The ITO, Burhanpur V. Smt. Ruquiya Bano Pathan, Burhanpur

ITA 7/IND/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7531 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 06-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: S N AGRAWAL
• Section: 244A; 147; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.7/IND/2012 A.Y. 2004-05 ITO-BURHANPUR ...... APPELLANT VS. SMT. RUQUIYA BANO PATHAN, BURHANPUR PAN AKRPP 8063 D ...... RESPONDENT APPELLANT BY : SHRI ARUN DEWAN, SR.DR RESPONDENT BY : S/SHRI S.N. AGRAWAL & PANKAJ MOGRA, CAS DATE OF HEARING : 28.3.2012 DATE OF PRONOUNCEMENT: 28.3.2012 ORDER PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 24.10.2011 PASSED BY THE LEARNED FIRST APPELL ATE AUTHORITY, INDORE ON THE GROUND THAT ON THE FACTS & IN THE 2 CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ADJUDICATING THE ISSUE ON THE PRINCIPLE OF TAX NEUT RALITY WHEN THE TAX WITH INTEREST FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 AMOUNTED TO RS.7,36,590/- AS AGAINST RS.5,71,960/- PAID BY THE ASSESSEE. 2. DURING HEARING, WE HAVE HEARD SHRI ARUN DEWAN, L D. SR. DR AND SHRI S.N. AGRAWAL ALONG WITH SHRI PANKAJ MOGRA, LD. COUNSEL FOR THE ASSESSEE. THE CRUX OF TH E ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR TH E ASSESSEE DEFENDED THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DECLARED TOTAL INCOME AT RS.1,98,320/- AFTER CLAIMING THE DEDUCTIO N OF RS.12,000/- U/S 80L OF THE I.T. ACT, 1961. THE ASSE SSEE DURING THE RELEVANT ASSESSMENT YEAR RECEIVED INTERE ST OF 3 RS.14,92,653/- ON THE FIXED DEPOSITS WHICH ARE SUMMARISED AS UNDER: S.NO. A.Y. FDR NO.741421(RS.) FDR NOS.741324- 328(RS.) FDRS INTEREST (RS.) 1 1998-99 58026 91864 149890 2 1999-00 86189 123366 209555 3 2000-01 97480 139525 237005 4 2001-02 110247 157802 268049 5 2002-03 124688 178473 303161 6 2003-04 141020 183973 324993 TOTAL: 6,17,650 8,75,003 14,92,653 ON THE AFORESAID AMOUNTS OF THE FDRS, THE INTEREST ACCRUED TO THE TUNE OF RS.14,92,653/- AND A TDS OF RS.1,46,265/- WAS DEDUCTED BY THE CONCERNED BANK. T HE ASSESSEE HAS MADE THE TDS CERTIFICATE AS PART OF TH E PAPER BOOK FROM PAGES 1 TO 4. THE ASSESSEE ALSO CLA IMED THE CREDIT OF THE SAME AMOUNT IN THE ASSESSMENT YEA R 2004-05 WHICH WAS ACCEPTED BY THE DEPARTMENT AND ACCORDINGLY A REFUND, AS DUE, WAS ISSUED TO THE ASS ESSEE VIDE INTIMATION U/S 143(1) OF THE ACT. THE RETURN O F THE IMPUGNED ASSESSMENT YEAR WAS PROCESSED U/S 143(1) O F THE ACT ON 6.1.2005 ASSESSING THE TOTAL INCOME AT RS.1,98,320/-. A REFUND OF THE RS.1,34,680/- INCLUDING INTEREST U/S 244A AMOUNTING TO RS.6 ,410/- 4 WAS ISSUED. VIDE NOTICE (PAGE 7 OF PAPER BOOK) DATE D 26.4.2007, U/S 154 OF THE ACT, THE THEN ASSESSING OFFICER, ON THE BASIS OF TDS CERTIFICATE, PROPOSED TO ADD AN AMOUNT OF RS.14,92,653/- TO THE INCOME OF THE ASSESSEE WHICH WAS OBJECTED BY FILING A LETTER BY T HE ASSESSEE ON 9.5.2007 (LETTER DATED 3.5.2007). IN TU RN, THE ASSESSING OFFICER ASKED FOR CERTAIN CLARIFICATIONS VIDE LETTER DATED 10.5.2007 (PAGE 9 OF THE PAPER BOOK). THE ASSESSEE PROVIDED THE INFORMATION ON 1.6.2007, AS DESIRED BY THE ASSESSING OFFICER (LETTER IS AVAILAB LE AT PAGES 10 & 11 OF THE PAPER BOOK). HOWEVER, THE ASSESSING OFFICER ADDED THE INTEREST OF RS.14,92,65 3/- TO THE INCOME OF THE ASSESSEE ON THE BASIS OF TDS CRED IT CLAIMED BY THE ASSESSEE. THE ORDER PASSED U/S 154 O F THE ACT WAS CHALLENGED, WHEREIN THE LD. COMMISSIONER VI DE ORDER DATED 25.6.2008 DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE AGAINST WHICH THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL. HOWEVER, THE TRIBUNAL VIDE ORD ER DATED 30.1.2009 SET ASIDE THE ISSUE TO THE FILE OF THE 5 ASSESSING OFFICER FOR FURTHER ADJUDICATION. ORDER O F THE TRIBUNAL HAS BEEN MADE PART OF THE PAPER BOOK FROM PAGES 50 TO 53. THE LD. ASSESSING OFFICER ISSUED A NOTICE U/S 147 OF THE ACT TO WHICH THE ASSESSEE FILED THE RETURN ON 27.8.2008 DECLARING INCOME AT RS.1,98,320/- (AS DECLARED IN THE ORIGINAL RETURN). THE ASSESSING OFF ICER IN HIS ORDER DATED 22.11.2009, PASSED U/S 147/143(3) O F THE ACT, ADDED THE AMOUNT OF RS.11,67,660/- TO THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004 -05 AND RS.3,24,993/- ACCEPTED AS RIGHTLY OFFERED FOR ASSESSMENT YEAR 2003-04. THUS, THE ASSESSING OFFI CER PRINCIPALLY ACCEPTED THE ACCRUAL SYSTEM OF ACCOUNTI NG. HOWEVER, HE ADDED THE INTEREST INCOME, RELATED TO ASSESSMENT YEARS 1998-99 TO 2002-03 AS INCOME FOR ASSESSMENT YEAR 2004-05 BY STATING THAT THE RETURNS ARE BELATED. IT IS PERTINENT TO MENTION HERE THAT THE CBDT VIDE CIRCULAR NO.371 DATED 21.11.1983 (IN PARA 2) CLARIFIED THAT THE CENTRAL GOVERNMENT HAS DECIDED THAT THE INTEREST ON CUMULATIVE DEPOSIT SCHEME OF GOVERN MENT 6 UNDERTAKING SHOULD BE TAXED ON ACCRUAL BASIS ANNUAL LY. THIS SETTLED POSITION BY THE CBDT IS BINDING ON THE DEPARTMENT. THIS VIEW IS SUPPORTED BY THE RATIO LAI D DOWN IN DECISIONS FROM HON'BLE APEX COURT IN HINDUS TAN AERONAUTICS LTD. VS. CIT, 243 ITR 808 (SC) AND CIT VS. P.V. RAMANAIAH & SONS, 157 ITR 300 (AP). FOR FURTHE R CLARIFICATION, THE ORIGINAL DATE OF PREPARATION OF FDRS, PRINCIPAL AMOUNT, DATE OF MATURITY AND RENEWAL THER EOF ARE SUMMARISED AS UNDER: S.NO. FD NO. FD DATE FD AMOUNT (RS.) MATURITY DATE MATURITY AMOUNT (RS.) RENEWAL DATE RENEWAL AMOUNT INTEREST IN BANK DEPOSIT (RS.) 1 741421/216/9794 30.6.97 600000 30.3.03 1217650 9. 4.03 1200000 17650 TOTAL: 600000 1217650 1200000 17650 2 741328/123/9798 29.5.97 50000 29.2.03 101471 9.4. 03 100000 1471 741326/121/9799 29.5.97 200000 29.2.03 405883 9.4. 03 400000 5883 741325/120/9798 29.5.97 200000 29.2.03 405883 9.4. 03 400000 5883 741324/119/9777 29.5.97 200000 29.2.03 405883 9.4. 03 400000 5883 741327/122/9798 29.5.97 200000 29.2.03 405883 9.4. 03 400000 5883 TOTAL: 850000 1725003 1700000 25003 IF THE AFORESAID TABLE IS ANALYSED, THE ISSUE TO BE ADJUDICATED RELATES TO THE YEAR OF TAXABILITY OF TH E INTEREST RECEIVED FROM FDRS BY THE ASSESSEE. FROM THE AFORES AID CHART, IT IS SEEN THAT THE FDRS WERE MATURED IN THE MONTHS OF FEBRUARY 2003 AND MARCH 2003, THEREFORE, 7 EVEN ON CASH SYSTEM OF ACCOUNTING, THE ENTIRE AMOUN T OF INTEREST REQUIRES TO BE TAXED IN THE ASSESSMENT YEA R 2003-04 AND NOT IN THE ASSESSMENT YEAR 2004-05. THE FDRS WERE RENEWED ON 9.4.2003 AND THE ENTIRE AMOUNT OF INTEREST RELATES TO ASSESSMENT YEARS 1998-99 TO 2003- 04 AND IN NO WAY FOR ASSESSMENT YEAR 2004-05. THE D ATE MENTIONED IN THE TDS CERTIFICATE LED TO THE CONFUSI ON, HOWEVER, THE ASSESSING OFFICER WAS DUTY BOUND TO FO LLOW THE ONE SYSTEM OF ACCOUNTING EITHER THE CASH SYSTEM OR THE MERCANTILE. AS PER THE CASH SYSTEM OF ACCOUNTIN G, THE AMOUNT OF INTEREST REQUIRES TO BE TAXED IN THE YEAR OF ACCRUAL. ADMITTEDLY, THE ASSESSEE OFFERED HER INTER EST ON ACCRUAL BASIS IN THE YEAR TO WHICH IT RELATES AND A LSO PAID THE LEGITIMATE TAX. EVEN OTHERWISE, THE LD. SR. DR ON QUESTIONING FROM THE BENCH REGARDING ANY LOSS TO REVENUE FAIRLY ADMITTED THAT THERE IS NO LOSS TO TH E REVENUE. IN VIEW OF THESE FACTS, SINCE THE ASSESSEE HAS OFFERED ENTIRE AMOUNT OF INTEREST FOR TAXATION BY DISCLOSING IN HER RETURN, THERE IS NO REASON TO TAX THE 8 ENTIRE AMOUNT OF INTEREST AGAIN IN THE YEAR 2004-05 , CONSEQUENTLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). IT IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT TH E CONCLUSION OF HEARING ON 28.3.2012. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28.3.2012 !VYS! COPY TO APPELLANT/RESPONDENT/CIT/CIT(A)/DR