARDING 99.5% FOR WHICH WHETHER CREDIT NOTE TO STATE BANK OF INDIA HAS BEEN ISSUED OR DEBIT NOTE TO M/S. OXIGEN SERVI CES INDIA (P) LTD. IS ISSUED DOES NOT EFFECT THE TAXABILITY OF THE INCOME OF THE ASSESSEE AND THEREFORE THE ASSESSEE HAS NOT TAKEN ANY STEP OF WHATSOEVER KIND IN THE DATE OF HEARING BEFORE ME AND HAS NOT PLACED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT ANY STEP HAS BEEN TAKEN TO LOCATE THE CREDIT NOTE OF 0.5% INCOME AMOUNTING TO RS.25,30,712/ - AND IN SUCH 7 ITA NO. 3257 /DEL/201 7 CIRCUMSTANCES AND FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE AO. THUS ALL THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO.3257/DEL/2017 IS DISMISSED. THE ORDER IS PRO NOUNCED IN THE OPEN COURT ON 08 . 0 3 .201 8 . SD/ - [ B.P. JAIN] ACCOUNTANT MEMBER DATED: 08 TH MARCH, 2018 VL/ COPY FORWARDED TO: 1 . ASSESSEE 2 . RESPONDENT 3 . CIT ASSISTANT REGISTRAR 4 . CIT(A) ITAT, NEW DELHI 5 . DR