DCIT 23(3), MUMBAI V. S.R. SHIPPING AGENCY, MUMBAI

ITA 702/MUM/2011

• Counselvise Citation: 70219914 RSA 2011
• Duration Of Justice: 4 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Bench Allotted: H
• Next Hearing Date: 21-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-01-2011
• Court: TRIBUNAL
• Department Lawyers: MRS NEELAM NADKARNI
• Section: 143(3)

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./I.T.A. NO.702/M/2011 ( AY: 2007 - 2008 ) DCIT 23(3), C - 10, PRATYAKSHAKAR BHAVAN, C - 10/4 TH FLOOR, BKC, MUMBAI - 51. / VS. S.R. SHIPPING AGENCY, 201 PREM VILLA, 5 MRP SCHOOL ROAD, MULUND (W), MUMBAI 400080. ./ PAN : AAGFS8470A ( / APPELLANT) .. ( / RESPONDENT ) C.O.NO.02/M/2013 (ARISING OUT OF I.T.A. NO.702/M/2011) ( AY: 2007 - 2008) S.R. SHIPPING AGENCY, 201 PREM VILLA, 5 MRP SCHOOL ROAD, MULUND (W), MUMBAI 400080. / VS. DCIT 23(3), C - 10, PRATYAKSHAKAR BHAVAN, C - 10/4 TH FLOOR, BKC, MUMBAI - 51. ./ PAN : AAGFS8470A ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI MEHUL SHAH / REVENUE BY : MRS. NEELAM NADKARNI, DR / DATE OF HEARING : 21.5 .2015 / DATE OF PRONOUNCEMENT :29 .5.2015 / O R D E R PER G.S. PANNU, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) - 33, MUMBAI DATED 26.10.2010 FOR THE ASSESSMENT YEAR 2007 - 2008 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT), DATED 18.12.2009. 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVENUE WHEREIN THE SOLITARY GRIEVANCE IS WITH REGARD TO THE ACTION OF THE CIT (A) IN DELETING THE ADDITION OF RS. 2 42,34,079/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRESSION OF SALES AS PER TDS CERTIFICATES. 3. B RIEFLY STATED , RELEVANT FACTS ARE THAT THE ASSESSEE IS PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROVIDING SHORE BASED MANAGEMENT SERVICES, STORAGE, WAREHOUSING, LOADING, UNLOADING, CRANE, FORKLIFT & TRANSPORT SERVICES. IN THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER NOTED THAT THERE WAS CERTAIN MISMATCHES BETWEEN THE RECEIPTS CREDITED TO THE PROFIT & LOSS ACCOUNT AND THE RECEIPTS AS DECLARED IN THE TDS CERTIFICATES ISSUED BY THE PARTIES TO WHOM ASSESSEE HAD RENDERED THE SERVICES. THE ASS ESSING OFFICER HAS DISCUSSED THE ISSUE IN PARA 3 OF THE ASSESSMENT ORDER WHEREIN, IN THE CASE OF THREE PARTIES SUCH DIFFERENCES HAVE BEEN NOTED. IN THE CASE OF THREE PARTIES, WHICH ARE DETAILED THEREIN, THE RECEIPTS AS DECLARED IN THE TDS CERTIFICATES WAS FOUND TO BE IN EXCESS OF WHAT WAS CREDITED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT, AND SUCH DIFFERENCE IS TABULATED AT RS. 42 ,34,079/ - . ON BEING SHOW CAUSED , THE EXPLANATION OF THE ASSESSEE WAS THAT THE DIFFERENCES WERE ON ACCOUNT OF VARIOUS PURCH ASES EFFECTED OR EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF SUCH PARTIES AND THAT THE BILLING OF THE ASSESSEE CONSISTS TWO SEGMENTS NAMELY; SERVICES CHARGES AND FOR PURCHASES EFFECTED ON BEHALF OF THE PARTIES. THE ASSESS ING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. ACCORDING TO HIM, THE PURCHASES EFFECTED BY THE ASSESSEE OR OTHER SERVICES PROVIDED BY THE ASSESSEE TO SUCH PARTIES WAS AN INTEGRAL PART OF THE CONTRACT AND THAT THE TAX WAS DEDUCTED ON TOTAL CONTRACT RECEIPTS. THE A SSESSEE HAD NOT SHOWN THE OTHER SERVICES AS A PART OF THE CONTRACT RECEIPTS AND THEREFORE, THE INCOME WAS LESS CREDITED IN THE PROFIT & LOSS ACCOUNT. IN THIS MANNER, THE ASSESSING OFFICER CONCLUDED THAT THERE WAS SUPPRESSION OF RECEIPTS IN THE PROFIT & LO SS ACCOUNT AND THEREFORE, HE ADDED THE AMOUNT OF RS. 42,34,079/ - TO THE RETURNED INCOME OF THE ASSESSEE. 4. IN APPEAL BEFORE THE CIT (A), ASSESSEE FURNISHED RECONCILIATION SHOWING PARTY WISE BREAK UP OF SALES AND SERVICES. ASSESSEE ALSO FURNISHED THE LEDG ER ACCOUNT OF THE THREE PARTIES DULY CERTIFIED SHOWING THE CONTRACT RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT. ASSESSEE ALSO EXPLAINED THAT ITS METHOD OF ACCOUNTING WAS MERCANTILE AND THEREFORE, THE AMOUNT OF INVOICES RAISED IN A PARTICULAR YEAR MAY NOT MATCH WITH 3 THE PAYMENTS RECEIVED AS REFLECTED IN THE TDS CERTIFICATES ISSUED BY THE PARTIES. CIT (A) CONSIDERED THE EXPLANATION FURNISHED BY THE ASSESSEE AND IN TERMS OF HIS DISCUSSION IN PARAS 4.1 TO 4.3 OF THE IMPUGNED ORDER, HE HAS CONCLUDED THAT T HE TOTAL CONTRACT RECEIPTS SHOWN IN THE PROFIT & LOSS ACCOUNT ARE RECONCILED WITH THE TOTAL RECEIPTS DECLARED IN THE TDS CERTIF ICATES ISSUED BY THE PARTIES, AND THEREFORE , HE HAS DELETED THE ADDITION OF RS. 42,34,079/ - . 5. IN THE ABOVE BACKGROUND, THE LD D R APPEARING FOR THE REVENUE HAS CONTENDED THAT THE CIT (A) ERRED IN NO APPRECIATING THAT THE PURCHASES AND OTHER SERVICES CLAIMED TO HAVE BEEN RENDERED BY T HE ASSESSEE TO THE PARTIES WERE NOT INTEGRAL PART OF THE CONT RACT ON WHICH TAX WAS DEDUCTED AT SOURC E. IT WAS THEREFORE CONTENDED THAT THE PLEA OF THE ASSESSEE THAT THERE WERE CERTAIN RECEIPTS AS PER THE TDS CERTIFICATES, WHICH DO NOT FORM PART OF THE PROCEEDS CREDITED IN THE PROFIT & LOSS ACCOUNT WAS AN UNTENABLE EXPLANATION, AND THE SAME HAS BEEN WRON GLY ACCEPTED BY THE CIT (A). 6. ON THE OTHER HAND, LD REPRESENTATIVE FOR THE ASSESSEE HAS PRIMARILY RELIED UPON THE FINDINGS OF THE CIT (A). THE LD REPRESENTATIVE HAS REFERRED TO THE WRITTEN SUBMISSIONS, WHICH WERE FILED BEFORE THE LOWER AUTHORITIES, WHIC H, ACCORDING TO HIM, BRING OUT THE RECONCILIATION BETWEEN THE TOTAL RECEIPTS DECLARED IN THE TDS CERTIFICATES AND RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THIS CASE, THE ASSESSING OFFICER NO TED THE DIFFERENCES BETWEEN THE RECEIPTS AS DECLARED IN THE TDS CERTIFICATES VIS - A - VIS THE TOTAL RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT. IN PARA 4.1 OF THE ORDER OF THE CIT (A), IT IS NOTED THAT IN THE CASE OF NIKO RESOURCES LID., THE RECEIPTS AS PER THE TDS CERTIFICATES IS RS. 75,38,590/ - WHEREAS THE RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT AMOUNT TO RS. 95,68,917/ - . HOWEVER, THE ASSESSING OFFICER IN THE TABULATION PREPARED IN PARA 3 OF HIS ORDER HAS TAKEN A FIGURE OF RS. 62,82,961/ - AS THE RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT IN RELATION TO THE AFORESAID PARTY. AT THE TIME OF HEARING, THE LD REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THIS DIFFERENCE ON ACCOUNT OF WRONG APPRECIATION OF FACTS BY THE ASSESSING OFFICER. THE LD REPRES ENTATIVE SUBMITTED THAT BEFORE THE CIT (A), ASSESSEE HAS REFERRED TO ITEM WISE ENTRY OF CONTRACT RECEIPTS DECLARED IN THE TDS CERTIFICATES AND 4 THE LEDGER ACCOUNT OF THE SAID PARTY, WHICH WAS DULY CERTIFIED. IT HAS BEEN CONTENDED THAT I N TERMS OF THE SAID MATERIAL, THE CIT (A) HA S PROPERLY APPRECIATED THE FACT - POSITION THAT THE RECEIPTS CREDITED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT WITH RESPECT TO NIKO RESOURCES LTD WAS RS. 95,68,917/ - . THE AFORESAID EXPLANATION RENDERED BY THE ASSESSEE IN THE COUR SE OF HEARING BEFORE US IS CLEARLY BORNE OUT OF THE RECORD ON THE BASIS OF THE MATERIAL PLACED IN THE PAPER B OOK AT PAGES 11 TO 13. MOREOVER, THE CIT (A) HAS MADE THE FOLLOWING DISCUSSION IN TH E CONTEXT OF NIKO RESOURCES LTD: - 4.1..........COMING TO THE ACCOUNT OF NIKO RESOURCES LTD., IT IS SEEN THAT APPELLANT HAS CREDITED RS. 95,68,917/ - AGAINST TDS CERTIFICATE ISSUED FOR RS. 75,38,590/ - WHICH IS UNDERSTOOD ON ACCOUNT OF THE FACT THAT APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND HENCE BILLS ARE ACCOUNTED A SAND WHEN THEY ARE ISSUED BY CREDITING REVENUE IN P&L ACCOUNT. THUS, IT CAN BE SEEN THAT THE AMOUNT CREDITED BY APPELLANT IN THE BOOKS ARE MORE THAN THE RECEIPT REFLECTED IN THE TDS IN CASE OF ONE PARTY I.E., NIKO RESOURCES LTD. AS REGAR DS OTHER TWO PARTIES I.E., M.I. OVERSEAS AND OIL & GAS DRILLING CO., THE AMOUNT CREDITED IN THE BOOKS OF ACCOUNTS ARE LESSER IN THE TDS CERTIFICATES. THE APPELLANT HAS GIVEN RECONCILIATION FOR ALL THESE THREE PARTIES. 8. THE AFORESAID DISCUSSION BY THE C IT (A) , WHICH CLEARLY BELIES THE STAND OF THE ASSESSING OFFICER , IS LIABLE TO BE AFFIRMED AS NO COGENT REASONING HAS BEEN ADVANCED BY THE REVENUE BEFORE US, WHICH WOULD REQUIRE US TO INTERFERE WITH THE AFORESAID FINDING OF THE CIT (A). THUS, ON THIS ISSUE , WE AFFIRM THE ORDER OF THE CIT (A). 9. NOW, COMING TO THE SECOND PARTY I.E., OIL & GAS DEALING CO., IN THIS CASE, THE RECEIPTS SHOWN AS PER THE TDS CERTIFICATES ARE RS. 22,30,081/ - , WHEREAS THE AMOUNT CREDITED IN THE PROFIT & LOSS ACCOUNT IS STATED TO BE RS. 11,56,003/ - . IN THIS CONTEXT, THE CIT (A) HAS DELETED THE ADDITION BY MAKING THE FOLLOWING DISCUSSION. 4.3. COMING TO THE OTHER PARTY I.E., OIL & GAS DRILLING CO., IT IS SEEN THAT APPELLANT HAS CREDITED RS. 11,56,003/ - IN THE BOOKS WHEREAS CERTIFICATES ARE SHOWING FIGURES OF RS. 20,64,173/ - LEAVING A GAP OF RS. 9,08,170/ - . THE APPELLANT HAS SUBMITTED THAT THIS DIFFERENCE HAS COME BECAUSE OF WRONG ISSUANCE OF TDS CERTIFICATE TWICE FOR THE AMOUNT OF RS. 9,23,635/ - FIRST FOR THE ENTIRE GROSS AMOUNT AND THEN AGAIN ON 31.3.2007 FOR RS. 7,37,000/ - , RS. 78,200/ - AND RS. 1,08,435/ - [TOTAL RS. 9,23,635/ - ]. THE APPELLANT HAS FURNISHED CERTIFIED LEDGER ACCOUNT OF THE SAID PARTY AND IT IS SEEN THAT TDS FOR THE AMOUNT OF RS. 51,814/ - H AS BEEN PAID BY THE APPELLANT TO OIL & GAS DRILLING CO TO REIMBURSE THE AMOUNT TO THEM WHICH THEY HAD PAID TO THE GOVERNMENT ON BEHALF OF THE APPELLANT. THUS, THE GAP OF RS. 9,08,170/ - IN THE CASE OF OIL & GAS DRILLING CO. IS ALSO RECONCILED. ..... 10 . TH E AFORESAID FINDING OF THE CIT (A) IS HEREBY AFFIRMED IN THE ABSENCE OF ANY INFIRMITY HAVING BEEN ESTABLISHED BY THE REVENUE BEFORE US. 5 11 . COMING TO THE THIRD PARTY I.E., M.I. OVERSEAS, THE CONTRACT RECEIPT AS PER THE TDS CERTIFICATE IS RS. 58,10,478/ - WHEREAS THE AMOUNT CREDITED IN THE PROFIT & LOSS ACCOUNT WAS TO THE TUNE OF RS. 56,43,098 / - . THE ASSESSING OFFICER HAS TAKEN THE RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT AS RS. 39,30,631/ - . THE CIT (A) HAS NOTED THE RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT DIFFERENT FROM WHAT THE ASSESSING OFFICER HAS NOTED. IN THIS CONTEXT, THE LD REPRESENTATIVE FOR THE ASSESSEE HAS REFERRED TO PAGE 9 OF THE PAPER BOOK WHEREIN IS PLACED A PARTY WISE RECONCILIATION OF THE AMOUNTS CREDITED IN THE PROFIT & LOSS ACCOUNT AND AS PER THE TDS CERTIFICATES ISSUED BY THE RESPECTIVE PARTIES, WHICH SUPPORTS THE STAND OF THE CIT (A). AS THE FINDING OF THE CIT (A) IS BASED ON MATERIAL, WHICH HAS NOT DEMONSTRATED TO BE INFIRM, WE UPHOLD THE SAME. WITH REGARD TO THE DIFFER ENCE WITH THE RECEIPTS AS PER THE TDS CERTIFICATES, THE CIT (A) HAS NOTED THAT ONE BILL OF RS. 1,96,420/ - WAS RAISED BY THE ASSESSEE IN MARCH 2006, WHICH WAS ACCOUNTED FOR IN THE PRECEDING YEAR WHEREAS THE SAID CONCERN ACCOUNTED FOR IT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AS THE REQUISITE TAX WAS DEDUCTED AT SOURCE ON 4.4.2006, A DATE WHICH FALLS IN THE CURRENT ASSESSMENT YEAR. AS PER THE CIT (A), IF THE AFORESAID COPY IS CONSIDERED, THE RECEIPTS SHOWN IN THE TDS CERTIF ICATE VIS - A - VIS THE RECEIPTS SHOWN IN THE PROFIT & LOSS ACCOUNT WOULD BE RECONCILED. ON THIS ASPECT ALSO, WE FIND THAT THE FINDING RECORDED BY THE CIT (A) IS BORNE OUT OF THE MATERIAL ON RECORD NAMELY THE COPIES OF THE LEDGER ACCOUNT OF THE SAID CONCERN, WHICH IS PLACED AT PAGES 14 TO 16, WHICH IS DULY CERTIFIED. IN THE ABSENCE OF ANY MATERIAL TO CONTRARY, WE AFFIRM THE ORDER OF THE CIT (A) ON THIS ASPECT AND ACCORDINGLY THE REVENUE FAILS ON THIS ASPECT. 12. THUS, IN SO FAR AS THE APPEAL OF THE REVENUE IS CONCERNED, THE SAME IS DISMISSED. 13. NOW, WE MAY TAKE UP THE CROSS OBJECTION OF THE ASSESSEE, WHEREIN THE ACTION OF THE CIT (A) IN UPHOLDING THE DISALLOWANCE OF RS. 50,000/ - OUT OF LOADING AND UNLOADING CHARGES HAS BEEN SUSTAINED. IN THIS CONTEXT, THE CIT (A) NOTED THAT THERE WAS A TOTAL EXPENSE OF RS. 13,41,007/ - UNDER THE HEAD LOADING AND UNLOADING CHARGES, WHICH WAS SUPPORTED ONLY BY THE SELF - MADE VOUCHERS. HE, THEREFORE, 6 AFFIRMED THE ACTION OF THE ASSESSING OFFICER IN MAKING A LUMP SUM AD - HOC DI SALLOWANCE OF RS. 50,000/ - . THE UNVERIFIABILITY OF THE EXPENDITURE ON ACCOUNT OF SELF - MADE VOUCHERS IS NOT DISPUTED BY THE ASSESSEE AND ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH THE ACTION OF THE CIT (A) IN RETAINING A DISALLO WANCE OF RS. 50,000/ - ON THIS COUNT. WE AFFIRM THE SAID ACTION OF THE CIT (A) AND THE ASSESSEE FAILS ON THIS ASPECT. 14. RESULTANTLY, THE APPEAL OF THE REVENUE AS WELL AS THE CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 29 TH MAY, 2015. SD/ - SD/ - ( SANJAY GARG ) ( G.S. PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 29 .5 .2015 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI