GOVID B NAIK, MUMBAI V. ITO 18(2)(3), MUMBAI

ITA 4732/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2592 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 15-12-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 17-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED USMAN
• Assessee Lawyers: VINAY MULYE
• Keywords: TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, SR.V.P. AND SHRI J.SUDHAKA R REDDY, AM I.T.A. NO. 4732/MUM/2008 ( ASSESSMENT YEAR :2004-05 ) GOVIND B.NAIK, 1 ST FLOOR, DINANANTH GURU BHUVAN KELUSKAR MARG(N), DADAR, MUMBAI. PAN:ABVPN0526C VS. THE INCOME TAX OFFICER- 18(2)(3), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. VINAY MULYE RESPONDENT BY : MR. MOHAMMED USMAN, DR O R D E R PER R.V.EASWAR, SENIOR VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2004-05 AND ARISES OUT OF THE ASSESSMENT MADE UNDER SECTION 143(3) OF THE INCOME TAX ACT BY ORDER DATED 2.11.2006. THE ASSESSEE IS AN I NDIVIDUAL AND IS A TECHNO-LEGAL CONSULTANT. HE RETIRED FROM THE P WD, GOVERNMENT OF MAHARASHTRA AND STARTED RENDERING THE AFORESAID CONSULTANCY SERVICES. 2. THE FIRST DISPUTE IN THE APPEAL RELATES TO THE I NCLUSION OF A SUM OF RS.75,648/- AS PROFESSIONAL FEES IN THE ASSE SSMENT. THE ASSESSEE MAINTAINED BOOKS OF ACCOUNT. FOR THE YEAR UNDER CONSIDERATION, HE DECLARED PROFESSIONAL RECEIPTS OF RS.25,50,457/- AND AFTER DEDUCTION OF EXPENSES DEC LARED NET INCOME FROM THE PROFESSION AT RS.19,99,214/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED CREDIT FOR TDS OF RS.1,661/- OUT OF THE CONTRACT RECEIPTS OF RS.77,309/-. THE TDS CERTIFICATE WAS IS SUED BY THE MUNICIPAL CORPORATION OF GREATER MUMBAI FROM WHICH THE ASSESSEE HAD RECEIVED THE AFORESAID FEES. THE NET F EES AMOUNTED ITA NO.4732/MUM/08 2 TO RS.75,648/- (RS.77,309 TDS OF RS.1,661) . IT W AS FOUND BY THE ASSESSING OFFICER THAT THE TDS CERTIFICATE WAS IN THE NAME OF ONE G.S. AUTO INTERNATIONAL AND NOT IN THE NAME OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO CLARIFY AS TO H OW HE CAN TAKE CREDIT FOR THE TDS WHEN THE CERTIFICATE WAS N OT IN HIS NAME. THE ASSESSEE REPLIED IN WRITING AND SUBMITTED THAT THE FEES OF RS.77,309/- WAS RECEIVED BY HIM FROM MCGM B UT THE MISTAKE IN THE TDS CERTIFICATE WAS NOT NOTICED BY H IM TILL IT WAS POINTED OUT BY THE ASSESSING OFFICER. HE FURTHER ST ATED THAT HE WOULD TAKE IT UP WITH THE MCGM FOR NECESSARY CORREC TION AND REQUESTED THE ASSESSING OFFICER NOT TO GIVE CREDIT FOR THE TDS TILL THE CORRECTED CERTIFICATE IS PRODUCED. THE ASSESSI NG OFFICER DID NOT DISPUTE THE CONTENTS OF THE ASSESSEES REPLY. H OWEVER, HE OBSERVED THAT SINCE THERE IS NO CLARIFICATION, EXC EPT WHAT IS STATED IN ASSESSEES LETTER DATED 30.10.2006, THE S UM OF RS.75,648/- CREDITED TO THE ACCOUNT OF G.S. AUTO IN TERNATIONAL AS PER THE TDS CERTIFICATE ATTACHED WITH THE RETURN IS TREATED AS ASSESSEES INCOME. THUS, THE SUM OF RS.75,648/- W AS INCLUDED IN THE ASSESSMENT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS PART OF THE AMOUNT OF RS.3,00,363/- WHICH WAS DISALLOWED/ADDED TO THE TOTAL INCOME DECLARED. 3. THE ASSESSEE APPEALED TO THE CIT(A) AND PLEADED THAT THE AMOUNT OF RS.75,648/- WAS ALREADY INCLUDED BY THE A SSESSEE HIMSELF IN HIS PROFESSIONAL RECEIPT AND THERE WAS N O JUSTIFICATION FOR INCLUDING THE SAME OVER AGAIN ON THE MISTAKEN ASSUMPTION THAT IT WAS NOT INCLUDED IN THE PROFESSI ONAL RECEIPTS. THE ATTENTION OF THE CIT(A)WAS DRAWN TO THE STATEME NT OF PROFESSIONAL FEES FILED BEFORE THE ASSESSING OFFICE R WHICH INCLUDED THE AMOUNT OF RS.77,309/- RECEIVED FROM MC GM BY CHEQUE. THE CIT(A) HOWEVER FOCUSSED HIS ATTENTION O N THE MISTAKE IN THE CERTIFICATE OF TDS ISSUED BY THE MCG M AND HELD THAT SINCE THERE IS NOTHING TO SHOW AS TO WHAT WAS THE OUTCOME ITA NO.4732/MUM/08 3 OF THE CORRECTIVE MEASURES SAID TO BE TAKEN BY THE ASSESSEE, THE ADDITION OF RS.75,648/- WAS JUSTIFIED. HE ACCORDING LY CONFIRMED THE ADDITION. 4. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. WE HAVE EXAMINED THE FACTS AS ALSO THE LEDGER ACCOUNT OF TH E PROFESSIONAL RECEIPTS AGGREGATING TO RS.25,50,457/-, A COPY OF W HICH WAS FILED BEFORE US AS ALSO BEFORE THE ASSESSING OFFICE R AS ADMITTED BY HIM IN PARAGRAPH 4 OF THE ASSESSMENT ORDER. THE LEDGER ACCOUNT SHOWS THAT ON 3.7.2003 THE CHEQUE FOR RS.77 ,309/- RECEIVED FROM THE GHATKOPAR OFFICE OF MCGM WAS DEPO SITED IN THE ASSESSEES ACCOUNT WITH DENA BANK AND THAT THE TOTAL PROFESSIONAL RECEIPTS OF RS.25,50,457/- INCLUDES TH E PROFESSIONAL RECEIPT OF RS.77,309/-. THIS FACT HAS ALSO BEEN BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER IN T HE ASSESSEES LETTER DATED 30.10.2006 WRITTEN TO THE ASSESSING OF FICER BUT LITTLE ATTENTION SEEMS TO HAVE BEEN PAID TO THE SAME BY TH E LATTER. THE ASSESSING OFFICER ERRONEOUSLY PROCEEDED ON THE ASSU MPTION THAT THE AMOUNT OF RS.75,648/- WAS NOT INCLUDED IN THE T OTAL PROFESSIONAL RECEIPTS SHOWN IN THE LEDGER ACCOUNT, CLEARLY OVERLOOKING THAT THE GROSS AMOUNT OF RS.77,309/- WA S INCLUDED THEREIN. THE MISTAKE, IF WE MAY SAY SO WITH RESPECT , COMMITTED BY THE INCOME-TAX AUTHORITIES IS THAT THEIR FOCUS W AS ON THE MISTAKE IN THE TDS CERTIFICATE WHICH THE ASSESSEE H IMSELF ADMITTED AND REQUESTED THE ASSESSING OFFICER THAT C REDIT NEED NOT BE GIVEN TO HIM FOR THE TAXES DEDUCTED. IT IS N OT KNOWN AS TO HOW THE MISTAKE COMMITTED IN THE TDS CERTIFICATE CA N JUSTIFY THE INFERENCE, WHICH HAS NO FACTUAL BASIS, THAT THE PRO FESSIONAL RECEIPT FROM WHICH THE TAX WAS DEDUCTED WAS ALSO N OT DISCLOSED BY THE ASSESSEE. THE ASSESSING OFFICER WOULD HAVE AT LEAST VERIFY THE ASSESSEES CLAIM THAT THE AMOUNT WAS INC LUDED IN THE PROFESSIONAL RECEIPTS AND THE CHEQUE WAS DEPOSITED WITH THE DENA BANK. UNFORTUNATELY, BOTH THE DEPARTMENTAL AUT HORITIES ITA NO.4732/MUM/08 4 FELL INTO THE SAME ERROR IN MAKING THE ADDITION WHI CH HAS NO FACTUAL BASIS. WE, THEREFORE DELETE THE AMOUNT OF R S.75,648/- FROM THE ASSESSMENT. 5. THE NEXT DISPUTE RELATES TO THE DISALLOWANCE OF CONVEYANCE EXPENSES OF RS.1,18,500/- VIDE PARAGRAPH 7 OF THE A SSESSMENT ORDER. THE ASSESSEE CLAIMED CONVEYANCE EXPENSES OF RS.1,82,217/-. THE ASSESSEE WAS ALSO BEING REIMBURS ED RS.1,58,000/- AS CONVEYANCE EXPENSES BY HIS CLIENTS . THE ASSESSING OFFICER CONSIDERED THE CONVEYANCE EXPENSE S DEBITED BY THE ASSESSEE TO BE TOO HIGH AND DISALLOWED 75% T HEREOF WHICH CAME TO RS.1,18,500/-. THE DISALLOWANCE WAS CONFIRM ED BY THE CIT(A) AND HENCE THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE FACTS AND THE RIVAL CONTE NTIONS. THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE NOR HAS HE FOUND ANY INF LATION IN THE CLAIM OF CONVEYANCE EXPENSES. IT IS NOT EVEN HI S CASE THAT ANY OF THE CONVEYANCE EXPENSES WAS UNSUPPORTED OR UNVERIFIABLE. HE HAS SIMPLY MADE THE DISALLOWANCE O N AD-HOC BASIS. AT OUR INSTANCE, THE ASSESSEE SUBMITTED BEFO RE US THAT THE CONVEYANCE EXPENSES AMOUNTED TO RS.1.29 LAKHS A ND RS.1.60 LAKHS IN THE ASSESSMENT YEARS 2002-03 AND 2 003-04 RESPECTIVELY IN WHICH YEARS THE PROFESSIONAL RECEIP TS AMOUNTED TO RS.14.09 LAKHS AND RS.18.81 LAKHS RESPECTIVELY. IT WAS ALSO SUBMITTED THAT IN THOSE YEARS THERE WAS NO DISALLOW ANCE OF THE CONVEYANCE EXPENSES. THE ASSESSEE HAS ALSO NO VEHIC LE OF HIS OWN AND IN THE COURSE OF PERFORMING HIS CONSULTANCY SERVICES HE HAS TO GO TO DISTANT PLACES IN MUMBAI AND ITS SUBUR BS AND HAS TO INCUR SUCH EXPENSES ON TAXIS AND OTHER PUBLIC TR ANSPORT SERVICES. CONSIDERING THE AFORESAID FACTS, WE SEE N O JUSTIFICATION FOR DISALLOWING ANY PART OF THE CONVEYANCE EXPENSES . THE DISALLOWANCE IS DELETED. ITA NO.4732/MUM/08 5 7. THE THIRD DISPUTE RELATES TO THE DISALLOWANCE OF THE FOREIGN TRAVEL EXPENSES OF RS.99,900/-. THIS GROUND WAS NOT PRESSED AND IS THEREFORE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON THIS 17 TH DAY OF DECEMBER, 2009. SD/- (J.SUDHAKAR REDDY) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI, DATED 17 TH DECEMBER, 2009. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-MC-XVIII, MUMBAI. 4. THE CIT(A)/XVIII, MUMBAI 5. THE DR G BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI