KAVITA SINGH, MUMBAI V. DCIT 7(3)(ERSTWHILE DCIT CC 42), MUMBAI

ITA 4536/MUM/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5217 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Reopening of assessment; TDS
• Section: 43B; 143(3); 234B; 201; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 4536/MUM/2015 : A.Y : 2007 - 08 MRS. KAVITA SINGH (PROP. OF REFLECTIONS) 1001, DALAMAL HOUSE, 10 TH FLOOR, NARIMAN POINT, MUMBAI 400 0 21. PAN : A NDPS0896C (APPELLANT) VS. DC IT, CENTRAL CIRCLE - 7(3), MUMBAI (RESPONDENT) APPELLANT BY : SHRI MANISH V. SHAH/ MRS. NIYANTA MEHTA RESPONDENT BY : MS. POOJA SWAROOP DATE OF HEARING : 11 /0 7 /2018 DATE OF PRONOUNCEMENT : 05 /10/2018 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2007 - 08 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A) - 49, MUMBAI DATED 28.05.2015, WHICH IN TURN HAS ARISE N OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 22.08.2012. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 2 ITA NO. 4536/MUM/2015 MRS. KAVITA SINGH GROUND I 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 49 ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT U/S 147 WHICH IS DONE BY DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 7(3), MUMBAI (ERSTWHILE DCIT C.C.42, MUMB AI ('THE A.O'). 2. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT, I) THE APPELLANT HAS NOT FAILED TO DISCLOSE ANY RELEVANT FACTS AT THE TIME OF ASSESSMENT; II) MERELY A CHANGE IN THE OPINION CANNOT BE GROUND FOR REOPENING OF ASSESSMENT U/S 147 OF THE ACT. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE REOPENING WAS UNJUSTIFIED, UNWARRANTED AND BAD - IN - LAW. IV) WHETHER ONCE ORDER IS PASSES U/S 153A, NOTICE U/S 148 AND ORDER U/S 147 CAN BE ISSUED / PASSED. 3. THE APPELLANT, THEREFORE, PRAYS THAT IT BE HELD THAT THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT IS AB - INITIO AND / OR OTHERWISE VOID AND BAD - IN - LAW. GROUND II 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 49 ERRED IN NOT CONSIDERING THAT RS. 2,03,789/ - IS ALREADY OFFE RED, ADDITION WILL LEADS TO DOUBLE TAXATION. 2. THE APPELLANT THEREFORE PRAYS THAT THE A.O BE DIRECTED TO DELETE THE ADDITION OF RS. 2,03,789/ - AS DONE BY THE ASSESSEE. GROUND III THE ASSESSING OFFICER ERRED IN LEVYING INTEREST U/S 220(2), U/S 234B AND U/S 234C OF THE I.T. ACT. 3 ITA NO. 4536/MUM/2015 MRS. KAVITA SINGH 3. ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS, BUT THE SUM AND SUBSTANCE OF THE DISPUTE IS WITH REGARD TO AN ADDITION OF RS.2,03,789/ - MADE TO THE RETURNED INCOME. 4. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE ASSESSI NG OFFICER REOPENED THE ASSESSMENT EARLIER FINALISED U/S 143(3) R.W.S. 1 53A OF THE ACT DATED 30.12.2009 BY ISSUING A NOTICE U/S 148 OF THE ACT DATED 28.03.2012. IN THE ENSUING ASSESSMENT, THE ASSESSING OFFICER, INTER - ALIA , MADE AN ADDITION OF RS.2,03,789/ - WHICH ACCORDING TO HIM REPRESENTED AN UNDERSTATEMENT OF INCOME. PERTINENTLY, THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF INTERIOR DESIGNING, TRADING IN PAINTINGS AND ARTEFACTS AND MANUFACTURE OF FURNITURE. AS PER THE ASSESSING OFFICER, THE AMOUNT OF PROFESSIONAL FEE CREDITED IN THE PROFIT & LOSS ACCOUNT WAS RS.44,20,441/ - , WHEREAS AS PER THE TDS CERTIFICATES, IT WAS RS.46,24,200/ - THEREBY REFLECTING A DIFFERENTIAL OF RS.2,03,789/ - . THIS AMOUNT HAS BEEN ADDED TO THE TOTAL INCOME, WHICH HAS ALSO BEEN SUSTAINED BY THE CIT(A). 5. THE STAND OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES WAS TO THE EFFECT THAT THE DIFFERENCE IS PRIMARILY ON ACCOUNT OF TREATMENT OF SERVICE TAX ELEMENT. AS PER THE ASSESSEE, THE PROFESSIONAL FEE WAS CREDITED IN THE PROFIT & LOSS ACCOUNT NET OF SERVICE TAX ELEMENT, WHEREAS THE AMOUNT REFLECTED IN THE TDS CERTIFICATES WAS THE GROSS AMOUNT AS THE PAYER HAD DEDUCTED THE TDS ON THE GROSS AMOUNT. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO A DETAILED RECONCILIATION IN THIS REGARD, A COPY OF WHICH HAS BEEN PLACED AT PAGE 12 OF THE PAPER BOOK. THE RECONCILIATION WORKED OUT BY THE ASSESSEE, WHICH WAS VERY MUCH BEFORE THE LOWER AUTHORITIES, CLEARLY BRINGS OUT THAT ONCE THE SERVICE TAX ELEME NT IS ACCOUNTED 4 ITA NO. 4536/MUM/2015 MRS. KAVITA SINGH FOR, THERE DOESNT REMAIN ANY DIFFERENCE BETWEEN THE INCOME REFLECTED IN THE PROFIT & LOSS ACCOUNT AND THAT REFLECTED IN THE TDS CERTIFICATES. IN THIS CONTEXT, THE LEARNED REPRESENTATIVE ALSO REFERRED TO THE REMAND REPORT FURNISHED BY THE ASSESSING OFFICER BEFORE THE CIT(A), WHEREIN SUCH ASSERTIONS OF THE ASSESSEE HAVE BEEN FOUND TO BE CORRECT. A COPY OF SUCH REMAND REPORT DATED 02.02.2015 IS PLACED AT PAGE 37 AND 38 OF THE PAPER BOOK AND THE RELEVANT OBSERVATION OF THE ASSESSING OFFICER R EADS AS UNDER : - IT IS SEEN FROM THE PROFESSIONAL FEES SALES LEDGER ACCOUNT (1 - APR - 2006 TO 31 - MAR - 2007) OF M/S. REFLECTIONS (COPY ENCLOSED) THAT THERE IS BIFURCATION OF PROFESSIONAL FEES CHARGED FROM VARIOUS ENTITIES AND THE SERVICE TAX PAYABLE COMPONENTS THEREOF, TOTAL LING TO RS.5,41,059/ - . THUS, THE FACTS AS SUBMITTED, THAT THE DIFFERENCE OF RS.2,03,789/ - IN PROFESSIONAL FEE OF RS.46,24,200/ - AS REFLECTED IN THE STATEMENT OF TDS CERTIFICATES AND PROFESSIONAL INCOME OF RS.44,20,411/ - RECORDED IN THE BOOKS FOR A.Y 2007 - 08 IS ON ACCOUNT OF SERVICE TAX COMPONENT PAYABLE, WHICH IS NOT INCLUDED IN THE P&L ACCOUNT, ARE CORRECT. 6. IN THIS BACKGROUND, THE LEARNED REPRESENTATIVE POINTED OUT THAT THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ADDITION. IN ANY CASE, IT IS CONTENDED THAT IF THE ELEMENT OF SERVICE TAX IS TO BE TAXED AS AN INCOME OF THE ASSESSEE, THE PAYMENT THEREOF OUGHT TO BE ALLOWED AS EXPENDITURE. THE CIT(A), IN PARA 10.1 OF HIS ORDER, HAS UPHELD THE ADDITION PRIMARILY ON THE GROUND THAT THERE WAS NO PROOF EVIDENCI NG THE PAYMENT OF SERVICE TAX TO THE EXCHEQUER. THE CIT(A) FURTHER NOTED THAT ASSESSEE WOULD BE ENTITLED TO CLAIM THE DEDUCTION IN THE YEAR IN WHICH THE SERVICE TAX IS ACTUALLY PAID IN TERMS OF SEC. 43B OF THE ACT. 5 ITA NO. 4536/MUM/2015 MRS. KAVITA SINGH 7. ON THIS ASPECT, THE LEARNED REPRESEN TATIVE REFERRED TO PAGES 33 TO 36 OF THE PAPER BOOK WHEREIN IS PLACED COPY OF THE TR - 6 CHALLANS EVIDENCING PAYMENT OF REQUISITE SERVICE TAX DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS ALSO POINTED OUT THAT THE AFOR ESAID MATERIAL WAS VERY MUCH BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A), AND THAT EVEN ON THIS SCORE, THE CIT(A) ERRED IN SUSTAINING THE IMPUGNED ADDITION. 8. THE LD. DR APPEARING FOR THE REVENUE HAS MERELY RELIED UPON THE ORDER OF THE AU THORITIES BELOW. 9. IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, THERE IS HARDLY ANY REASON TO SUSTAIN THE IMPUGNED ADDITION. FIRSTLY, THE ASSESSING OFFICER HIMSELF AFFIRMS IN THE REMAND PROCEEDINGS THAT THE DIFFERENCE IN THE AMOUNT OF PROFESSIONAL FEE REFLECTED IN THE PROFIT & LOSS ACCOUNT AND AS PER THE TDS CERTIFICATES WAS ON ACCOUNT OF SERVICE TAX COMPONENT PAYABLE. ADMITTEDLY, THE PROFESSIONAL FEE CREDITED IN THE PROFIT & LOSS ACCOUNT IS NET OF SERVICE TAX PAYABLE. SECONDLY, THE PAYMENT OF SE RVICE TAX COMPONENT DURING THE YEAR UNDER CONSIDERATION IS VERY MUCH REFLECTED BY TR - 6 CHALLANS WHICH ARE ON RECORD. IT HAS ALSO BEEN EXPLAINED BEFORE US THAT ASSESSEE HAS NOT EARNED ANY OTHER INCOME EXCEPT PROFESSIONAL FEE AND, THEREFORE, THE ONLY PROBAB ILITY OF SERVICE TAX PAID IS TOWARDS SUCH PROFESSIONAL FEE RECEIVED. THUS, THE SERVICE TAX PAID IS LIABLE TO BE ALLOWED AS A DEDUCTION EVEN IF ONE WAS TO CONSIDER THAT THE SERVICE TAX COMPONENT IS TO BE TAKEN AS INCOME OF THE ASSESSEE. BE THAT AS IT MAY, UNDER THESE CIRCUMSTANCES, THERE IS NO JUSTIFICATION TO UPHOLD THE ADDITION OF RS.2,03,789/ - MADE BY THE ASSESSING OFFICER, WHICH IS HEREBY DIRECTED TO BE DELETED. 6 ITA NO. 4536/MUM/2015 MRS. KAVITA SINGH 10. SINCE THE ASSESSEE HAS SUCCEEDED ON MERIT OF THE ISSUE, THE OTHER GROUNDS RAISED WITH REGARD TO VALIDITY OF THE PROCEEDINGS INITIATED UNDER SECTIONS 147/148 OF THE ACT IS RENDERED ACADEMIC AND IS NOT ADJUDICATED AT PRESENT. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED TO THE ABOVE EXTENT. ORDER PRONOUNCED IN THE OPEN COURT ON 5 T H OCTOBER, 2018. SD/ - SD/ - ( PAWAN SINGH ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 5 T H OCTOBER, 201 8 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, H BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI