Golden Trust Financial Services, Kolkata V. ACIT, CIR-54, ADMN. KOLKATA, Kolkata

ITA 459/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1439 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE CITSR
• Assessee Lawyers: DR SOMNATH GHOSH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI N.V. VASUDEVAN, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 459/KOL/201 5 ASSESSMENT YEAR : 2009-1 0 GOLDEN TRUST FINANCIAL SERVICES -VS- AC IT, CIRCLE-54, KOLKATA [PAN: AACFG 8395 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : DR. SOMNATH GHOSH, AR FOR THE RESPONDENT :SHRI ARINDAM BHATTACHARJEE, ADDL CIT,SR. DR DATE OF HEARING : 18.09.2017 DATE OF PRONOUNCEMENT : 20.09.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -11, KOLKATA [ IN SHORT THE LD CITA] IN APPEAL NO. 146/CIT(A)- 11/CIR-54/14-15/KOL DATED 24.02.2015 AGAINST THE O RDER PASSED BY THE ACIT, CIRCLE- 54, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 09.05.2011 FOR THE ASSESSME NT YEAR 2009-10. 2. THE ONLY ISSUE IS TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE TOWARDS IN TEREST INCOME IN THE SUMS OF RS. 43,11,699/- (INTEREST FROM SBI) AND RS. 83,865/- (I NTEREST FROM VIJAYA BANK), IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE FIRM IS DERIVING INCOME FROM INSURANCE COMMISSION AND BUSINESS AUXILIARY SERVICE S AND HAS ITS BRANCHES SITUATED 2 ITA NO.459/KOL/2015 GOLDEN TRUST FINANCIAL SERVICES A.YR.2009-10 2 MOSTLY IN RURAL AND SEMI URBAN AREAS. BECAUSE OF IT S NETWORK, LARGE NUMBER OF FIELD WORKERS BELONG TO RURAL AND SEMI URBAN AREAS. THE B RANCHES ARE THE COLLECTION AS WELL AS RELATIONSHIP MAINTENANCE POINTS WITH THE LARGE NETW ORK OF FIELD WORKERS OF THE ASSESSEE FIRM. IT TAKES AT LEAST 5 TO 15 DAYS TO TRANSFER TH E FUNDS FROM THE BRANCHES TO THE HEAD OFFICE AT KOLKATA DEPENDING ON THE LOCATIONS OF THE BRANCHES. FOR THAT REASON, SOME TIMES THE FIRM FACED CASH CRUNCHES AND WAS FORCED T O AVAIL BANK OVERDRAFTS. CONSEQUENTLY THE FIRM HAS TO PAY INTEREST ON BANK O VERDRAFT. THIS IS DUE TO THE UNIQUE BUSINESS CONDITION AND BUSINESS STRATEGY OF THE ASS ESSEE FIRM. BANK OVERDRAFTS WERE ALSO OBTAINED AGAINST THE FIXED DEPOSITS OF THE FIR M INSTEAD OF ENCASHING THE FIXED DEPOSITS. THIS WAS DONE TO AVOID THE LOSS OF PENAL DEDUCTION OF INTEREST BY THE BANKS ON PREMATURE ENCASHMENT OF FIXED DEPOSITS. THIS PENAL DEDUCTION OF INTEREST BY THE BANKS WOULD BE MORE THAN THE DIFFERENCE OF INTEREST CHARG ED BY THE BANKS FOR AVAILING BANK OVERDRAFTS AGAINST THE FIXED DEPOSITS. HENCE, THE FIRM OBTAINED BANK OVERDRAFTS AGAINST FIXED DEPOSITS OUT OF BUSINESS PRUDENCE ONL Y. APART FROM THESE, THE FIRM HAS EARNED CONSIDERABLE AMOUNT OF INTEREST ON FIXED DEP OSITS. THE TOTAL INFLOW OF INTEREST DURING THE YEAR ON FIXED DEPOSITS WAS MORE THAN THE OUTFLOW OF INTEREST ON BANK OVERDRAFTS. SO, THE FIRM WAS A NET GAINER IN THIS R ESPECT AND HAS ACTED ON THE BASIS OF ORDINARY BUSINESS PRUDENCE ONLY. 4. THE ASSESSEE HAS REPORTED INTEREST INCOME ON FIX ED DEPOSIT OF RS. 4,31,16,329/- FROM STATE BANK OF INDIA, MIDDLETON ROW BRANCH AND OFFER ED THE SAME FOR TAXATION. THIS FIGURE ALSO TALLIED WITH THE PHYSICAL TDS CERTIFICA TE ISSUED BY THE BANK IN FORM NO. 16A. THE LD. AO OBSERVED THAT THE ITS DETAILS REVEALED T HAT THE INTEREST INCOME ON FIXED DEPOSIT FROM STATE BANK OF INDIA, MIDDLETON ROW BRA NCH WAS RS. 4,74,28,028/-. THE LD. AO PLACED RELIANCE ON THE ITS DETAILS OBTAINED BY THE DEPARTMENT AS SACROSANCT AND RESORTED TO MAKE AN ADDITION FOR THE REMAINING PORT ION OF RS. 43,11,699/- (47428028 43116329) AND IGNORED THE PHYSICAL TDS CERTIFICATE IN FORM 16A WHICH REFLECTED THE TOTAL INTEREST INCOME FROM STATE BANK OF INDIA OF R S. 4,31,16,329/-. THE SAID PHYSICAL 3 ITA NO.459/KOL/2015 GOLDEN TRUST FINANCIAL SERVICES A.YR.2009-10 3 FORM 16A ALSO REFLECTED TDS AMOUNT OF RS. 48,85,087 /- WHICH WAS DULY GIVEN CREDIT BY THE LD. AO AND THERE IS ABSOLUTELY NO DISPUTE ON TH E SAME. 5. WITH REGARD TO INTEREST INCOME ON FIXED DEPOSIT FROM VIJAYA BANK, HOWRAH BRANCH, THE ASSESSEE REPORTED INTEREST INCOME OF RS. 78,73, 000/- AND OFFERED FOR TAXATION. IN THE PHYSICAL TDS CERTIFICATE IN FORM 16A ISSUED BY VIJA YA BANK, THE INTEREST INCOME WAS REFLECTED AT RS. 78,67,809/-, THEREBY RESULTING IN ASSESSEE CONSIDERING EXCESS INTEREST INCOME OF RS. 5,198/- IN ITS PROFIT AND LOSS ACCOUN T AND IN THE RETURN OF INCOME. HOWEVER, THE ITS DETAILS OBTAINED BY THE DEPARTMENT REVEALED THAT THE INTEREST INCOME ON FIXED DEPOSIT FROM VIJAYA BANK, HOWRAH BRANCH WA S RS. 79,56,865/-. THE LD. AO ACCORDINGLY RESORTED TO BRING THE DIFFERENCE OF RS. 83,865/-(79,56,865 7873000) TO TAX. THE TDS FIGURE REFLECTED IN FORM NO. 16A ISSUE D BY VIJAYA BANK WAS RS. 8,97,483/- WHICH WAS DULY GIVEN CREDIT BY THE LD. A O AND ON WHICH THERE IS ABSOLUTELY NO DISPUTE. 6. THE LD. CIT(A) UPHELD THE CONTENTIONS OF THE LD. AO THAT WITH REGARD TO INTEREST INCOME FROM STATE BANK OF INDIA, THE FORM NO. 26AS AFTER NUMBER OF CORRECTIONS CONTAINED INTEREST OF RS. 2,81,79,066/- AS AGAINST THE INTEREST OF RS. 4,31,16,329/- REFLECTED IN PHYSICAL TDS CERTIFICATE IN FORM 16A. HOWEVER, THE TDS AMOUNT OF RS. 48,85,087/- REMAINED THE SAME IN FORM 26AS ALSO. TH E LD. CIT(A) BASED ON THIS DISCREPANCY OBSERVED THAT IT INDICATES THERE MAY BE CERTAIN PAYMENT OF INTEREST BY THE BANK TO THE ASSESSEE WITHOUT TDS. SIMILARLY HE UPHE LD THE ADDITION MADE WITH REGARD TO INTEREST INCOME FROM VIJAYA BANK OF RS. 83,865/-. A GGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLKATA HAS ERRED IN LAW A S WELL AS IN FACT IN CONFIRMING THE ADDITION ON ACCOUNT OF INCREASING FI XED DEPOSIT INTEREST INCOME FROM STATE BANK OF INDIA, MIDDLETON ROW BRANCH BY RS. 43,11,699/-. 4 ITA NO.459/KOL/2015 GOLDEN TRUST FINANCIAL SERVICES A.YR.2009-10 4 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLKATA HAS ERRED IN LAW A S WELL AS IN FACT IN CONFIRMING THE ADDITION ON ACCOUNT OF INCREASING F IXED DEPOSIT INTEREST INCOME FROM VIJAYA BANK, HOWRAH BRANCH BY RS. 83,865/-. 3. THE APPELLANT CRAVES LEAVE TO ADD TO OR AMEND TH E AFORESAID GROUNDS BEFORE DISPOSAL OF THE APPEAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE, THE SAME ARE NOT REITE RATED FOR THE SAKE OF BREVITY. WE FIND THAT BOTH AUTHORITIES BELOW HAD RESORTED TO MA KE AND CONFIRM THIS ADDITION RESPECTIVELY TAKING THE AIR INFORMATION/ ITS DETAIL S AS SACROSANCT AND BY COMPLETELY IGNORING THE PHYSICAL TDS CERTIFICATE ISSUED BY THE STATE BANK OF INDIA AND VIJAYA BANK RESPECTIVELY TO THE ASSESSEE. WE HOLD THAT THE ASSE SSEE CANNOT BE FAULTED AT ALL JUST BECAUSE HE IS NOT ABLE TO RECONCILE THE FIGURES MEN TIONED IN FORM 26AS AS WELL AS THE FIGURES THAT WERE REFLECTED IN ITS DETAILS/ AIR INF ORMATION. THE FIGURES IN FORM 26AS ARE DEPENDENT ON THE FIGURES UPLOADED BY THE DEDUCT OR I.E. STATE BANK OF INDIA AND VIJAYA BANK WHILE UPLOADING THEIR RESPECTIVE QUARTE RLY TDS RETURNS, ON WHICH, THE ASSESSEE CANNOT HAVE ANY CONTROL IN ANY MANNER WHA TSOEVER. IN THE INSTANT CASE, THE ASSESSEE HAS DULY OFFERED THE INTEREST INCOME BASED ON THE PHYSICAL TDS CERTIFICATE ISSUED IN FORM NO. 16A BY THE RESPECTIVE BANKS I.E. STATE BANK OF INDIA AND VIJAYA BANK AND CLAIMED THE TDS REFLECTED THEREON. WE FIND THAT THE LD. AO HAS NOT DISPUTED THE TDS FIGURE MENTIONED IN PHYSICAL TDS CERTIFICAT E BUT HAD DISPUTED THE GROSS INTEREST INCOME REFLECTED THEREON. WE FIND THAT CBD T HAD COME OUT WITH INSTRUCTION DATED 15.02.2016 AS UNDER: S ECTION 190 OF THE INCOME-TAX ACT, 1961 - ADMINISTRA TION OF TDS - REDRESSAL OF TAXPAYER GRIEVANCES RAISED DUE TO TDS MISMATCHES LETTER, DATED 15-2-2016 THIS IS IN REFERENCE TO THE SUBJECT MENTIONED ABOVE . THE TAXPAYERS ARE FACING PROBLEMS DUE TO MISMATCH OF TDS/OTHER TAXES. THESE PROBLEMS MAY BE DUE TO THE NON-REPORTING OF 5 ITA NO.459/KOL/2015 GOLDEN TRUST FINANCIAL SERVICES A.YR.2009-10 5 TDS AND UPLOADING THE TDS DETAILS IMPROPERLY BY THE IR DEDUCTORS. AS A RESULT, DEMAND NOTICES ARE BEING SENT TO THE TAXPAYERS DUE TO NON- AVAILABILITY OF THE TAX CREDITS FOR CLAIM LTR. 2. THE DEMAND CREATED PRIOR TO 1-4-2010 WAS UPLOADE D MANUALLY. THERE MAY HAVE BEEN MISTAKES IN UPLOADING THE DEMAND (E.G. ALREADY PAID DEMAND WAS WRONGLY UP LOADED WITHOUT GIVING CREDIT FOR TAXES PAID, SAME DEMAND W AS UP LOADED MORE THAN ONCE, DEMAND CREATED U/S 143(1) WAS AGAIN INCLUDED IN DEM AND CREATED U/S 143(3) ETC. SINCE THE DETAILS OF THESE ASSESSMENTS ARE NOT AVAILABLE IN CPC(ITR), CPC(ITR) IS NOT IN A POSITION TO RESOLVE ANY GRIEVANCE IN SUCH CASES. FU RTHER, MORE THAN 90% OF DEMAND ENTRIES IN CPC FAS INVOLVE DEMAND OF LESS THAN RS. 1 LAKH. IN ORDER TO HANDLE THESE CASES, THE CBDT ISSUED CIRCULAR NO. 8/2015 (COPY AT TACHED) DIRECTING THE AOS TO GIVE CREDIT FOR TAXES PAID ON THE BASIS OF EVIDENCE FURN ISHED BY THE TAXPAYER. 4. IN THIS REGARD, DIRECTORATE HAS FROM TIME TO TIM E ISSUED INSTRUCTIONS TO THE FIELD OFFICERS ABOUT THE PROCEDURES TO BE FOLLOWED IN SUC H CASES. SINCE THE NUMBER OF DEMAND ENTRIES IS VERY LARGE, THEREFORE, TAXPAYERS REMAIN DISSATISFIED. ACCORDINGLY, CHAIRMAN, CBDT HAS DESIRED THAT THE STANDARD OPERATING PROCED URE AS PER CIRCULAR NO. 8/2015 MAY BE STRICTLY FOLLOWED BY ALL ASSESSING OFFICERS UNDER YOUR CHARGE AND IMMEDIATE STEPS NEED TO BE TAKEN TO REDUCE THE GRIEVANCES OF THE TAXPAYERS. WE FIND THAT FROM AFORESAID LETTER DATED 15.02.2016 ISSUED BY CBDT THAT, CREDIT FOR TDS SHOULD BE GIVEN BASED ON THE EVIDENCE FURNISHED BY THE ASSESSEE. IT IS WELL SETTLED AS PER PROVISIONS OF THE ACT, THAT THE CORRESPONDIN G INCOME RELATABLE TO THE TDS CLAIMED BY THE ASSESSEE SHOULD BE OFFERED TO TAX IN THE RET URN OF INCOME. IN THE INSTANT CASE, THE ASSESSEE HAD DULY OFFERED THE INTEREST INCOME AS PE R THE PHYSICAL FORM 16A I.E. PHYSICAL TDS CERTIFICATE AND HENCE, WE HOLD THAT THERE IS NO ESCAPEMENT OF INTEREST INCOME AND THERE IS NO CASE FOR BRINGING TO TAX DIFFERENTIAL ALLEGED INTEREST INCOME MERELY BASED ON AIR INFORMATION/ITS DETAILS RELIED BY THE DEPARTMEN T. WE ALSO FIND THAT THE HONBLE DELHI HIGH COURT VIDE ITS JUDGMENT IN THE CASE OF COURT ON ITS OWN MOTION VS. CIT AND ALL INDIA FEDERATION OF TAX PRACTITIONERS VS. UOI & ORS.] (W.P.(C) 2659/2012 AND W.F. (C) 5443/2012) DATED 14.03.2013 HAS ISSUED AUDI MANDAMUS FOR NECESSARY ACTION BY INCOME TAX DEPARTMENT ONE OF WHICH IS REGARDING THE ISSUE OF NON-CREDIT OF TDS TO THE TAXPAYER DUE TO TDS MISMATCH DESPITE THE ASSESS EE FURNISHING BEFORE THE ASSESSING OFFICER, TDS CERTIFICATE ISSUED BY THE DEDUCTOR. TH E CBDT ALSO TO BE IN CONSONANCE WITH THIS JUDGMENT HAD COME OUT WITH INSTRUCTION NO . 5 OF 2013 DATED 08.07.2013 IN THIS 6 ITA NO.459/KOL/2015 GOLDEN TRUST FINANCIAL SERVICES A.YR.2009-10 6 REGARD. HENCE, WE HOLD THAT, SINCE THE INCOME RELAT ABLE TO THE TDS CLAIMED BY THE ASSESSEE IS DULY OFFERED TO TAX IN THE INSTANT CASE , THERE IS NO CASE FOR MAKING ANY ADDITION TOWARDS DIFFERENTIAL INTEREST INCOME BASED ON AIR INFORMATION. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 20.09.2017 SD/- SD/- [N.V.VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20.09.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. GOLDEN TRUST FINANCIAL SERVICES, S.B. MANSION, 1 6, R.N. MUKHERJEE ROAD, KOLKATA- 700001. 2. ACIT, CIRCLE-54M (ADMN), KOLKATA, 3, GOVERNMENT PLACE (WEST ), SECOND FLOOR, KOLKATA-700001 3..C.I.T.(A)-11, KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S