Chellayan Devidsamraj, CHENNAI V. ITO, CHENNAI

ITA 498/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8514 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2015
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S SRIDHAR
• Section: 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 4 98 /MDS/201 5 / ASSESSMENT YEAR :20 08 - 09 SRI CHELLAYAN DEVIDSAMRAJ, OLD. NO. 223, NEW NO. 76, ARINGNAR ANNA STREET, THIRUVALLUVAR NAGAR, AYANAVARAM, CHENNAI 600 023. [PAN:A A HPD7938B ] VS. THE INCOME TAX OFFICER , BUSINESS WARD XIII ( 2 ), CHENNAI 600 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI S HIVA SRINIVAS , JCIT / DATE OF HEARING : 11 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 28 . 0 9 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) III , C HENNAI , DATED 2 8 . 0 8 .201 4 RELEVANT TO THE ASSESSMENT YEAR 20 08 - 09 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF .27,95,029/ - BEING THE ALLEGED I.T.A. NO . 498 /M/ 15 2 DIFF ERENCE BETWEEN THE INCOME ADMITTED AND THE TDS CERTIFICATES IN THE COMPUTATION OF TAXABLE TOTAL INCOME. 2. THE APPEAL OF THE ASSESSEE IS FOUND TO HAVE BEEN FILED LATE BY 113 DAYS BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED AN AFFIDAVIT FOR CONDONATION O F DELAY IN FILING THE APPEAL ALONG WITH THE PETITION FOR CONDONATION OF DELAY, WHEREIN, IT WAS STATED THAT THE ASSESSEE WAS STATIONED AT KRISHNAPATTANAM, ANDHRA PRADESH IN THE EXECUTION OF THE CONTRACT FOR FABRICATION AND ERECTION OF EQUIPMENTS FOR M/S. GA YATHRI THERMAL POWER STATION AND THE ASSESSEE WAS ALSO THE SUB - CONTRACTOR TO M/S. B.G.R. ENERGY SYSTEMS P. LTD. AFTER RECEIPT OF THE APPELLATE ORDER, THE SAME WAS HANDED OVER TO THE C.A. AT CHENNAI FOR FILING FURTHER APPEAL BEFORE THE TRIBUNAL. WHEN THE AS SESSEE HAS RECEIVED INFORMATION ABOUT THE CONFIRMATION OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE LD. CIT(A), THE ASSESSEE WAS INFORMED THAT THE DURING THE COURSE OF SHIFTING OF C.A. OFFICE IN THE MONTH OF SEPTEMBER,2014, THE IMPUGNED ORD ER WITH REGARD TO QUANTUM ADDITION WAS FOUND TO BE MISPLACED. THEREAFTER, THE ASSESSEE HAS INSTRUCTED ITS C.A. TO FILE APPEAL FOR QUANTUM ADDITION AS WELL AS AGAINST THE ORDER OF THE CONFIRMATION OF PENALTY LEVIED BY THE ASSESSING OFFICER. ACCORDINGLY, THE APPEAL AGAINST QUANTUM ADDITION WAS FILED BELATEDLY WHEREAS THE APPEAL AGAINST PENALTY ORDER WAS I.T.A. NO . 498 /M/ 15 3 FILED WITHIN THE STATUTORY TIME LIMIT. WITH THE ABOVE EXPLANATION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE DELAY IN FILING THE APPEAL AGAINST QU ANTUM ADDITION WAS NEITHER WILFUL NOR WANTON AND PRAYED THAT THE APPEAL MAY BE ADMITTED FOR HEARING. ON THE OTHER HAND, THE LD. DR STRONGLY OPPOSED THAT THE DELAY 113 DAYS IN FILING OF APPEAL SHOULD NOT BE CONDONED AND THE PLEA OF THE LD. COUNSEL FOR THE A SSESSEE SHOULD NOT BE ENTERTAINED. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN FILING THE APPEAL BEFORE DUE TIME OF FILING THE APPEAL BEFORE THE TRIBUNAL. ACCOR DINGLY, WE CONDONE THE DELAY IN FILING THE APPEAL AND ADMIT THE APPEAL FOR HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION AND ERECTION OF MATERIAL HANDLING SYSTEMS AND HAS FILED ITS RETURN OF INCOME F OR THE ASSESSMENT YEAR 2008 - 09 ON 27.12.2010 ADMITTING TOTAL INCOME AT .4,25,590/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] WAS ISSUED ON 11.08.2009. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 27.12.2010 ON THE ASSESSED TOTAL INCOME OF .32,20,620/ - AFTER MAKING I.T.A. NO . 498 /M/ 15 4 ADDITION OF .27,95,029/ - BEING THE DIFFERENCE BETWEEN THE INCOME ADMITTED IN THE RETURN AND RECEIPT OF INCOME AS PER THE TDS CERTIFICATES. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) DISMISSED THE A PPEAL FILED BY THE ASSESSEE. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BY REITERATING THE GROUNDS RAISED IN THE APPEAL OF THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION, THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION TOWARDS THE DIFFERENCE BETWEEN THE INCOME ADMITTED BY THE ASSESSEE AND THE TDS CERTIFICATES IN THE COMPUTATION OF TAXABLE TOTAL INCOME AND PLEADED THAT THE ADDITION MADE BY THE ASSESSING OF FICER SHOULD BE DELETED. 6. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW, THE LD. DR HAS SUBMITTED THAT SECTION 198 OF THE ACT IS VERY CLEAR THAT REGARDLESS OF THE METHOD OF ACCOUNTING SYSTEM ADOPTED BY THE ASSESS EE, THE PAYMENTS TO THE ASSESSEE MENTIONED IN THE TDS CERTIFICATES ARE DEEMED TO BE INCOME RECEIVED FOR THE PURPOSE OF I.T.A. NO . 498 /M/ 15 5 COMPUTING THE INCOME AND PLEADED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) SHOULD BE SUSTAINED.. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS RECEIVED TOTAL PAYMENTS OF .1,10,15,675/ - WITH TDS DEDUCTION OF .2,89,424/ - , WHEREAS, THE ASSESSEE HAS ADMITTED THE TOTAL INCOME ONLY AT .83,33,081/ - BUT CLAIMED FULL TDS OF .2,89,424/ - AS PER THE TDS CERTIFICATE FILED BY THE ASSESSEE. ON THIS ASPECT, THE CONTENTION OF THE ASSESSEE IS THAT THE TDS DEDUCTOR I.E., M/S. TECHPRO SYSTEMS LTD. WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, WHEREAS, THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE NOT CONVINCED WITH THE ABOVE SUBMISSIONS O F THE ASSESSEE. THE AUTHORITIES BELOW HAVE RELIED UPON THE PROVISIONS OF SECTION 198 OF THE ACT AND CAME TO A CONCLUSION THAT THE ASSESSEE HAS TO PAY THE DIFFERENCE AMOUNT OF .27,95,029/ - . THE LD. CIT(A) HAS ALSO RELIED UPON THE DECISION IN THE CASE OF DC IT V. SMT. K. BHAGYALAKSHMI IN I.T.A. NO. 1289/MDS/2013, WHEREIN THE TRIBUNAL HAS HELD THAT CREDIT FOR TDS SHOULD BE GIVEN IN THE YEAR IN WHICH THE INCOME WAS OFFERED. IN THE PRESENT CASE, THE ASSESSEE ITSELF HAS CLAIMED CREDIT FOR THE ENTIRE TDS DURING TH E CURRENT YEAR UNDER CONSIDERATION. THEREFORE, I.T.A. NO . 498 /M/ 15 6 THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS BEEN FOLLOWING CASH SYSTEM OF ACCOUNTING, WHEREAS THE DEDUCTOR M/S. TECHPRO SYSTEMS LTD. WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THIS WAS THE REASON FOR THE SHORTFALL OF THE AMOUNT OF .27,95,029/ - . THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. IN THIS CASE, THE PROVISIONS OF SECTION 198 OF THE ACT IS VERY CLEAR THAT REGARDLESS OF THE METHOD OF ACCOUNTING SYSTEM ADOPTED BY THE ASSESSEE, THE PAYMENTS TO THE ASSESSEE MENTIONED IN THE TDS CERTIFICATES ARE DEEMED TO BE INCOME RECEIVED FOR THE PURPOSE OF COMPUTING THE INCOME. HOWEVER, THE ASSESSEE CL AIMS THAT DUE TO DIFFERENT SYSTEM OF ACCOUNTING METHODS ADOPTED BY THE ASSESSEE AND THE DEDUCTOR, THERE IS A SHORTFALL. THIS CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE IN VIEW OF THE PROVISIONS OF SECTION 198 OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE FAILED TO DEMONSTRATE AS TO HOW THE DIFFERENCE ARISES WHILE FOLLOWING CASH SYSTEM OF ACCOUNTING AS WELL AS MERCANTILE SYSTEM OF ACCOUNTING WITH RELEVANT RECORDS SUCH AS RECONCILIATION STATEMENT OR THE ASSESSEE HAS FILED ANY DETAILS IN THE FORM OF PAPER BOO K. HENCE, TO MEET THE ENDS OF JUSTICE, WE REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO VERIFY THE RECONCILIATION STATEMENT AND ANY OTHER DETAILS AS MAY BE FILED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIE NT I.T.A. NO . 498 /M/ 15 7 OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO DEMONSTRATE BEFORE THE ASSESSING OFFICER AS TO HOW THE DIFFERENCE ARISES WHILE FOLLOWING CASH SYSTEM OF ACCOUNTING AS WELL AS MERCANTILE SYSTEM OF ACCOUNTING. THUS, THE GROUND RAIS ED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 28 TH SEPTEMBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBE R ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 28 . 0 9 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.