LSA DESIGN PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER-15(2)(2), MUMBAI

ITA 4986/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4839 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 20-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Keywords: TDS
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAVISH SOOD , JM ITA NO. 4986 /MUM/ 2017 (ASSESSMENT YEAR: 2013 - 14 ) LSA DESIGN PVT. LTD. A - 10/10, APURVA APARTMENT, LBS MARG, GOVARDHAN NAGAR, MULUND (W), MUMBAI - 400 080 VS. ITO - 15(2)(2) ROOM NO.480, AAYKAR BHAVAN, MUMBAI 400 020 PAN/GIR NO. AACCL 2573 L ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI DEVENDRA JAIN RESPONDENT BY : SHRI SATISHCHANDRA RAJORE DATE OF HEARING : 24.12.2018 DATE OF PRONOUNCEMENT : 15.02 .2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 24, MUMBAI (LD.CIT(A) FOR SHORT) DATED 29.05.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2013 - 14. 2. THE GROUND OF APPEAL READ AS UNDER: 1. LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,30,78,662/ - MADE BY LD. A.O. ON ACCOUNT OF DIFFERENCE BETWEEN RECEIPTS AS PER 26AS AND BOOKS OF ACCOUNT. 3. BRIEF FACTS OF THE CASE AR E AS UNDER: THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF INTERIOR DESIGNING OF CORPORATE OFFICES. THE RETURN OF INCOME FOR THE YEAR UNDER APPEAL WAS FILED ON 30.03.2015 DECLARING TOTAL INCOME OF RS.7,04,956/ - . ASSESSMENT U/S. 143(3) WAS COMPLETE D BY THE A.O. ON 31.03.2016 DETERMINING INCOME AT RS.1,37,83,620/ - . 2 ITA NO. 4986/MUM/2017 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ( A.O. FOR SHORT) OBSERVED THAT THERE WAS DIFFERENCE IN ADMISSION OF RECEIPTS IN THE RETURN OF INCOME. HE NOTED THAT A S PER FORM 26AS, THE RECEIPTS U/S. 194C/194J WERE RS.2,25,27,104/ - WHEREAS THE ASSESSEE HAS SHOWN THE TOTAL RECEIPTS AT RS.84,06,973/ - ONLY. HE HAS THUS OBSERVED THAT THE ASSESSEE HAS SHORT ADMITTED THE CONTRACT RECEIPTS. THE CONTENTION OF THE ASSESSEE WAS THAT IT HAD RECEIVED AN ADVANCE FROM ITS CUSTOMERS AND THE SAID DIFFERENCE WAS ADMITTED IN THE SUBSEQUENT ASSESSMENT YEAR I.E. 2014 - 15. THE SUBMISSIONS OF THE ASSESSEE ARE AS UNDER: AS PER THE REASONS FOR SCRUTINY SELECTION IS RECEIPT U/S. 194C AND 1943 ( AS PER 26AS) ARE MORE THAN THE RECEIPTS SHOWN IN ITR 04/05/06. ON VERIFICATION OF THE DETAILS FILED { IT IS SEEN THAT THE ASSESSEE HAS SHOWN TOTAL RECEIPTS AT RS.84,06,973/ - (IE. EXCLUSIVE OF VAT AND SERVICE TAX) AGAINST THE RECEIPT OF RS.2,25,27,1 0 4/ - SH OWN AS PER 26A5. THEREBY THERE IS DIFFERENCE OF R S .1,41,20,131/ - ACCORDINGLY, THE ASSESSEE VIDE THIS OFFICE SHOW CAUSE LETTER DATED 04.03.2016 AND A REMINDER DATED 11.03.2016 WAS ASKED TO RECONCILE THE SAME OR THE SAME WOULD BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN RESPONSE TO THE SAME THE AR ATTENDED ON 21.03.2016 AND SUBMITTED AS UNDER : 'THERE WAS A CONTRACT FROM M/S. TITAN INDUSTRIES LTD. AS IT TAKES A LONG PERIOD, WE HAD RAISED THE BILL AS PER THE WORK IS COMPLETED AS FOLLOWS INVOICE NO. 001 DATED 08.10,2012 2,49,524 INVOICE NO. 002 DATED 26.11.2012 62,39,212 INVOICE NO. 003 DATED 26,11.2012 9,02,849 INVOICE NO. 004 DATED 19.03.2013 17,45,451 91,37,066 IN THE SUBSEQUENT YEAR ON COMPLETION OF THE WORK FINAL BILL IS RAISED AS FOLLOWS : INVOICE NO. 001 DATED 14.06.2013 1,36,32,662 WE ARE DOING THE WORK ON 3 CONTINUOUS BASIS FOR TITAN INDUSTRIES LTD (LATER ON AS TITAN CO. LTD) WE HAVE RAISED THE INVOICE ACCORDING TO THE COMPLETION OF THE WORK. WE HAVE CREDITED WORKING IN PROGRESS T O P & L ACCOUNT AS AT 31.03.2013. THE BALANCE OF RS.1,41,20,031 IS OFFERED TO TAX IN THE FY 2013 - 14 ALONGWITH OTHER WORKS AS WE ARE CONTINUOUSLY DOING THEIR WORK. THE COMPANY MIGHT HAVE DEDUCTED THE TDS ON PAYMENT BASIS. COPY OF THE INVOICES AND LEDGE R ACCOUNT OF TITAN IS ATTACHE D TO SUBSTANTIATE OUR CLAIM'. THE A.O. HAS CONSIDERED THE EXPLANATION OF THE ASSESSEE. THE INFORMATION/EXPLANATION FILED BY THE ASSESSEE WAS NOT ACCEPTABLE FOR THE A.O. AS HE WAS 3 ITA NO. 4986/MUM/2017 OF THE OPINION THAT THE ASSESSEES ACTION IS NOT BONAFIDE OR NOT IN ACCORDANCE WITH THE ACCOUNTING STANDARD. HE HELD AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE ASSESSEE AND FIND THE SAME TENABLE ON THE FOLLOWING GROUNDS : - THE ASSESSEE IS FOLLOWING MERCANTILE ACCOUNTING METHOD AND THE ASSESSEE IS REQUIRED TO PRESENT AND COMPLETE THE BOOKS OF ACCOUNTS ACCORDINGLY. MOREOVER, THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE AY 2013 - 14 ON 30.03.2015 THEREBY THE ASSESSEE HAD AMPLE OF TIME TO ACCOUNT THE RECEIPTS MADE BY THE CONTRACTOR M/S. TITAN INDUSTRIES LTD. FURTHER, THE ASSESSEE WAS WELL AWARE OF THE FACTS THAT THE TDS HAS BEEN DEDUCTED AGAINST THE SAID RECEIPTS AS THE PAYMENTS HAVE BEEN CREDITED IN THEIR ACCOUNTS. THIS FURTHER EMPHASIS THE FACT THAT THE ASSESSEE HAD NOT FILED THE ROI FOR THE AY 2014 - 15 ON 21.03.2016 AND A NOTICE OF NON FILER DATED 30.02.2016 WAS ISSUED ON THE ASSESSEE AND THEREAFTER THE ASSESSEE HAS FILED THE ROI FOR THE AY 2014 - 15 AND ACCOUNTED THE RECEIPTS. THIS ACT OF THE ASSESSEE IS NOT ACCEPTABLE AS PER THE ACCOUNTING STANDARD AND THE ASSESSEE HAS FAILED TO ACCOUNT THE RECEIPT DURING THE ACCOUNTING YEAR. ALSO, THE ASSESSEE HAS NOT CLEARED THE TAX LIABILITY OF RS.4,88,090 / - FOR THE AY 2014 - 15, THIS BY ITSELF STRENGTHENS THE FACT THAT THE ASSESSEE HAS DONE THIS ONLY TO AVOID THE ADDITION AND PENALTY PROCEEDINGS. THEREFORE, I AM OF THE CONSIDERED OPINION THAT AS PER THE ACCOUNTING STANDARD, THE ASSESSEE WAS REQUIRED TO OFFER THE RECEIPTS DURING THE AY 2013 - 14 AND THE RECEIPTS OF RS. L,30,78,662/ - IS NOT O FFERED AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE/ HENCE, HE HAS WORKED OUT THE DIFFERENCE OF RS.1,30,78,662/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 5. BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS: 2.3.1 LD. AR HAS, INTER ALIA, SUBMITTED THE FOLLOWING ARGUMENTS: THE LEARNED AO HAVE ADDED THE DIFFERENCE IN SALES AMOUNT AND AMOUNT CREDITED IN FORM 26AS TO TOTAL INCOME BY EMPHASIS TO T HE FACT THAT THE ASSESSE HAS NOT FILED THE ROI FOR THE AY 2014 - 15 ON 21.03.2016 AND A NOTICE OF NON - FILER DATED 30 - 02 - 2016 WAS ISSUED ON THE ASSESSE AND THERE AFTER THE ASSESSE HAD FILED THE ROI FOR THE AY 2014 - 15 AND ACCOUNTED THE RECEIPTS. FURTHER ON THE ABOVE FACTS, THE LEARNED AO HAVE CONTENDED THAT THE ACT TOF THE ASSESSE IS NOT ACCEPTABLE AS PER THE ACCOUNTING STANDARD AND THE ASSESSE HAS FAILED TO ACCOUNT THE RECEIPT DURING THE ACCOUNTING YEAR. THE LEARNED AO HAVE FAILED TO RECOGNIZE THAT ABOVE RECEI PT WAS ADVANCE FOR CONTRACT IN AY 2013 - 14 AND SALES OF AY 2014 - 15 COMMUNICATED TO HIM ON 21 ST MARCH.2016. FURTHER THE ASSESSE HAS CORRECTLY RECOGNIZED THE SALES OF AY 2014 - 15 AND HAS FILED THE SALES TAX RETURN SHOWING THE ABOVE SALES ON 26 TH OCTOBER,2013. SO THE CONTENTION OF THE LEARNED AO OF HAVING RECOGNIZED SALES ONLY AFTER THE NOTICE FROM THE LEARNED AO IS SERVED AS INCORRECT AND THE PRESUMPTION OF NOT ACCOUNTING FOR THE RECEIPT AS PER ACCOUNT STANDARD IS ALSO INCORRECT. THE LEARNED AO HAVE COMPLETED T HE ASSESSMENT PROCEEDING AND HAVE PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) DATED 27 TH DECEMBER 2016 RECOGNIZING THAT THE 4 ITA NO. 4986/MUM/2017 SALES OF AY 201415. - HAS BEEN APPROPRIATELY RECORDED WHICH/INCLUDE THE SALES MADE AGAINST THE ADVANCE RECE IVED IN, THE ASSESSMENT YEAR 2013 - 14.' 6. HOWEVER, THE LD. CIT(A) WAS NOT CONVINCED. HE CONFIRMED THE A.O.S ACTION BY HOLDING AS UNDER: DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ID AR HAS MADE SIMILAR SUBMISSIONS THAT WERE MADE BEFORE THE AO. THE SUBMISSIONS A ND ARGUMENTS OF THE AR HAVE BEEN PERUSED AND ISSUE HAS BEEN CONSIDERED IN THE LIGHT OF THE FACTS OF THE CASE ON RECORD. THE AO HAS EXAMINED THE DETAILS FILED BEFORE HIM DURING THE SCRUTINY ASSESSMENT PROCEEDINGS AND FOUND THAT THE CREDIT OF PREPAID TAXES A S PER 26AS WAS GIVEN TO THE EXTENT WHICH WAS CLAIMED AND ALLOWED ON COMPUTERIZED PROCESSING OF THE RETURN OF INCOME. IT IS FACTUALLY TRUE THAT THE APPELLANT HAS LESS ADMITTED ITS RECEIPTS. HOWEVER IT HAS CLAIMED AND AVAILED FULL CREDIT OF TDS AS PER 26AS. THE ID AO HAS RIGHTLY BROUGHT TO TAX THE TOTAL RECEIPTS. THE ACTION OF THE ID AO IS THEREFORE SAID TO HAVE BEEN MADE ON SOUND FOOTING AND AFTER DUE VERIFICATION AND APPLICATION OF MIND. HENCE I DO NOT FIND ANY INCONSISTENCY AND THE FINDINGS OF THE ID AO AR E THEREFORE CONFIRMED 7 . AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 8 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION, WE FIND THAT ADMITTEDLY THERE IS A DIFFERENCE BETWEEN THE SALES RECORDED BY THE ASSESSEE AND THE CONTRACT RECEIPT AS PER FORM 26AS. HOWEVER, THE ASSESSEE HAS CLAIMED FULL TDS AS PER FORM 26AS. THE ASSESSEE IN THIS REGARD HAS SUBMITTED THAT IT HAS RECEIVED ADVANCES FROM THE SAME PARTY AGAINST THE INVOICES RAISED DURING THE YEAR. HOWEVER, THE WORK WAS COMPLETED IN SUBSEQUENT YEAR AND ANOTHER INVOICE WAS RAISED . HOWEVER, WE NOTE THAT THE EXPLANATION IS AMBIGUOUS AND DOES NOT COGENTLY SUPPORT THE CASE OF THE ASSESSEE. IN CASE, THE ASSESSEE WANTS CLAIM OF THE ENTIRE AMOUNT OF TDS, AT THE SAME TIME, HE WANTS TO SHOW LESS AMOUNT OF RECEIPT, IT WAS INCUMBENT UPON THE ASSESSEE TO GIVE THE COMPLETE AND COGENT DETAILS ALONGWITH THE CONFIRMATION FROM THE CONCERNED PARTY THAT THE AMOUNT RECEIVED FROM IT WAS ADVANCE FOR THE YEAR AND NO T PAYMENT AGAINST THE COMPLETION OF WORK DONE. 5 ITA NO. 4986/MUM/2017 IN OUR CONSIDERED OPINION, THE INTEREST OF JUSTICE DEMANDS THAT THIS ISSUE BE REMITTED TO THE A.O. THE A.O. SHALL EXAMINE THE CASE AFRESH AFTER GRANTING THE ASSESSEE AN OPPORTUNITY TO SUBMIT THE DETAILS OF RECONCILIATION AND OTHER NECESSARY EVIDENCES TO FRUCTIFY ITS CLAIM. 9 . IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.02.2019 SD/ - SD/ - ( RAVISH SOOD ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 15.02.2019 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI