Vikas Strips Ltd., Delhi V. ACIT Circle-26(2), New Delhi

ITA 4484/DEL/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8828 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 15-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANGEETA YADAV
• Keywords: TDS; Set aside; FORM 26AS
• Section: 145; 40(a)(ia); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC-1’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA No.4484/Del/2019 (Assessment Year : 2014-15) Vikas Strips Ltd., C/o. Kapil Goel Adv. F-26/124, Sec-07, Rohini New Delhi-110 085 PAN : AABCV 7134 J Vs. ACIT Circle – 26(2) New Delhi (APPELLANT) (RESPONDENT) Assessee by Shri Kapil Goel, Adv. Revenue by Ms. Sangeeta Yadav, Sr. D.R. Date of hearing: 28.10.2021 Date of Pronouncement: 11.11.2021 ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the assessee is directed against the order dated 22.02.2019 of the Commissioner of Income Tax (Appeals)-9, New Delhi relating to Assessment Year 2014-15. 2. The relevant facts as culled from the material on records are as under : 2 3. Assessee is a company stated to be engaged in the business of manufacturing & Trading of Iron & Steel Strips. Assessee electronically filed its return of income for A.Y. 2014-15 on 26.09.2014 declaring total income at Rs.42,11,015/-. The case was selected for scrutiny and thereafter in the order passed u/s 143(3) of the Act dated 16.12.2016 determined the total income at Rs.45,97,207/-. Aggrieved by order of AO, assessee carried the matter before the CIT(A), who vide order dated 22.02.2019 in Appeal No.10479/2016-17 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds: “1. That on the facts and in the circumstances of the case and in law, Learned CIT-A erred in sustaining the addition made on account of alleged mismatch in 26AS with income recorded in books amounting to Rs.147,388 without appreciating categorical denial of assessee for any income over and above as actually received by it and as recorded in audited defect free books undoubted u/s 145 of the Act and without making any enquiry u/s 133(6)/131 of the Act from other party as to whether assessee has actually received anything excess in comparison to books amount and putting negative burden on assessee without first discharging burden on revenue to establish that assessee has actually earned the taxable income, ergo addition of Rs.147,388 deserves to be deleted and/or set aside. 2. That on the facts and in the circumstances of the case and in law, Learned CIT-A erred in sustaining the addition made on account of non deduction of tax at source on stated payment of Rs.101,304 u/s 40(a)(ia) of the Act without mentioning in the assessment order as to under which particular provision of TDS Chapter under the Act assessee was supposed to withhold the tax sans which entire disallowance is vitiated for non application of mind and lack of jurisdictional fact and further without making any sort of enquiry from payee/recipient as to whether they have recorded said receipt in their accounts in light of proviso to section 40(a)(ia) read with section 201 of the Act which would automatically exonerate 3 the assessee from adverse implications u/s 40(a)(ia) and without prejudice in worst case amendment made in section 40(a)(ia) restricting disallowance to 30% of the expense claimed may be applied in case of assessee as held in various precedents; 3. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in sustaining the addition made on account of non deduction of tax at source on stated payment of Rs.134,500 u/s 40(a)(ia) of the Act without mentioning in the assessment order as to under which particular provision of TDS Chapter under the Act assessee was supposed to withhold the tax sans which entire disallowance is vitiated for non application of mind and lack of jurisdictional fact and further without making any sort of enquiry from payee/recipient as to whether they have recorded said receipt in their accounts light of proviso to section 40(a)(ia) read with section 201 of the Act which would automatically exonerate the assessee from adverse implications u/s 40(a)(ia) and without prejudice in worst case amendment made in section 40(a)(ia) restricting disallowance to 30% of the expense claimed may be applied in case of assessee as held in various precedents; That the appellant craves leave to add / alter any/all grounds of appeal before or at the time of hearing of the appeal.” Humble Prayer : i) To delete the three additions of Rs.147,388/-, Rs.101,304, Rs.134,500/- respectively made on account of 26AS difference and section 40(a)(ia) disallowance ii) To restore returned income iii) Any other appropriate relief 4. Ground No.1 is with respect to the addition made on account of alleged mismatch in 26AS with income recorded in books amounting to Rs.147,388/- 5. During the course of assessment proceedings, AO on comparing the 26AS statement and the income shown by the 4 assessee noticed that as per Form 26AS assessee had received income of Rs.1,05,40,879/- whereas assessee has shown income of Rs.1,13,42,834/-. Assessee was asked to explain and reconcile the difference of income. Assessee filed the reconciliation and inter alia submitted that assessee had disclosed the correct income. The submissions of the assessee was not found acceptable to AO. AO thereafter made an addition of Rs.1,47,388/- on account of the following: S. No. Name of the party Income as per Books Income as per 26AS Undisclose d Income 1. Style Marketing P. Ltd. 13,56,656 13,65,534 8,878 2. Bag Poly Internationa l Pvt. Ltd. 86,794 1,57,804 71,010 3. DHBVN - 67,500 67,500 Total Undisclosed Income 1,47,388 6. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who upheld the order of AO. Aggrieved by the order of CIT(A), assessee is now in appeal. 7. Before me, Learned AR reiterated the submissions made before the AO & CIT(A) and further submitted that AO has not rejected the books of accounts u/s 145 of the Act, meaning thereby that the income shown in the books of accounts was accepted to be correct and therefore in such a situation no addition could have been made by AO. He thereafter submitted 5 that AO has proceeded to make the addition only based on the difference between the amounts shown by the assessee and the amount reflected in Form 26AS without considering the explanation of the assessee in proper perspective. He submitted that AO could have called for the necessary information from the respective parties which he has failed to do so and in such a situation also he submitted that no addition could have been made by AO. 8. Learned DR on the other hand supported the order of lower authorities. She further submitted that as far as addition of Rs.8,878/- with respect to Style Marketing Pvt. Ltd. is concerned, Assessee did not press for adjudication about the same before the CIT(A), as also noted by CIT(A) in para 3.2 of the order and therefore she submitted that assessee cannot now agitate aforesaid addition. With respect to the other additions, she submitted that it is the primary onus of the assessee to prove that no other income as reflected in Form 26AS has been received by the assessee and since the assessee has failed to discharge the onus. AO and CIT(A) were fully justified for making the addition. 9. I have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the addition made on account of the difference between the amount shown by the assessee in the books of accounts and the amounts reflected in the Form 26AS. As far as addition with respect to Rs.8,878/- from Style Marketing Pvt. Ltd. is 6 concerned, it is seen that before CIT(A) assessee did not agitate the addition. In such as situation, I am of the view that no interference to the order of CIT(A) to the extent of upholding the order of AO on addition of Rs.8,878/- is warranted. As far as other additions aggregating to Rs.1,38,510/- is concerned. I find that assessee had filed reconciliation and given explanation before the AO but the same was rejected by the AO without demonstrating as to how the explanation of the assessee is incorrect. I am of the view that no addition on undisclosed income is called for simply on the basis of the difference as per the books of accounts and the amount reflected in 26AS unless there is evidence with the Revenue about the income being earned by the assessee and not being reflected in the books of accounts, more so, when the books of accounts of the assessee are audited and the same have not been rejected by the AO u/s 145 of the Act and no independent enquiry having been made by AO on the issue. I therefore set aside the addition to the extent of Rs.1,38,510/- made by AO. Thus the ground of the assesse is partly allowed. 10. Ground No.2 & 3 are interconnected and are with respect to the disallowance u/s 40(a)(ia) of the Act. 11. During the course of assessment proceedings, AO noticed that assessee had claimed interest expenses of Rs.1,01,304/- being payment of interest of Car loan to Kotak Mahindra Prime Ltd. AO noticed that assessee had not deducted TDS on such 7 interest payment. He also noticed that assessee had made payment towards repair and maintenance expense of Rs.1,34,500/- to M/s. Light Lift India Pvt. Ltd. and on such payments also no TDS was deducted by the assessee. AO therefore, by invoking the provision of Section 40(a)(ia) of the Act, made the addition of Rs. 1,01,304/- and Rs.1,34,500/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who upheld the action of AO. Aggrieved by the order of CIT(A), assessee is now in appeal. 12. Before me, Learned AR reiterated the submissions made before the lower authorities and further submitted that assessee has paid interest of Rs.1,01,304/- to Kotak Mahindra Prime Ltd. and had also made the payment towards repair and maintenance expenses to M/s. Light Lift India Pvt. Ltd. amounting to Rs.1,34,500/-. He submitted that aforesaid payments have already been reflected by the respective recipients in their total income and in such a situation no addition is called for Section 40(a)(ia) of the Act. He thereafter fairly submitted that assessee has received a certificate from the Chartered Accountant of the respective recipients certifying that amount received from the assessee having been offered by the respective recipients as their income. He submitted that aforesaid certificate could not be produced before the CIT(A) and therefore matter may be remitted to lower authorities for verification. 8 13. Learned DR on the other hand supported the order of lower authorities but did not seriously object to the prayer of the assessee to remit the issue back for verification. 14. I have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to the disallowance u/s 40(a)(ia) of the Act on account of non-deduction of TDS. It is the contention of the assessee that amount paid by the assessee has been reflected by the respective recipients in their income and have also been offered to tax. In support of the aforesaid contention, assessee has now produced the certificate from Chartered Accountant of the respective recipients. In view of the aforesaid, the issue is restored back to AO for verification and decide the issue afresh in accordance with law. Needless to state that AO shall grant adequate opportunity of hearing to the assessee and the assessee shall also promptly furnish all the necessary details called by the authorities. Thus the ground of assessee is allowed for statistical purposes. 15. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 11.11.2021 Sd/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER Date:- 11.11.2021 9 PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI