V.Jogulamba, Vijayawada V. THE ADDL. CIT., Vijayawada

ITA 530/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9957 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Opportunity of being heard

Judgement Text

ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.530/VIZAG/2014 ( / ASSESSMENT YEAR: 2007-08) SMT. V. JOGULAMBA, VIJAYAWADA VS. ACIT, RANGE - 2, VIJAYAWADA [PAN: AARPV7213K ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI V. RAGHAVENDRA RAO, AR / RESPONDENT BY : SHRI M.N. MURTHY NAIK, DR / DATE OF HEARING : 27.07.2016 / DATE OF PRONOUNCEMENT : 12.08.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A), VIJAYAWADA DATED 30.7.2014 AND IT PERTA INS TO THE ASSESSMENT YEAR 2007-08. ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL CARRYING ON THE BUSINESS AS TRAVEL AGENT FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.2007 DECLARING TOTAL INCOME OF RS.94,14,183/-. THE CASE HAS BEEN SELECTED FOR SCRU TINY AND ACCORDINGLY, NOTICES U/S 143(2) & 142(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WERE ISSUED. IN RESPONSE TO N OTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TOME AND FURNISHED BOOKS OF ACCOUNTS AND OTHER INFORMATION C ALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FROM THE DETA ILS FILED BY THE ASSESSEE, THE A.O. NOTICED THAT THERE IS A DIFFEREN CE OF RS.8,03,749/- IN THE COMMISSION INCOME, WHEN COMPARED TO BOOKS OF AC COUNTS AND TDS CERTIFICATE ISSUED BY THE CUSTOMERS. WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, THE ASSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN DEALT AT LENGTH FOR THE ASSESSMENT YEAR 2004-05. TH E ASSESSEE FURTHER SUBMITTED THAT THERE IS NO DIFFERENCE IN THE COMMIS SION INCOME, AS SHE HAD ACCOUNTED COMMISSION INCOME ON ACCRUAL BASIS, W HEREAS THE AIRLINE COMPANIES HAVE DEDUCTED TDS ON PAYMENT BASIS. THE A .O. AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HELD T HAT THE ASSESSEE HAS FAILED TO EXPLAIN THE DIFFERENCE OF RS.8,03,749/- I N THE COMMISSION INCOME ADMITTED WHEN COMPARED TO TDS CERTIFICATES I SSUED BY THE CUSTOMERS. SIMILARLY, THE A.O. FURTHER NOTICED THA T THERE IS A DIFFERENCE ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 3 OF RS.52,081/- IN THE CASE OF M/S. FUSION, WHEN COM PARED TO INCOME ADMITTED BY THE ASSESSEE TO THE TDS CERTIFICATES IS SUED BY THE PARTY. THE ASSESSEE EXPLAINED THAT THE SAID DIFFERENCE OF RS.52,081/- WAS ON ACCOUNT OF ACCRUAL SYSTEM OF ACCOUNTING, WHEREIN SH E HAD ACCOUNTED INCOME AS AND WHEN SALE IS BOOKED, WHEREAS THE AIRL INES HAVE ISSUED TDS ON PAYMENTS BASIS. THE A.O. AFTER CONSIDERING T HE EXPLANATIONS OF THE ASSESSEE HELD THAT THE ASSESSEE HAS FAILED TO E XPLAIN THE DIFFERENCE OF RS.52,081/- WITH NECESSARY ENTRIES IN THE BOOKS OF ACCOUNTS OF THE PREVIOUS FINANCIAL YEAR. THE ASSESSEE HAS CLAIMED TDS ON COMMISSION INCOME WITHOUT ADMITTING COMMISSION INCOME. WITH TH ESE OBSERVATIONS, MADE ADDITIONS OF RS.52,081/- TO THE RETURNED INCOM E. 3. AGGRIEVED BY THE ASSESSMENT YEAR, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS SUBMITTED THAT THE A.O. WAS NOT CORRECT IN MAKING A DDITIONS OF RS.8,03,749/- TOWARDS INCOME. THE ASSESSEE FURTHER SUBMITTED THAT SHE HAD RECONCILED DIFFERENCE OF RS.8,03,749/- WITH NEC ESSARY EVIDENCES. IT WAS FURTHER SUBMITTED THAT THE AIRLINES WILL ALLOW DISCOUNTS TO PASSENGERS ON AIR TICKET BOOKINGS THROUGH AGENTS AND SETTLEMEN T OF SAME WILL BE ALLOWED IN THE FORTNIGHTLY BILLING SETTLEMENT PLAN. THE ASSESSEE FURTHER CONTENDED THAT THE DIFFERENCE IN COMMISSION WHEN CO MPARED TO TDS CERTIFICATE IS ARISES BECAUSE SHE HAD ACCOUNTED NET COMMISSION RECEIVED ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 4 AFTER REDUCING DISCOUNTS ALLOWED TO THE CUSTOMERS O N BEHALF OF THE AIRLINES. BUT, THE AIRLINES WILL DEDUCT TDS ON TOT AL COMMISSION PAID TO AGENTS INCLUDING COMMISSION PAID TO THE CUSTOMERS B Y THE AIRLINES THROUGH AGENTS. AS REGARDS OTHER ADDITION OF RS.52 ,081/- THE ASSESSEE SUBMITTED THAT SHE HAD ACCOUNTED RECEIPTS FROM M/S. FUSION IN THE PREVIOUS FINANCIAL YEAR ON ACCRUAL BASIS AS AND WHE N TICKETS ARE SOLD TO CUSTOMERS, BUT THE PARTY HAS ISSUED TDS CERTIFICATE ON FORTNIGHTLY BASIS WHICH FALLS UNDER THE NEXT FINANCIAL YEAR ACCORDING LY, THEY HAVE DEDUCTED TDS IN THE SUBSEQUENT FINANCIAL YEARS. 4. THE CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HELD THAT THE ASSESSEE COULD NOT RECONCILE GROSS RECEIPT SHOWN IN THE TDS CERTIFICATE WITH GROSS RECEIPTS OFFERED IN THE P&L ACCOUNT. THE DETAILS OF GROSS COMMISSION, THE TRADE DISCOUNTS RECEIVED AND THEIR BIFURCATION ALSO NOT PRODUCED. IN THE ABSENCE OF DOCUMENTARY EVIDEN CE, IT IS NOT POSSIBLE TO VERIFY AND ASCERTAIN AS TO WHETHER THE ENTIRE DISCOUNT ALLOWED BY THE AIRLINES WAS PASSED ON TO CUSTOMERS AND WHETHER THE APPELLANT HAS ALLOWED ANY ADDITIONAL DISCOUNT OTHER THAN THE DISCOUNT ALLOWED BY THE AIRLINE COMPANIES AND IT WAS PART OF STANDARD COMMISSION RECEIVED BY HER. WITH THESE OBSERVATIONS, UPHELD T HE ADDITIONS MADE BY THE A.O. SIMILARLY, AS REGARDS ADDITION OF RS.52,0 81/- MADE TOWARDS INCOME RECEIVED FROM M/S. FUSION, THE CIT(A) HELD T HAT THE ASSESSEE HAS ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 5 FAILED TO PROVE THAT SHE HAD OFFERED INCOME IN THE PREVIOUS FINANCIAL YEAR ON MERCANTILE BASIS. FURTHER, THE ASSESSEE FAILED TO ESTABLISH THAT M/S. FUSION IS FOLLOWING CASH SYSTEM OF ACCOUNTING IN RE SPECT OF INCOME ACCRUED IN THE EARLIER YEAR. THE ASSESSEE HAS CLAI MED TDS WITHOUT OFFERING RESULTANT INCOME AND ACCORDINGLY THE A.O. HAS RIGHTLY MADE ADDITIONS. AGGRIEVED BY THE CIT(A) ORDER THE ASSES SEE IS IN APPEAL BEFORE US. 5. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT THE FACTS ARE NOT DIFFERENT FROM THOSE CONSIDERED BY HONBLE TRIBUNAL FOR ASSESSMENT YEAR 2004-05 IN ASS ESSEES OWN CASE AND THAT THE RATIO OF ORDER OF ITAT IS APPLICABLE F OR THE CURRENT YEAR ALSO BECAUSE THE ISSUE INVOLVED BEING IDENTICAL. THE A. R. FURTHER SUBMITTED THAT THE ASSESSEE HAS RECONCILED DIFFERENCE ON GROS S COMMISSION ACCOUNTED IN THE BOOKS OF ACCOUNTS TO GROSS COMMISS ION AS PER TDS CERTIFICATE AND EXPLAINED BEFORE THE A.O. THAT THE DIFFERENCE IN COMMISSION IS ON ACCOUNT OF PASSING DISCOUNT ALLOWE D BY THE AIRLINES TO THE CUSTOMERS THROUGH AGENTS. THE A.R. FURTHER SUBM ITTED THAT THE AIRLINES ALLOWING DISCOUNTS TO ITS CUSTOMERS THROUG H AGENTS AND THE SAME HAS BEEN SETTLED THROUGH FORTNIGHTLY BILLING SETTLE MENT PLAN. TO THIS EFFECT FURNISHED COPIES OF FORTNIGHTLY BILLING SETT LEMENT PLAN ALONG WITH FEW SAMPLE COPIES OF INVOICES. ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 6 6. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF CIT(A). THE D.R. FURTHER SUBMITTED THAT THE ASSESS EE HAS FAILED TO EXPLAIN DIFFERENCE BETWEEN GROSS COMMISSION ACCOUNT ED IN THE BOOKS OF ACCOUNTS AND GROSS COMMISSION AS PER TDS CERTIFICAT E TO THE SATISFACTION OF A.O. THE ASSESSEE SIMPLY STATED THAT THE ISSUE HAS BEEN CONSIDERED BY THE CIT FOR THE ASSESSMENT YEAR 2004-05 AND THE FACTS ARE SIMILAR TO THE ASSESSMENT YEAR 2004-05, THEREFORE, NO ADDITION IS CALLED FOR. THE A.O. AFTER CONSIDERING RELEVANT DETAILS RIGHTLY MAD E ADDITIONS AND HIS ORDER SHOULD BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE A.O. MADE ADDITIONS OF RS .8,03,749/- TOWARDS DIFFERENCE BETWEEN GROSS COMMISSION ACCOUNTED IN TH E BOOKS OF ACCOUNTS AND GROSS COMMISSION AS PER TDS CERTIFICAT E ISSUED BY THE CUSTOMERS. THE A.O. WAS OF THE OPINION THAT THE AS SESSEE HAS FAILED TO RECONCILE DIFFERENCE BETWEEN COMMISSION AS PER BOOK S OF ACCOUNTS AND TDS CERTIFICATES. IT IS THE CONTENTION OF THE ASSE SSEE THAT SHE HAD RECONCILED THE DIFFERENCE. THE ASSESSEE FURTHER CO NTENDED THAT DIFFERENCE IN TURNOVER AS PER BOOKS OF ACCOUNTS AND TDS CERTIFICATE IS ON ACCOUNT OF PASSING DISCOUNTS ALLOWED BY THE AIRLINE S THROUGH AGENTS. THE AIRLINES WILL ALLOW DISCOUNTS TO THE CUSTOMERS THROUGH AGENTS AND THE SAME HAS BEEN SETTLED THROUGH FORTNIGHTLY BILLI NG STATEMENT PLAN. ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 7 SHE HAD ACCOUNTED COMMISSION AFTER REDUCING DISCOUN TS PASSED ON TO THE CUSTOMERS ON BEHALF OF THE AIRLINES. TO THIS E FFECT, FURNISHED COPIES OF FORTNIGHTLY BILLING SETTLEMENT PLAN ALONG WITH S AMPLE COPIES OF INVOICES. WE FIND THAT THE ASSESSEE IS ALLOWING TWO TYPES OF DISCOUNTS TO CUSTOMERS I.E. DISCOUNT AS PER BILL AND DISCOUNT GI VEN OUT OF OUR COMMISSION. IT IS THE CLAIM OF THE ASSESSEE THAT D ISCOUNT AS PER BILL IS PERTAINS TO DISCOUNT ALLOWED BY THE AIRLINES THROUG H AGENTS. THE DIFFERENCE IN GROSS COMMISSION ACCOUNTED IN THE BOO KS OF ACCOUNTS TO THE TDS CERTIFICATE IS ON ACCOUNT OF DISCOUNT PASSE D ON TO THE CUSTOMERS ON BEHALF OF THE AIRLINES. WE FIND FORCE IN THE ARG UMENTS OF THE ASSESSEE FOR THE REASON THAT THE AIRLINES WILL NORMALLY ALLO W DISCOUNTS TO CUSTOMERS WHEN TICKETS ARE BOOKED. THE ASSESSEE FI LED A PAPER BOOK WHEREIN SHE HAD FURNISHED COPIES OF FORTNIGHTLY BIL LING SETTLEMENT PLAN AND ALSO COPIES OF INVOICES ISSUED TO THE CUSTOMERS , HOWEVER, FAILED TO FURNISH THE DETAILS OF TOTAL DISCOUNT ALLOWED TO TH E CUSTOMERS ON BEHALF OF THE AIRLINES TO RECONCILE THE DIFFERENCE OF RS. 8,03,749/- QUANTIFIED BY THE A.O. THEREFORE, WE DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF THE A.O. AND DIRECT THE A.O. TO EXAMINE THE ISSUE IN THE LIGHT OF THE ABOVE DISCUSSION IN ACCORDANCE WITH LAW AFTE R AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 8 8. COMING TO OTHER ADDITIONS OF RS.52,081/- MADE TO WARDS INCOME RECEIVED FROM M/S. FUSION. THE A.O. MADE ADDITIONS OF RS.52,081/- ON THE GROUND THAT THE ASSESSEE HAS CLAIMED TDS WITHOU T ACCOUNTING RESULTANT INCOME IN THE BOOKS OF ACCOUNTS. IT IS T HE CLAIM OF THE ASSESSEE THAT SHE HAD ACCOUNTED INCOME ON ACCRUAL B ASIS IN THE PREVIOUS FINANCIAL YEARS AND THE AIRLINES HAS ISSUE D TDS IN SUBSEQUENT FINANCIAL YEAR BASED ON THE FORTNIGHTLY BILLING SET TLEMENT PLAN, ACCORDINGLY SHE HAD CLAIMED TDS. WE FIND FORCE IN T HE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE AIRLINES WILL FOLL OW FORTNIGHTLY BILLING SETTLEMENT PLAN, WHEREIN THEY SETTLE COMMISSION ONC E IN 15 DAYS. THE ASSESSEE CLAIMS THAT SHE HAD ACCOUNTED COMMISSION O N ACCRUAL SYSTEM IN THE PREVIOUS FINANCIAL YEAR AS AND WHEN TICKETS ARE SOLD TO THE CUSTOMERS. SINCE THE AIRLINES ARE FOLLOWING FORTNIG HTLY BILLING SETTLEMENT PLAN, THE LAST 15 DAYS BILLED AMOUNT MAY FALL IN TH E SUBSEQUENT FINANCIAL YEAR. THOUGH, SHE HAD CLAIMED THAT THE RESULTANT CO MMISSION IS ACCOUNTED IN THE PREVIOUS YEAR, SHE HAD FAILED TO P ROVE THE DIFFERENCE OF RS.52,081/- WITH NECESSARY EVIDENCES. THEREFORE, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE REEXAMINED BY THE A.O. ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF THE A.O. AND DIRECT THE A.O. TO EXAMINE WHETHER THE ASSESSEE HAS ACCOUNTED RELEVANT INCOME IN THE PREVIOUS FINANCIAL YEAR OR NOT. IN CASE THE ASSESSEE HAS PR OVED THAT SHE HAD ITA NO.530/VIZAG/2014 SMT. V. JOGULAMBA, VIJAYAWADA 9 ACCOUNTED RELEVANT INCOME IN THE PREVIOUS FINANCIAL YEAR, THEN, THE A.O. IS DIRECTED TO DELETE THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 TH AUG16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 12.08.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SMT. V. JOGULAMBA, SMITHA WORLD TRAVELS, 40-1-142A, M.G. ROAD, LABBIPET, VIJAYAWADA-520 010. 2. / THE RESPONDENT ADDL CIT, RANGE-2, VIJAYAWADA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM