M/s. Aasita International Pune, Ahmedabad V. The Income Tax Officer, Ward-7(1), Ahmedabad

ITA 837/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94703 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALA PHILIPS
• Assessee Lawyers: M K PATEL
• Section: 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 837/AHD/2014 / ASSESSMENT YEAR: 2005-06 M/S AASITA INTERNATIONAL PUNE, 7, SAURASHTRA, VISHWAKARMA SOCIETY, JIVRAJPARK, AHMEDABAD PAN : AAGFA 9406 Q VS. THE ITO, WARD-7 (1), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M K PATEL, AR REVENUE BY : SHRI LALA PHILIPS, SR DR. !'# / DATE OF HEARING : 17/11/2015 / DATE OF PRONOUNCEMENT: 19/11/2015 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXI, AHMEDABAD DATED 20.01.2014 PASSED FOR ASSESSMENT YEAR 2005-06. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY AMOUNTING T O RS.76,471/- U/S 271B OF THE INCOME-TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME ON 28.03.2007 DECLARING TOTAL INCOME OF RS.5 ,81,224/-. ON SCRUTINY OF THE ACCOUNTS, IT WAS FOUND THAT THE ASSESSEE HAS MA DE A CLAIM FOR TDS REFUND TO THE EXTENT OF RS.3,58,487/- ON THE TOTAL RECEIPTS OF RS.1,52,94,191/-. ACCORDING TO THE ASSESSING OFFICER, THE GROSS RECEI PTS OF THE ASSESSEE WAS MORE THAN RS.40 LACS AND THEREFORE, IT WAS REQUIRED TO GET ITS ACCOUNTS ITA NO. 837/AHD/2014 AASITA INTERNATIONAL VS. ITO FOR AY: 2005-06 2 AUDITED U/S 44AB OF THE INCOME-TAX ACT. THE ASSESS EE DID NOT FILE TAX AUDIT REPORT. HENCE, THE ASSESSING OFFICER HAD ISSUED A S HOW-CAUSE NOTICE U/S 271B ON 22.03.2012 ASKING THE ASSESSEE, AS TO WHY P ENALTY U/S 271B AMOUNTING TO RS.76,471/- SHOULD NOT BE LEVIED UPON THE ASSESSEE QUA THE ALLEGED TURNOVER/GROSS RECEIPTS OF RS.1,52,94,191/- . THE EXPLANATION OF THE ASSESSEE HAS BEEN REPRODUCED BY THE LEARNED FIRST A PPELLATE AUTHORITY. IN BRIEF, THE CASE OF THE ASSESSEE HINGES UPON FOLLOWI NG LINE OF ARGUMENTS:- 'IN THIS REGARD WE HAVE TO SUBMIT THAT WE ARE CARRY ING ON THE BUSINESS OF CUSTOM HOUSE CLEARING AND FORWARDING AGENT. WE HAV E BEEN GIVEN LICENSE BY CUSTOMS DEPARTMENT TO ACT AS CUSTOM HOUSE AGENT (CH A). WE PROVIDE SERVICES IN RESPECT OF CLEARING AND FORWARDING OF G OODS OF OUR CLIENTS WHICH ARE IMPORTED TO INDIA OR EXPORTED OUT OF INDIA BY T HEM. WE RECEIVE AGENCY COMMISSION FROM OUR CLIENTS FOR PROVIDING THIS SERV ICE. REGULAR INVOICES ARE ISSUED BY US TO OUR CLIENTS FOR PROVIDING THIS SERV ICE. DURING THE YEAR WE HAD ISSUED SUCH INVOICES OF RS. 32,13,650/- WHICH WAS O UR ACTUAL TURNOVER. DURING THE COURSE OF OUR BUSINESS WE ACT AS AN AGEN T OF OUR CLIENT FOR CLEARING OF THEIR GOODS FROM CUSTOMS AND FORWARDING THE SAME TO THEIR DESTINATION. DURING THIS PROCESS CERTAIN EXPENSES L IKE CUSTOMS DUTY, TRANSPORTATION/FREIGHT CHARGES, FORKLIFT CHARGES ET C ARE REQUIRED TO BE PAID. WE ACT AS AN AGENT OF OUR CLIENTS AND THEREFORE WE PAY THESE FOR AND ON BEHALF OF OUR CLIENTS. AS THESE EXPENSES ARE PAID BY US FOR AND ON BEHALF O F OUR CLIENTS, WE ISSUE SEPARATE DEBIT NOTE TO THEM FOR REIMBURSEMENT OF SU CH EXPENSES. ORIGINAL COPIES OF VOUCHERS ARE SUBMITTED BY US TO OUR CLIEN TS ALONG WITH THIS DEBIT NOTE. AFTER THAT OUR CLIENTS REIMBURSE SUCH EXPENSE S TO US. DURING THE YEAR WE HAD RECEIVED RS. 1,20,80,541/- AS REIMBURSEMENT OF SUCH EXPENSES FROM OUR CLIENTS. HOWEVER, OUR CLIENTS WHILE REIMBURSING THESE EXPENS ES TO US, DEDUCT TDS FROM THESE REIMBURSEMENTS TO AVOID DISALLOWANCE U/S 40(A). THIS RESULTS INTO TDS BEING DEDUCTED ON AN AMOUNT WHICH DOES NOT FORM PART OF INCOME OR TURNOVER. THIS IS THE REASON FOR HIGHER TDS SHOWN I N OUR RETURN OF INCOME WHICH TED CO THE INFERENCE BY THE LEARNED ASSESSING OFFICER THAT OUR TURNOVER IS HIGHER WE HAVE FAILED TO GET OUR ACCOUNTS AUDITE D. SAMPLE COPIES OF INVOICES ISSUED BY US TO OUR CLIEN TS FOR SERVICES RENDERED BY US AND DEBIT NOTES ISSUED BY US TO OUR CLIENTS FOR REIMBURSEMENT OF EXPENSES ALONG WITH SUPPORTING VOUCHERS OF SUCH EXPENSES ORE ATTACHED HEREWITH. ITA NO. 837/AHD/2014 AASITA INTERNATIONAL VS. ITO FOR AY: 2005-06 3 IT IS RESPECTFULLY SUBMITTED THAT THESE EXPENSES AR E PAID FOR AND ON BEHALF OF OUR CLIENTS AS AN AGENT. THEY ARE NEITHER OUR INCOM E NOR OUR EXPENSES. THEREFORE WHEN THESE EXPENSES ARE REIMBURSED TO US BY OUR CLIENTS, THEY ARE NOT PART OF OUR INCOME OR TURNOVER. IN THE BOOKS OF ACCOUNTS ALSO WE DO NOT RECORD THES E EXPENSES WHICH ARE PAID FOR AND ON BEHALF OF OUR CLIENTS AS OUR INCOME. WE DEBIT THE AMOUNTS PAID FOR AND BEHALF OF OUR CLIENTS TO CLIENT'S ACCOUNT. AND CR EDIT THEIR ACCOUNT WHEN WE RECEIVED THE AMOUNTS BACK AS REIMBURSEMENT. IN CASE OF BROKERS OR ARAHTIAS, EVEN SALES EFFECTED BY THEM ON BEHALF OF THEIR PRINCIPALS ARE NOT CONSIDERED AS THEIR TURNOVER AS PER CBDT CIRCULAR NO. 452 DT. 17/03/1986 BECAUSE THEY ACT AS AN AGENT OF THEIR PRINCIPAL. IN OUR CASE ALSO WE ACT AS AGENT OF OUR CLIENTS AND PAY CE RTAIN AMOUNTS WHICH ARE REIMBURSED TO US ON ACTUAL BASIS, APPLYING THE SAME PRINCIPAL AS CONTAINED IN THE CIRCULAR, SUCH REIMBURSEMENTS CAN NOT BE CON SIDERED AS OUR TURNOVER. 4. THE LEARNED ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE IMPOSED PENALTY OF RS.76,471/- WHICH IS HALF PERCENT OF THE ALLEGED GROSS TURNOVER OF RS.1,52,94,191/-. AP PEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE ISSUE BEFORE US IS WHETH ER REIMBURSEMENT OF ACTUAL EXPENDITURE ON WHICH THE PAYER HAS DEDUCTED TDS OUGHT TO BE CONSIDERED BY THE ASSESSEE AS A GROSS RECEIPTS OR T HE ASSESSEE WAS UNDER A BONA FIDE IMPRESSION THAT REIMBURSEMENT OF EXPENDITURE DOES NOT INVOLVE ELEMENT OF INCOME AND NOT REQUIRED TO BE CONSIDERED AS A PART OF GROSS TURNOVER. AFTER PERUSING VARIOUS INVOICES RAISED B Y THE ASSESSEE ON ITS CLIENTS WHICH ARE PLACED IN THE PAPER-BOOK, WE ARE OF THE VIEW THAT THE ASSESSEE REMAINED UNDER A BONA FIDE IMPRESSION THAT THE EXPENDITURE INCURRED ON BEHALF OF ITS CLIENTS REGARDING PAYMENT OF CUSTOMS DUTY, TRANSPORTATION/FREIGHT CHARGES, FORKLIFT CHARGES, E TC. WERE NOT REQUIRED TO BE RETAINED BY THE ASSESSEE. THEREFORE, THEY WILL NOT FALL IN ITS GROSS RECEIPTS. SUCH IMPRESSION MAY NOT BE TENABLE ON THE STRICT IN TERPRETATION OF THE ITA NO. 837/AHD/2014 AASITA INTERNATIONAL VS. ITO FOR AY: 2005-06 4 PROVISION; BUT, WE DO NOT SEE ANY MALAFIDE INTENTIO N BY THE ASSESSEE, IN FORMING A BELIEF THAT SUCH AN AMOUNT WILL NOT BECOM E PART OF THE GROSS TURNOVER AND THEREFORE, IT IS NOT REQUIRED TO GET I TS ACCOUNTS AUDITED. TO OUR MIND, THE ASSESSEE HAS GIVEN A PLAUSIBLE EXPLANATIO N FOR NOT GETTING THE ACCOUNTS AUDITED AND THEREFORE, IT DOES NOT DESERVE TO BE VISITED WITH PENALTY U/S 271B OF THE INCOME-TAX ACT. WE, THEREF ORE, ALLOW THE APPEAL OF ASSESSEE AND DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 19/11/2015 BIJU T., PS !&''()(*' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' # / CONCERNED CIT 4. ' # ( ) / THE CIT(A) 5. &'( ! , ! , / DR, ITAT, AHMEDABAD 6. (- ./ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD