Ajay Aggarwal, New Delhi V. ITO, New Delhi

ITA 4581/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1248 (ITAT-DELHI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-02-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: VINOD KUMAR GARG
• Keywords: Opportunity of being heard
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.4581/DEL/2012 4581/DEL/2012 4581/DEL/2012 4581/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 SHRI AJAY AGGARWAL, SHRI AJAY AGGARWAL, SHRI AJAY AGGARWAL, SHRI AJAY AGGARWAL, B BB B- -- -1/98, 1/98, 1/98, 1/98, PASCHIM VIHAR, PASCHIM VIHAR, PASCHIM VIHAR, PASCHIM VIHAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 06 110 06 110 06 110 063. 3.3. 3. PAN : AADPA9442P. PAN : AADPA9442P. PAN : AADPA9442P. PAN : AADPA9442P. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -39(1), 39(1), 39(1), 39(1), C.R.BUILDING, C.R.BUILDING, C.R.BUILDING, C.R.BUILDING, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD KUMAR GARG, CA. RESPONDENT BY : MS.Y.KAKKAR, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXVIII, NEW DELHI DATED 29 TH JUNE, 2012 FOR THE AY 2009- 10. 2. GROUND NOS.1 & 4 OF THE ASSESSEES APPEAL ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. 3. GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UNDER:- 2(A) THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION OF RS.21,36,547/- ON ACCOUNT OF DIFFERENCE IN CONTRACT RECEIPTS WHEREAS THE APPELLANT HAS DECLARED T HE RECEIPTS OF RS.85,91,944/- ON THE BASIS OF FORM 16A ISSU ED BY THE DEPARTMENT AND AVAILABLE AT THE TIME OF FILI NG THE RETURN OF INCOME AND FURTHER DECLARED THIS RECEIPTS O F RS.21,36,547/- AS CONTRACT RECEIPTS IN A.Y. 2010-11. THE PRACTICE OF DECLARING THE CONTRACT RECEIPT ON THE B ASIS OF FORM 16A IS FOLLOWED INCONSISTENTLY OVER THE YEARS WITH OUT ANY BREAK. ITA-4581/DEL/2012 2 (B) ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE TH E APPELLANT DISPUTES THAT THE QUANTUM OF ADDITION CONFI RMED IS ON HIGHER SIDE AND REBATE FOR EXPENSES BE ALLOWED. ALSO CREDIT FOR TDS AGAINST THE ADDITION MADE BE ALLOWED TO THE APPELLANT. 4. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY T HE LEARNED COUNSEL THAT THE ASSESSEE DERIVES INCOME FROM EXECUTION O F GOVERNMENT CIVIL CONTRACTS. THAT AS PER THE METHOD O F ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE, HE IS ACCOUNTING FOR THE CONTRACT RECEIPTS ON THE BASIS OF FORM NO.16A ISSUED BY THE DEPA RTMENT. HE REFERRED TO PAGE 19 OF THE ASSESSEES PAPER BOOK AND POI NTED OUT THAT AS PER FORM 16A (TDS CERTIFICATE DATED 4.5.2009), TH E CONTRACT RECEIPT PAID TO THE ASSESSEE WAS ` 85,91,944/- WHICH WAS DULY DISCLOSED BY THE ASSESSEE. HOWEVER ON 8.6.2010, ANOTHER FORM 16A WAS ISSU ED SHOWING FURTHER PAYMENT TO THE ASSESSEE OF ` 21,36,547/-. HE SUBMITTED THAT THE RETURN OF INCOME WAS ALREADY FILED BY THE ASSESSEE O N 17.9.2009 AND SECOND TDS CERTIFICATE WAS ISSUED BY THE DEPARTMEN T ON 8.6.2010. THEREFORE, THE ABOVE SUM OF ` 21,36,547/- WAS TAKEN IN THE RECEIPT OF ASSESSMENT YEAR 2010-11. HE STATED THAT THIS METHOD OF A CCOUNTING BEING REGULARLY AND CONSISTENTLY FOLLOWED HAS BEEN AC CEPTED BY THE REVENUE IN ALL THE PRECEDING YEARS. HE ALSO SUBMITTED THAT THERE IS NO LOSS OF REVENUE BECAUSE THE AMOUNT HAS ALREADY BEEN OFF ERED TO TAX IN THE NEXT ASSESSMENT YEAR. HE, THEREFORE, SUBMITTED THAT THE ADDITION OF ` 21,36,547/- MAY BE DELETED. 5. THE LEARNED COUNSEL MADE AN ALTERNATIVE SUBMISSION THAT THE REVENUE HAS MADE THE ADDITION OF THE ENTIRE RECEIPT WITHOUT ALLOWING THE EXPENDITURE THEREFROM WHICH WAS INCURRED FOR EA RNING THE ABOVE INCOME. HE FURTHER SUBMITTED THAT EVEN THE SUM OF ` 21,36,547/- IS NOT THE ACTUAL PAYMENT BUT IT IS THE GROSS AMOUNT FROM WHI CH VARIOUS DEDUCTIONS ARE MADE BY THE CONTRACTEE. THE ASSESSEE SHOU LD BE ITA-4581/DEL/2012 3 ALLOWED THE SAID DEDUCTIONS WHILE COMPUTING THE INCO ME AGAINST THE SUM OF ` 21,36,547/-. HE ALSO SUBMITTED THAT THE CREDIT FOR T DS MADE AGAINST THIS RECEIPT SHOULD ALSO BE ALLOWED AND THE R ECEIPT SHOULD BE EXCLUDED FROM THE INCOME OF AY 2010-11 BECAUSE THE S AME INCOME CANNOT BE ASSESSED TWICE. 6. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF AUTHORITIES BELOW AND SHE STATED THAT AS PER AUDIT REP ORT COLUMN 11(A), THE METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE IS AC CRUAL BASIS. THUS, THE RECEIPT IS TO BE ACCOUNTED FOR ON ACCRUAL B ASIS IRRESPECTIVE OF WHETHER THE AMOUNT IS ACTUALLY RECEIVED OR NOT. IN THIS CASE, FROM THE TDS CERTIFICATE DATED 8.6.2010, IT IS EVIDENT THAT T HE AMOUNT WAS EITHER PAID TO THE ASSESSEE OR CREDITED TO THE ASSESSEES ACCOUNT I N THE YEAR 2008 ITSELF. THAT MERELY BECAUSE THERE IS A DELAY IN THE RECEIPT OF TDS CERTIFICATE, THE ASSESSEE CANNOT POSTPONE THE DISCLOSURE OF SUCH RECEIPT. SHE FURTHER STATED THAT THE ASSESSEE IS MAINTAI NING REGULAR BOOKS OF ACCOUNT WHICH ARE DULY AUDITED AND THE ASSESSEE HAS ALREADY ACCOUNTED FOR ALL THE EXPENDITURE INCURRED RELATING TO THE RECEIPT OF ` 21,36,547/- BECAUSE THE WORK WAS DULY COMPLETED DURIN G THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSID ERATION. SHE, THEREFORE, SUBMITTED THAT THERE IS NO QUESTION O F ALLOWING OF ANY FURTHER DEDUCTION AGAINST THE RECEIPT OF ` 21,36,547/-. SHE AGREED IN PRINCIPLE THAT THE SAME AMOUNT CANNOT BE TAXED TWICE . HOWEVER, SHE STATED THAT THE ASSESSEE IS AT LIBERTY TO FILE AN APPLIC ATION UNDER SECTION 154 IN THE NEXT YEAR FOR EXCLUDING THE RECE IPT IN THAT YEAR. SHE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LEAR NED CIT(A) IN THIS REGARD SHOULD BE SUSTAINED. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSEE IS AN INDIVIDUAL WHO IS DERIVING INCOME FROM EXECUTION OF CIVIL CONTRACT WORK. ITA-4581/DEL/2012 4 HE IS MAINTAINING REGULAR BOOKS OF ACCOUNT WHICH ARE DULY AUDITED AND THE AUDIT REPORT IS PLACED AT PAGE 3 ONWARDS OF THE ASSESSEES PAPER BOOK. FROM PARA 11(A) OF THE AUDIT REPORT, IT IS FO UND THAT THE ASSESSEE IS FOLLOWING ACCRUAL BASIS AS HIS METHOD OF ACCOUNTING I N THE PREVIOUS YEAR. NOW, AS PER ACCRUAL BASIS, ASSESSEE IS TO ACCOUNT FO R THE AMOUNT WHICH HAS BECOME DUE AND PAYABLE TO HIM EVEN IF THE AMOUNT IS NOT ACTUALLY RECEIVED. AS PER TDS CERTIFICATE DATED 8.6 .2010, THE DETAILS OF PAYMENT TO THE ASSESSEE AND TAX DEDUCTION IS AS UNDER:- S.NO. AMOUNT PAID DATE OF PAYMENT/CREDIT TDS RS. SURCHARGE RS. EDU. CESS RS. TOTAL TAX DEPOSITED RS. 1. 1259716 25.10.08 25194 2519 831 28544 2. 876831 04.12.08 17537 1754 579 19870 TOTAL 21,36,547 48414 8. FROM THE ABOVE, IT IS EVIDENT THAT THE SUM OF ` 12,59,716/- WAS EITHER PAID TO THE ASSESSEE OR CREDITED TO HIS ACCOUNT O N 15.10.2008 WHILE THE SUM OF ` 8,76,831/- WAS PAID/CREDITED ON 4.12.2008. THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSI DERATION IS 1.4.2008 TO 31.3.2009. THEREFORE, BOTH THE ABOVE SU MS WERE EITHER PAID OR CREDITED TO THE ASSESSEES ACCOUNT DURING THE AC COUNTING YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION AND AS PE R ACCRUAL METHOD OF ACCOUNTING, THE SUM OUGHT TO HAVE BEEN REC ORDED AS THE RECEIPT OF THE ASSESSEE. THE RECORDING OF THE RECEIPT AS PER ISSUE OF TDS CERTIFICATE IS NEITHER PERMISSIBLE ON ACCOUNTING P RINCIPLE NOR UNDER THE INCOME-TAX ACT. IN THIS CASE, THE DEDUCTEE HAD ISSUED A TDS CERTIFICATE ON 8.6.2010 BUT, IF WE SUPPOSE THAT A DED UCTEE DOES NOT ISSUE THE TDS CERTIFICATE, THEN, AS PER THE STAND OF TH E ASSESSEE, SUCH INCOME IS NOT ASSESSABLE AT ALL. IN OUR OPINION, THE A CCRUAL OF INCOME HAS NO RELEVANCY WITH THE ISSUE OF TDS CERTIFICATE. W E, THEREFORE, REJECT THE ASSESSEES CONTENTION THAT THE INCOME OF ` 21,36,547/- HAD ITA-4581/DEL/2012 5 NOT ACCRUED TO HIM DURING THE ACCOUNTING YEAR RELEV ANT TO ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, WE AGREE WITH HI S ALTERNATIVE CONTENTION THAT IF ANY SUM IS DEDUCTED FROM THE ABOV E AMOUNT BY THE CONTRACTEE FOR ANY REASON, THE SAME IS TO BE REDUCED F ROM THE ASSESSEES RECEIPT. HOWEVER, THE BURDEN WOULD BE UPON T HE ASSESSEE TO ESTABLISH THAT ANY SUCH AMOUNT WAS DEDUCTED BY THE C ONTRACTEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO STATED THAT E XPENDITURE INCURRED IN RESPECT OF ABOVE INCOME SHOULD ALSO BE ALL OWED. IN PRINCIPLE, ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR EARNING INCOME IS TO BE ALLOWED WHILE COMPUTING THE INCOME FROM SUC H RECEIPT. HOWEVER, BURDEN WOULD BE UPON THE ASSESSEE TO ESTABLISH T HAT THE EXPENDITURE INCURRED FOR EARNING THE ABOVE INCOME W AS INCURRED DURING THE YEAR UNDER CONSIDERATION BUT NOT DEBITED IN THE PROFIT & LOSS ACCOUNT IN THIS YEAR AND DEBITED IN THE SUBSEQUENT YEA R. WE ALSO AGREE WITH THE ASSESSEES SUBMISSION THAT IF THE RECEIPT OF ` 21,36,547/- IS TO BE ASSESSED IN THIS YEAR, THEN THE CREDIT FOR TDS O F ` 48,414/- IS TO BE ALLOWED. WE ALSO AGREE WITH THE ASSESSEES SUBMISSION T HAT THE SAME INCOME CANNOT BE ASSESSED TWICE, ONCE IN AY 2009-10 AND AGAIN IN AY 2010-11. SINCE, IN OUR OPINION, INCOME IS ASSESSA BLE IN THE YEAR UNDER CONSIDERATION, WE DIRECT THE ASSESSING OFFICER TO GIVE APPROPRIATE RELIEF IN THE NEXT YEAR I.E. AY 2010-11 , AFTER BEING SATISFIED THAT SAME INCOME IS DISCLOSED IN THAT YEAR ALSO. IN VI EW OF THE TOTALITY OF THE ABOVE FACTS, WE SET ASIDE THE ORDERS OF THE AUTH ORITIES BELOW ON THIS POINT AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION AS PER OUR DIRECTIONS/OBSERVATIONS ABOVE . NEEDLESS TO MENTION THAT WHILE GIVING EFFECT TO THIS ORDER, THE ASSESSING OFFICER WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 9. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UNDER:- ITA-4581/DEL/2012 6 3(A) THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION OF RS.2651/- AND RS.3497/- AGAINST TELEPHONE EXPENSES AND VEHICLE EXPENSES RESPECTIVELY ON ACCOUNT OF PERSONAL ELEMENT. 10. AT THE TIME OF HEARING BEFORE US, NO ARGUMENT WA S ADVANCED RELATING TO THIS GROUND OF APPEAL. WE, THEREFORE, T REAT THE SAME AS NOT PRESSED AND ACCORDINGLY REJECT THE SAME. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DEEMED TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2013. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRA (G.D.AGRA (G.D.AGRA (G.D.AGRAWAL) WAL) WAL) WAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 28.02.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : SHRI AJAY AGGARWAL, B SHRI AJAY AGGARWAL, B SHRI AJAY AGGARWAL, B SHRI AJAY AGGARWAL, B- -- -1/98, 1/98, 1/98, 1/98, PASCHIM VIHAR, NEW DELHI PASCHIM VIHAR, NEW DELHI PASCHIM VIHAR, NEW DELHI PASCHIM VIHAR, NEW DELHI 110 063. 110 063. 110 063. 110 063. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -39(1), C.R.BUILDING, NEW DELHI. 39(1), C.R.BUILDING, NEW DELHI. 39(1), C.R.BUILDING, NEW DELHI. 39(1), C.R.BUILDING, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR