C.C. CHOKSHI & CO, MUMBAI V. ASST CIT RG 11(2), MUMBAI

ITA 6533/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100945 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 29-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: KADAMBARI DAVE
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) C.C.CHOKSHI & CO., 12, DR. ANNIE BESANT ROAD, OPP. SHIV SAGAR ESTATE, WORLI, MUMBAI 400018 PAN: AAAFC 0866E ... APPELLANT VS. THE ACIT,RANGE 11(2) 4 TH FLOOR,AAYKAR BHAVAN, MK RAOD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : SHRI GIRISH DAVE & MS. KADAMBARI DAVE REVENUE BY : SHRI PREMANAND J. DATE OF HEARING : 17/06//2015 DATE OF PRONOUNCEMENT : 31/08/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL IS PREFERRED BY THE ASSESS EE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 09/08/201 2 OF CIT(A)-3, MUMBAI PERTAINING TO THE ASSESSMENT YEAR 2009-10, W HICH IN-TURN HAS 2 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFIC ER DATED 29/12/2011 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT). 2. THE APPELLANT BEFORE US IS A PARTNERSHIP FIRM O F CHARTERED ACCOUNTANTS AND THE FIRST ISSUE RELATES TO AN ADDIT ION OF RS.28,43,777/- SUSTAINED BY THE CIT(A) AS UN-RECONCILED PROFESSIO NAL RECEIPTS ON THE BASIS OF DIFFERENCE BETWEEN THE INFORMATION GATHER ED FROM THE ANNUAL INFORMATION REPORT(AIR) AND PROFESSIONAL RECEIPTS D ECLARED AS PER BOOKS OF ACCOUNT. 3. IN THIS CONTEXT, LD. REPRESENTATIVE FOR THE ASSE SSEE POINTED OUT THAT ASSESSEE FIRM WAS ENGAGED IN PROVIDING PROFESS IONAL SERVICES AND WAS MAINTAINING ITS BOOKS OF ACCOUNT ON RECEIPT/CAS H BASIS. IT HAS BEEN POINTED OUT THAT THE ASSESSEE FIRM RECEIVES ITS PRO FESSIONAL FEES THROUGH BANKING CHANNELS. IN THE COURSE OF ASSESSMENT PROC EEDINGS, ASSESSEE WAS ASKED TO RECONCILE THE AMOUNT OF PROFESSIONAL R ECEIPTS DECLARED IN THE BOOKS OF ACCOUNT WITH THE INFORMATION GATHERED FROM THE AIR. THE DETAILS IN THIS REGARD, I.E., THE NAME OF THE PAR TY; THE AMOUNT AS PER AIR; THE AMOUNT RECORDED IN THE ACCOUNT BOOKS; AND, THE REASONS FOR THE DIFFERENCE AS EXPLAINED BY THE ASSESSEE HAS BEE N TABULATED BY THE ASSESSING OFFICER IN PARA-3 OF THE ASSESSMENT ORDE R. IN CASES OF TWELVE PARTIES NOTED IN THE TABULATION, ASSESSEE RENDERED EXPLANATION FOR 3 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) EACH OF THEM AND POINTED OUT THAT NO ADDITION WAS M ERITED ON ACCOUNT OF ANY UNDECLARED PROFESSIONAL FEES. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE EXPLANATION RENDERED BY THE ASSE SSEE AND ADDED A SUM OF RS.28,51,870/- TO THE RETURNED INCOME. BEFO RE THE CIT(A) ALSO, ASSESSEE REITERATED ITS STAND AND CONTENDED THAT NO ADDITION WAS SUSTAINABLE HAVING REGARD TO THE EXPLANATIONS AND M ATERIAL FURNISHED. THE CIT(A) ALSO HAS TABULATED THE DIFFERENCE IN AC COUNTS AS WELL AS THE MATERIAL AND EXPLANATIONS RENDERED BY THE ASSESSEE , BUT HE HAS DISAGREED WITH THE ASSESSEE EXCEPT FOR AN AMOUNT O F RS.8,093/- AND, ACCORDINGLY, THE BALANCE OF RS.28,43,777/- HAS BEE N RETAINED AS UN- RECONCILED PROFESSIONAL RECEIPTS. 4. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE VEHEMENTLY POINTED OUT THAT THE PARTY-WISE EXPLANATION RENDERE D BY THE ASSESSEE FOR EACH OF THE TRANSACTION APPEARING IN THE AIR HA S BEEN RECONCILED WITH THE BOOKS OF ACCOUNT AND THAT THE EXPLANATION OF THE ASSESSEE HAS BEEN REJECTED WITHOUT ANY THIRD PARTY VERIFICATION. IT HAS BEEN POINTED OUT THAT THERE IS NO MATERIAL TO PROVE THAT THE EN TRIES APPEARING IN THE AIR WERE LIABLE TO BE TAKEN AS PROFESSIONAL RECEIP TS TAXABLE IN THE HANDS OF THE ASSESSEE OVER AND ABOVE WHAT HAS BEEN SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE EXPLANATION RENDERED BY THE 4 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) ASSESSEE BEFORE THE LOWER AUTHORITIES, WHICH HAS BE EN REPRODUCED IN THE RESPECTIVE ORDERS, HAVE ALSO REITERATED BEFORE US. APART THERE-FROM, THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE FOLLOWING DECISIONS OF THE MUMBAI BENCH OF THE TRIBUNAL FOR THE PROPOSITION THAT NO ADDITION COULD BE MADE SOLELY ON THE BASIS OF TH E AIR INFORMATION WITHOUT CROSS CHECKING WITH THE RESPECTIVE PARTIES: - 1. A.F. FERGUSON & CO., ITA NO. 5037/MUM/2012 DAT ED 17/10/2014 (MUMBAI ITAT). 2. A.F.FERGUSSON ASSOCIATES ITA NO.6962/M/2012 DAT ED 28/2/2014 (MUMBAI ITAT). 3. S.B.BALLIMORIA & CO. ITA NO. 297/MUM/2012 DATED 17/4/2015 (MUMBAI ITAT). 4. RELIANCE BROADCAST NETWORK LTD. ITA NO. 3531/M /2013 DATED 27/5/2015 (MUMBAI ITAT) 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE POINTED OUT THAT THERE WAS DIFFERENCE IN THE PROFESSIONAL RECEI PTS AS SHOWN IN THE BOOKS OF ACCOUNT AND AS PER THE AIR WITH RESPECT TO SOME OF THE PARTIES AND ON ACCOUNT OF NON-RECONCILIATION THE AMOUNT HAS BEEN CORRECTLY ASSESSED IN THE HANDS OF THE ASSESSEE FIRM. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. PERTINENTLY, IT IS NOT IN DISPUTE THAT THE ASSESSEE IS MAINTAINI NG ITS BOOKS OF ACCOUNT ON RECEIPT/CASH BASIS. IT IS ALSO AN ESTABLISHED P OSITION BETWEEN THE 5 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) ASSESSEE AND THE REVENUE THAT THE PROFESSIONAL RECE IPTS DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT HAVE BEEN RECEIVED THROUGH BANKING CHANNELS. IN PRINCIPLE, THE ASSERTION OF THE ASSES SEE THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE MERELY ON THE BASIS OF DIFFERENCE IN THE PROFESSIONAL RECEIPTS AS PER BOOK S OF ACCOUNT AND THE INFORMATION IN AIR IS QUITE APT, BECAUSE IT IS ONLY AFTER CROSS-VERIFICATION WITH THE RESPECTIVE PARTIES THAT IT CAN BE ESTABLIS HED THAT THERE IS ANY UNDISCLOSED PROFESSIONAL RECEIPTS LIABLE TO BE ASSE SSED IN THE HANDS OF THE ASSESSEE. BE THAT AS IT MAY, IN THE PRESENT CA SE, WE HAVE ALSO PERUSED THE EXPLANATIONS RENDERED BY THE ASSESSEE W ITH RESPECT TO EACH OF THE PARTIES, WHICH ARE FOUND TABULATED IN THE OR DER OF THE CIT(A). IN THE CASE OF THREE PARTIES, NAMELY SARAF CHEMICALS LTD., SBI CAPITAL MARKET LTD., BMD CHEMICALS PVT. LTD., THE AIR INF ORMATION REVEALED CERTAIN AMOUNT OF PROFESSIONAL RECEIPTS, WHEREAS AS PER THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE THERE WAS NIL RE CEIPT FROM THE SAID THREE PARTIES. THE ASSESSEE ASSERTED THAT NO SERVI CES WERE RENDERED BY IT AND NOR ANY INVOICE WAS RAISED ON THE THREE PART IES. THE ASSESSEE ALSO EXPLAINED THAT ONE OF ITS SISTER CONCERN I.E. DELOITTE HASKINS AND SELLS (DHS) HAD RENDERED SERVICES AND RAISED INVOI CE FOR THE RESPECTIVE AMOUNTS AND HAD ACTUALLY RECEIVED THOSE AMOUNTS. I T WAS POINTED OUT 6 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) THAT THE THREE CONCERNS HAD BY MISTAKE INSERTED THE PAN NO. OF THE ASSESSEE FIRM AND, THEREFORE, THERE WAS NO CASE THA T SUCH INCOME WAS PROFESSIONAL RECEIPTS IN THE HANDS OF THE ASSESSEE FIRM. WE FIND THAT ASSESSEE SUPPORTED THE AFORESAID EXPLANATION BY PRO DUCING THE RESPECTIVE INVOICES RAISED BY DHS ON THE THREE PART IES AND IN TWO OF SUCH CASES I.E. SBI CAPITAL MARKET LTD. AND BMD CHE MICALS PVT. LTD., NECESSARY CONFIRMATIONS FROM THE SAID CONCERNS WERE ALSO FURNISHED. IN OUR CONSIDERED THE OPINION IN VIEW OF THE AFORESAID FACTUAL MATRIX, WHICH IS UNDISPUTED, THERE WAS NO JUSTIFICATION FOR THE CIT(A) TO HAVE HELD THAT THE DIFFERENCE IN THE PROFESSIONAL RECEIP TS BASED ON THE AIR INFORMATION WAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THI S ASPECT AND DIRECT THE ASSESSING OFFICER TO DELETE THE SAID ADDITION. 6.1 SIMILARLY, WITH REGARD TO THE TWO CONCERNS OF I SHETA INVESTMENT PVT. LTD. AND SUKARMA INVESTMENT PVT. LTD., MINOR DIFFERENCES OF RS.10,000/- AND RS.1,000/- RESPECTIVELY WERE NOTICE D. THE ASSESSEE HAD FURNISHED THE RESPECTIVE INVOICES RAISED AND TH E AMOUNT RECEIVED FROM THE SAID PARTIES, CORRESPONDING TO THE PROFESS ION RECEIPTS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND CONTENDED THAT THE DIFFERENCES ARE ONLY ON ACCOUNT OF PUNCHING ERROR I N THE ETDS RETURN 7 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) FILED BY THE CLIENTS. ON THIS ASPECT ALSO WE FIND THAT THE ASSESSEE HAS DISCHARGED HIS BURDEN AND IN THE ABSENCE OF ANY COG ENT MATERIAL WITH THE REVENUE THE EXPLANATION HAS BEEN UNJUSTIFIABLY REJECTED. ON THIS ASPECT ALSO WE SET ASIDE THE ORDER OF CIT(A) AND DI RECT THE ASSESSING OFFICER TO DELETE THE RESPECTIVE ADDITIONS. 6.2 FURTHERMORE, WITH REGARD TO THE DIFFERENCE NOT ICED IN RELATION TO MAFATLAL HOLDING LTD., IS CONCERNED, ASSESSEE POIN TED OUT THAT AGAINST THE AMOUNT OF RS.4,09,496/- SHOWN IN THE AIR, ASSES SEE HAD RAISED INVOICES OF RS.4,09,496/- UPTO THE FINANCIAL YEAR 2 008-09, OUT OF WHICH INVOICES AGGREGATING TO RS.2,63,428/- HAVE BEEN CA NCELLED AND FURTHER INVOICES AGGREGATING TO RS.1,46,068/- WERE OUTSTAND ING AS ON THE DATE. THE ASSESSEE EXPLAINED THAT THE SAID CONCERN HAS EF FECTED THE TDS BASED ON THE PROVISION OF RS.4,09,496/-, AND THAT N O AMOUNT HAS BEEN RECEIVED AND, THEREFORE, NO AMOUNT OF PROFESSIONAL FEE WAS DECLARED AND FURTHER THE INVOICES WERE CANCELLED AS THEY WE RE OUTSTANDING SINCE LONG TIME AND THERE WERE RARE CHANCES OF RECOVERY. ON THIS ASPECT ALSO, WE ARE UNABLE TO SUSTAIN THE ACTION OF CIT(A) IN SU STAINING THE ADDITION, BECAUSE THE ACCOUNTING TREATMENT OF THE ASSESSEE IS TO ACCOUNT FOR PROFESSIONAL RECEIPTS ON CASH/RECEIPT BASIS AND THE RE IS NO MATERIAL TO ESTABLISH THAT ASSESSEE HAD RECEIVED THE IMPUGNED SUM. THEREFORE, ON 8 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) THIS ASPECT ALSO WE FIND NO JUSTIFICATION TO UPHOLD THE ORDER OF THE CIT(A). 6.3 SIMILARLY, WE HAVE PERUSED THE EXPLANATIONS REN DERED BY THE ASSESSEE WITH RESPECT TO FIVE OTHER CONCERNS AS PER TABULATION CONTAINED IN THE ORDER OF THE CIT(A) AND FIND NO JU STIFIABLE REASON TO SUSTAIN THE RESPECTIVE ADDITIONS, AS THERE IS NO EV IDENCE THAT ASSESSEE HAS RECEIVED THE IMPUGNED SUMS. 6.4 THEREFORE, IN CONCLUSION, WE SET-ASIDE THE ORDE R OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.28,43,777/- ON THE GROUND THAT THE DIFFERENCES BETWEEN THE INFORMA TION GATHERED FROM AIR AND THE PROFESSIONAL RECEIPTS AS PER BOOKS OF ACCOUNT IS NOT CORROBORATED BY ANY THIRD PARTY EVIDENCE TO SUGGES T ANY NON- DISCLOSURE OF PROFESSIONAL RECEIPTS BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THUS, ON THIS ASPECT THE ASSESSEE S UCCEEDS. 7. THE ONLY OTHER ISSUE RAISED BY THE ASSESSEE IS W ITH REGARD TO THE COMPUTATION OF INTEREST CHARGEABLE UNDER SECTION 23 4B OF THE ACT. ON THIS ASPECT, THE ONLY POINT RAISED BY THE ASSESSEE IS AS TO WHETHER INTEREST PAYABLE UNDER SECTION 234A OF THE ACT, FOR THE PURPOSES OF SECTION 140A OF THE ACT, IS TO BE COMPUTED WITH RES PECT TO THE TAX 9 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) PAYABLE ON THE INCOME RETURNED OR ON INCOME DETERMI NED IN THE REGULAR ASSESSMENT. IN THIS CONTEXT, THE STAND OF THE ASSESSEE IS THAT THE INTEREST UNDER SECTION 234B OF THE ACT AGAINST WHICH TAX PAID UNDER SECTION 140A HAS TO BE ADJUSTED FIRST IS REQUIRED T O BE COMPUTED WITH RESPECT TO THE RETURNED INCOME AS THE ASSESSED TAX FOR THE PURPOSES OF SECTION 140A HAS BEEN DEFINED TO MEAN TAX ON THE TOTAL INCOME DECLARED IN THE RETURN AS REDUCED BY THE AMOUNT OF TAX DEDUCTED/COLLECTED AT SOURCE, ETC. 7.1 ON THIS ASPECT, LD. REPRESENTATIVE FOR THE ASSE SSEE HAS POINTED OUT THAT IDENTICAL CONTROVERSY HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y 2000-01 AND 2001-02 VIDE ITA NO.7450/MUM/2004 DATED 21/5/2010 AND THE STAND OF T HE ASSESSEE HAS BEEN APPROVED. FOLLOWING DISCUSSION IN THE ORD ER OF THE TRIBUNAL DATED 21/5/2010 IS RELEVANT:- 3.6.2. WE HAVE HEARD BOTH PARTIES PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. THE FACTUAL AND LEGAL BACKGROUND RELATING TO THE ISSUE HAS ALREADY BEENDISCUSSED IN THE PRECEDING PARA. THE 1 40A PROVIDES THAT IN CASE PAYMENT MADE UNDER THE SAID SECTION FALLS SHORT O F THE TAX PAYABLE INCLUDING INTEREST UNDER THE SAID SECTION FALLS SH ORT OF THE TAX PAYABLE INCLUDING INTEREST UNDER THE SAID SECTION THEN THE TAX SO PAID SHALL BE FIRST ATTRIBUTED TOWARDS THE INTEREST AND THE BALANCE AM OUNT SHALL BE ADJUSTED AGAINST THE TAX PAYABLE. IN THIS CASE, THE TAX PAY ABLE UNDER SECTION 140A ALSO INCLUDED INTEREST PAYABLE UNDER SECTION 234B. THE ISSUE IS WHETHER THE INTEREST PAYABLE UNDER SECTION 234B WHICH HAS TO BE FIRST ADJUSTED AGAINST THE PAYMENT MADE UNDER SECTION 140A HAS TO BE CALCU LATED WITH RESPECT TO TOTAL INCOME AS DECLARED IN THE RETURN OR TOTAL INC OME DETERMINED IN THE 10 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) REGULAR ASSESSMENT. WE FIND THAT THE SECTION 140(1 B) PROVIDES THAT INTEREST PAYABLE UNDER SECTION 234B, HAS TO BE COMPUTED ON T HE AMOUNT BY WHICH THE ADVANCE PAID FALLS SHORT OF ASSESSED TAX AND THE AS SESSED TAX FOR THE PURPOSE OF THIS SUB-SECTION HAS BEEN DEFINED IN THE EXPLANA TION TO MEAN THE TAX ON TOTAL ON TOTAL INCOME AS DECLARED IN THE RETURN AS REDUCED BY TAX DEDUCTED/COLLECTED AT SOURCE ETC. THEREFORE, WE AG REE WITH THE SUBMISSION MADE BY LD. A.R THAT THE INTEREST PAYABLE UNDER SEC TION 234B FOR THE PURPOSE OF ADJUSTMENT AGAINST THE TAX PAID UNDER SECTION 14 0A HAS TO BE COMPUTED WITH RESPECT TO ASSESSED TAX DETERMINED ON THE BASI S OF TOTAL INCOME DECLARED IN THE RETURN. BUT THIS IS ONLY FOR THE L IMITED PURPOSE OF ADJUSTMENT OF PAYMENT MADE U/S. 140A AGAINST INTEREST PAYABLE UNDER SECTION 234B WHILE MAKING COMPUTATION OF INTEREST PAYABLE BY THE ASSESSEE UNDER SECTION 234B, WHICH HAS TO BE COMPUTED WITH RESPECT WITH RE SPECT TO THE TOTAL INCOME DETERMINED IN REGULAR ASSESSMENT AS PER THE DEFINITION OF ASSESSED TAX GIVEN IN SECTION 234B. THE ASSESSEE HAS ALSO F OLLOWED THE SAME PROCEDURE WITH WHICH WE AGREE. THE OR OF CIT(A) CO NFIRMING THE METHOD FOLLOWED BY THE AO IS THEREFORE, SET ASIDE AND THE CLAIM OF THE ASSESSEE IS ALLOWED. 7.2 FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BE EN RENDERED UNDER IDENTICAL CIRCUMSTANCES, WE DEEM IT FIT AND P ROPER TO DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE INTEREST CHARGEA BLE UNDER SECTION 234B OF THE ACT IN TERMS OF THE DIRECTIONS OF THE T RIBUNAL DATED 21/05/2010(SUPRA). THUS ON THIS ASPECT ALSO, ASSES SEE SUCCEEDS FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2015 SD/- SD/- (AMIT SHUKLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI,DATED :31/08/2015 VM. 11 ITA NO. 6533/MUM/2012 (ASSESSMENT YEAR 2009-10) COPY OF THE ORDER FORWARDED TO : / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBA I VM , SR. PS