Ascend Telecom Infrastructure Pvt.Ltd., Hyd, Secunderabad V. DCIT, Circle-1(1), Hyd, Hyderabad

ITA 822/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2725 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 01-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L R AMJI RAO
• Assessee Lawyers: T SURYANARAYANA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A. NO. 822/HYD/2016 ASSESSMENT YEAR: 2008-09 ASCEND TELECOM INFRASTRUCTURE PRIVATE LIMITED, SECUNDERABAD [PAN: AAECA2381H] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI T. SURYANARAYANA, AR FOR REVENUE : SHRI L. RAMJI RAO, DR DATE OF HEARING : 10-08-2017 DATE OF PRONOUNCEMENT : 11-08-2017 O R D E R PER CHANDRA POOJARI, A.M. : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, HYDERABAD, DATED 22-02-2016. ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) (CIT(A)) HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFF ICER (AO) WITHOUT ANY BASIS. 2. THE LEARNED CIT(A) AND THE LEARNED AO ERRED IN C OMPARING THE GROSS RECEIPTS AS PER TDS CERTIFICATES WITH SALES INCOME AS PER PROFIT AND LOSS ACCOUNT. THE LEARNED CIT(A) AND AO OUGHT TO HAVE CO MPARED THE GROSS RECEIPTS AS PER TDS CERTIFICATES WITH THE AGGREGATE OF THE GROSS RECEIPTS AS PER PROFIT AND LOSS ACCOUNT AND THE AMOUNTS RECEIVE D ON ACCOUNT OF REIMBURSEMENTS ON WHICH TAXES WERE WITHHELD WHICH F ORMED PART OF THE BALANCE SHEET. I.T.A. NO. 822/HYD/2016 :- 2 - : 3. THE LEARNED CIT(A) AND THE LEARNED AO HAVE ERRED IN TREATING THE DIFFERENCE BETWEEN THE RECEIPTS AS PER TDS CERTIFIC ATES AND THE RECEIPTS AS PER PROFIT AND LOSS ACCOUNT AS THE INCOME OF THE AP PELLANT. 4. THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE APPELLANT HAS NOT PROVIDED ANY CONFIRMATION FROM TELECOM OPERATORS WI THOUT CONSIDERING THE FACT THAT THE APPELLANT HAD PROVIDED THE STATEMENT OF ACCOUNTS FROM SUCH OPERATORS AND THIS FACT WAS STATED BY THE LEARNED C IT(A) IN THE ORDER. 5. THE LEARNED CIT(A) HAS ERRED IN CONCLUDING THAT THE ENTRIES HIGHLIGHTED IN THE LEDGER ACCOUNTS IN THE APPELLANT'S BOOK DO N OT MATCH WITH THE ENTRIES IN THE BANK STATEMENT OF THE APPELLANT. 6. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE BILLS/INVOICES IN CONNECTION WITH REIMBURSEMENTS WE RE SUBMITTED BEFORE THE LEARNED CIT(A). 7. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ALL OR ANY OF THE AFORESTATED GROUNDS OF APPEAL. FOR THE ABOVE AND AN Y OTHER GROUNDS WHICH MAY BE REVISED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) BE SET ASIDE. 2. THE FACTS OF THE CASE ARE THAT, THE ASSESSEE-COMPANY ADMITTED GROSS RECEIPTS OF RS. 14,89,93,329/- AND CLAI MED CREDIT FOR TDS OF RS. 1,97,41,906/-. THE ASSESSEE WAS ASK ED TO RECONCILE THE RECEIPTS AS PER TDS CERTIFICATES AND AS PER BOOKS OF ACCOUNT. AS PER TDS CERTIFICATES, THE GROSS RECEIPTS WORKS OUT TO RS. 16,98,58,285/-. THEREFORE, THERE WAS A DIFFERENCE OF RS. 2,08,64,956/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE. THE ASSESSEES EXPLANATION WAS THAT IT HAD RENDERED CE RTAIN SERVICES TO THE PAYERS I.E., TELECOM OPERATORS SUCH AS BHARTI AIRTEL, IDEA CELLULAR ETC., WHO STATED TO HAVE REIMBURSED SUCH EXPENDITURE AND DEDUCTED TDS THEREON. IT WAS CLAIMED THAT SINCE IT W AS PURELY REIMBURSEMENT OF EXPENDITURE, THE ASSESSEE NEED NOT CON SIDER THE SAME AS RECEIPTS. ACCORDING TO THE ASSESSEE, EVEN THOU GH NO TDS WAS WARRANTED THE PAYERS HAVE DEDUCTED TAX AT SOURCE. T HE ASSESSEE WAS ASKED TO FURNISH NECESSARY DOCUMENTARY E VIDENCE OF I.T.A. NO. 822/HYD/2016 :- 3 - : REIMBURSEMENT OF EXPENDITURE BY WAY OF CONFIRMATION FR OM THE DEDUCTORS. THE ASSESSEE INSTEAD OF PRODUCING CONFIR MATIONS OR ANY OTHER DOCUMENTARY EVIDENCE MERELY PRODUCED ITS OWN LED GER. IN THE ABSENCE OF CONFIRMATION BY THE PARTIES INVOLVED, A O UNABLE TO ACCEPT ASSESSEES CLAIM. WHEN IT WAS PROPOSED TO ADD BACK THE DIFFERENCE AMOUNT BY AO, THE ASSESSEE MADE AN ALTERN ATE CLAIM THAT IN THE ADJUSTED COMPUTATION OF INCOME IT HAD SHOWN AN INCOME OF RS. 10,94,57,013, WHICH MAY BE CONSIDERED IN THIS REGARD. HOWEVER, IT WAS SEEN THAT THE ASSESSEE CLAIMED AN EXPENDITURE OF RS. 10,72,50,920/- TOWARDS THE SAID AM OUNT (REIMBURSEMENT OF EXPENSES ACCOUNT). IF THOSE TWO ITE MS WERE NETTED OFF, EFFECTIVELY AN INCOME OF RS. 22,06,093/- WAS OFFERED TO TAX. THIS WAS NETTED OFF AGAINST THE PROPOSED ADDITION. HENCE, THE NET DIFFERENCE OF RS. 1,86,58,863/- WAS TREATED AS IN COME OF THE ASSESSEE. AGAINST THE SAME, ASSESSEE WENT IN APPEAL BE FORE THE CIT(A). 3. THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO BY OB SERVING THAT THE ASSESSEE SUBMITTED THAT THIS AMOUNT REFLECT THE EXPENDITU RE INCURRED ELECTRICITY CHARGES AND DIESEL CHARGES. AS PER THE AGREEMENT THESE EXPENDITURES WERE SUPPOSED TO BE REIMBU RSED BY THE TELECOM OPERATORS LIKE IDEA CELLULAR LIMITED, VODA FONE ESSAR LIMITED, SPICE COMMUNICATION & TATA TELESERVICES ETC. 3.1. THE LD.CIT(A) ALSO OBSERVED THAT THE ASSESSEE WA S ASKED TO PRODUCE THE CONFIRMATION OF THE PAYMENT TO THE RESPECTIVE TELECOM OPERATORS. THE ASSESSEE SUBMITTED BEFORE CIT(A) THAT TH E LEDGER ACCOUNTS, WHICH WAS ALREADY PRODUCED BEFORE THE AO AN D AGREEMENT COPIES. NO CONFIRMATION WAS SUBMITTED BY ASS ESSEE. I.T.A. NO. 822/HYD/2016 :- 4 - : THE ACCOUNT TELECOM OPERATORS WERE PRODUCED. THE BANK ACCOUNT COPY OF THE ASSESSEE WAS PRODUCED TO SHOW THE RECEIPT S. HOWEVER, IN THE ASSESSEE BANK ACCOUNT, ENTRIES COULD NOT MATCH W ITH THE CHEQUE NUMBERS. THE ENTRIES HIGHLIGHTED BY THE ASSESS EE COULD NOT BE MATCHED WITH THE LEDGER ACCOUNT OF THE IDEA CELLU LAR AND SPICE COMMUNICATION. IN ABSENCE OF CONFIRMATION AND REIMBURSEMENT BY THE TELECOM OPERATORS AND ALSO IN THE BANK ACCOUNT OF THE ASSESSEE, THIS COULD NOT PROVE THAT THIS A MOUNT WAS ACTUALLY REIMBURSED. FINALLY, CIT(A) DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND DISMISSED THE APPEAL FILED BY HIM. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PRIMARY OBJECTION OF THE AS SESSEE IS THAT ASSESSEE FILED THE REVISED COMPUTATION OF INCOME BEFO RE THE AO SHOWING THE ADDITIONAL INCOME OF RS. 10,94,57,013, A GAINST WHICH, EXPENDITURE WAS CLAIMED AT RS. 10,72,50,920/-. THUS, OFFERED ADDITIONAL INCOME OF RS. 22,06,093/- AND IT HAS TO CON SIDER THE REVISED STATEMENT OF INCOME AND IF IT IS CONSIDERED, THE GROSS INCOME DECLARED BY THE ASSESSEE IS MORE THAN THE RECEI PTS SHOWN IN TDS CERTIFICATES AND THERE CANNOT BE ANY ADDITION TO WARDS ANY DIFFERENCE. 4.1. IN OUR OPINION, THE ARGUMENT OF COUNSEL FOR ASSE SSEE IS NOT VERIFIED BY THE LOWER AUTHORITIES AND THE TURNOVER AND EXPENDITURE SHOWN BY THE ASSESSEE THROUGH THE REVISED STATEMENT OF A CCOUNT BEFORE AO WAS UNVOUCHED AND IT IS REQUIRED TO BE EXA MINED BY THE LOWER AUTHORITIES WITH REFERENCE TO BOOKS OF ACCOUNT MA INTAINED BY ASSESSEE, THEN ONLY IT IS POSSIBLE TO SAY WHETHER ASSE SSEE HAS I.T.A. NO. 822/HYD/2016 :- 5 - : UNACCOUNTED THE RECEIPTS SHOWN IN THE TDS CERTIFICATE P RODUCED BY IT. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE REMIT THE ENTIRE ISSUE- IN-DISPUTE TO THE FILE OF AO WITH A DIRECTION TO ASSESS EE TO EXPLAIN THE ADDITIONAL RECEIPTS SHOWN BY THE ASSESSEE AND ADDI TIONAL EXPENDITURE CLAIMED BY ASSESSEE WITH REFERENCE TO THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. ACCORDINGLY, THE I SSUE IN DISPUTE IS REMITTED TO THE FILE OF AO FOR FRESH CONSIDER ATION TO DECIDE THE SAME AFTER GIVING OPPORTUNITY OF HEARING TO ASSESSEE. 5. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2017 SD/- SD/- (D. MANMOHAN) (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 11 TH AUGUST, 2017 TNMM COPY TO : 1. ASCEND TELECOM INFRASTRUCTURE PRIVATE LIMITED, # 37/2, PLOT NO. 332, MANI MANSION, DEFENCE COLONY, SAINIKP URI, SECUNDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1( 1), HYDERABAD. 3. CIT (APPEALS)-I, HYDERABAD. 4. PR.CIT-I, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.