ITO, Hubli V. Shri. Bhimaraddy K. Kurtakoti, Dharwad

ITA 909/BANG/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6930 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-10-2011
• Assessment Year: misc
• Appeal Filed On: 16-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: ATUL K ALUR
• Section: 148

Judgement Text

PAGE 1 OF 6 ITA NO.909/BANG/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, J.M ITA NO.909/BANG/2010 (ASSESSMENT YEAR 2004-05) THE INCOME TAX OFFICER, WARD-2(1), HUBLI. - APPELLANT VS SHRI BHIMAREDDY K KURTAKOTI, PROP: VENKATESHWAR TRANSPORT, KURTAKOTI COMPOUND, REDDY COLONY, SARSWATPUT, DHARWAD. - RESPONDENT PA NO. ADCPK 8098 B DATE OF HEARING : 11/10/2011 DATE OF PRONOUNCEMENT : 11/10/2011 APPELLANT BY : SMT. SUSAN THOMAS JOSE, JCIT RESPONDENT BY : SHRI ATUL K ALUR, ADVOCATE ORD ER PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE DEPARTM ENT IS DIRECTED AGAINST THE ORDER OF CIT(A), HUBLI DATED 07.04.2010. THE R ELEVANT ASST. YEAR IS 2004-05. 2. THE SOLITARY ISSUE THAT IS RAISED IS WHETHER TH E CIT(A) IS JUSTIFIED IN DELETING THE ADDITION TO THE EXTENT OF RS.9,25,549/-. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN TRANSPORT BUSINESS IN THE NAME OF SHRI VENKATESHWAR A TRANSPORT. IT MAINLY UNDERTAKES TRANSPORT CONTRACT WITH HINDUSTAN PETROLEUM PAGE 2 OF 6 ITA NO.909/BANG/2010 2 CORPORATION LTD. (HPCL) AND BHARAT PETROLEUM CORPOR ATION LTD. (BPCL). FOR THE CONCERNED ASST. YEAR, RETURN OF INC OME WAS FILED ON 1.11.2004 DECLARING TOTAL INCOME OF RS.6,06,708/- AND AGRICULTURAL INCOME OF RS.1,20,000/-. THE RETURN WAS PROCESSED U /S 143(1) OF THE ACT AND REFUND WAS DULY ISSUED TO THE ASSESSEE. 3.1 LATER, NOTICE U/S 148 WAS ISSUED TO THE ASSESS EE. THE BACKGROUND FOR ISSUANCE OF NOTICE U/S 148 IS AS FOL LOWS:- IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A SST. YEAR 2005-06, THE AO VERIFIED THE BANK ACCOUNT (OD) OF THE ASSESSEE WITH KARNATAKA BANK LTD., DHARWAD. HE NOT ICED A SUM OF RS.13,57,543/- WAS CREDITED IN THE SAID BANK ACCOUN T IN THE MONTH OF APRIL, 2004, BEING HIRE CHARGES RECEIVED FROM HPCL AND BPCL. THE ASSESSEE SUBMITTED THAT THESE HIRE CHARGES CREDITED TO THE BANK ACCOUNT IN THE MONTH OF APRIL, 2004 ACTUALLY PERTAI NS TO THE AMOUNTS RECEIVABLE AND RELATES TO THE TRANSPORTATION CHARGE S DUE FOR THE ASST. YEAR 2004-05; BUT THE PAYMENTS WERE RECEIVED IN THE ASST. YEAR 2005-06 (APRIL, 2004). THE AO NOTICED THAT SINCE T HE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE ASSE SSEE OUGHT TO HAVE SHOWN THIS AMOUNT OF RS.13,57,543/- AS HIRE CH ARGES RECEIVABLE IN THE BALANCE SHEET AS ON 31.3.2004 AND OUGHT TO HAVE OFFERED THE SAME FOR TAXATION IN THE CONCERNED ASST . YEAR, NAMELY, AY 2004-05. THIS FORMED THE BASIS FOR REOPENING TH E ASSESSMENT U/S 148 OF THE ACT. 3.2 IT WAS CONTENDED BY THE ASSESSEE THAT THE GROS S RECEIPT WAS DECLARED AS PER THE TDS CERTIFICATE ISS UED TO HIM BY THE BPCL AND HPCL. IT WAS SUBMITTED THAT HE HAD PREPAR ED INCOME AND EXPENDITURE ACCOUNT BY TAKING THE GROSS RECEIPT AS P ER THE TDS CERTIFICATE, AS IF THE SAID SUM OF RS.13,57,543/- I S ALREADY BEEN PAGE 3 OF 6 ITA NO.909/BANG/2010 3 RECEIVED BY 31.3.2004, THOUGH CREDITED IN ASSESSEE S BANK ACCOUNT ONLY IN APRIL, 2004. THIS CONTENTION RAISED BEFORE THE AO WAS REJECTED AND RE-ASSESSMENT WAS COMPLETED U/S 143 R. W.S. 147 OF THE ACT VIDE ORDER DATED 10.12.2008 BY BRINGING TO TAX T HE HIRE CHARGES AMOUNTING TO RS.13,56,543/- FOR THE CONCERNED ASST. YEAR. THE RELEVANT FINDING OF THE AO AT PAGE 4 READS AS FOLLO WS:- IN THE LIGHT OF THE ABOVE FACTS, THERE IS NO MERIT S IN THE ARGUMENT OF THE ASSESSEE AND UNDER THE CIRCUMSTANCES, THE ACTUAL AMOUNT REPRESENTING THE HIRE CHARGES DUE AND RECEIVABLE FOR THE YEAR ENDED 31.3.2004 BUT ACTUALLY RECEIVED IN APRIL 2004 AMOUNTING TO RS.13,56,542/- (THERE IS A MISTAKE IN QUANTIFICATION OF CORRECT AMOUNT WHICH SHOULD BE ACTUALLY RS.13,56,542/- AS AGAINST RS.13,57,343/-) IS RIGHTLY BROUGHT TO TAX FOR THE AY 2004-05 AS THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING ACCORDINGLY TO WHICH THE UNDERLINING PRINCIPLE OF RECOGNITION OF INCOME IS ON DUE BASIS OR ACCRUAL BASIS. 4. THE ASSESSEE BEING AGGRIEVED CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. IT WAS SUBMITTED THAT THE ASSESSEE HAS TAKEN TH E ENTIRE GROSS RECEIPTS FOR THE ASST. YEAR 2004-05 INCLUDING THE AMOUNT CREDITED IN THE BANK ACCOUNT IN THE MONTH OF APRIL, 2004. HENCE, THE ADDITION OF THE RECEIPT IN THE MONTH OF APRIL, 2004 AGAIN AS INCOME FOR THE ASST. YEAR 2004-05 IS NOT CORRECT. BY MAKI NG THIS ADDITION, IT WAS SUBMITTED, THE SAME AMOUNT IS ADDED TWICE IN TH E SAME ASST. YEAR. THE FIRST APPELLATE AUTHORITY AFTER PERUSING THE TDS CERTIFICATES ISSUED BY THE PAYER, NAMELY, HPCL AND BPCL, DELETED AN AMOUNT OF RS.9,25,549/- OUT OF THE TOTAL ADDITIO N MADE BY THE AO AMOUNTING TO RS.13,56,542/- THE ADDITION TO THE TU NE OF PAGE 4 OF 6 ITA NO.909/BANG/2010 4 RS.4,30,993/- WAS UPHELD BY THE FIRST APPELLATE AUT HORITY. THE RELEVANT FINDING OF THE FIRST APPELLATE AUTHORITY R EADS AS FOLLOWS:- IT HOWEVER, IS SEEN THAT OUT OF THE TOTAL AMOUNT O F RS.13,56,542/- THE AMOUNT OF RS.9,25,549/- (RS.5,76,100 + 34,94,491) ONLY IS FOUND COVERED BY THE TDS CERTIFICATES ISSUED TO THE APPELLANT BY BPCL AND HPCL RESPECTIVELY. THEREFORE, THE AMOUNT OF RS.9,25,549/- ONLY IS PROVED TO HAVE BEEN INCLUDED IN HIS GROSS RECEIPTS BY THE APPELLANT WHILE ARRIVING AT THE INCOME DECLARED IN THE RETURN AND FURTHER ADDITION AMOUNTS DOUBLE ADDITION TO THIS EXTENT AND THE BALANCE AMOUNT OF RS.4,30,993/- IS NOT FOUND TO HAVE BEEN INCLUDED IN THIS GROSS RECEIPTS. IN THE RESULT, THE APPELLA NT GETS RELIEF OF RS.9,25,549/- AND THE ADDITION TO TH E TUNE OF RS.4,30,993/- IS UPHELD. 6. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 7. THE LEARNED DR SUBMITTED THAT THE CIT(A) HAS ER RED IN DELETING THE ADDITION OF RS.9,25,549/- BY HOLDING T HAT THE SAID AMOUNT IS INCLUDED IN THE TDS CERTIFICATES ISSUED F OR THE AY 2004- 05. IT WAS CONTENDED THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT EVEN THOUGH THE SAID SUM OF RS.9,25,549/- HAS BEEN INCLUDED IN THE TDS CERTIFICATES, THE SAME IS NOT ACCOUNTED FOR BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. IN CASE, THE SAID SUM IS AC COUNTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE ASSESSEE OUG HT TO HAVE SHOWN THE SAME AS HIRE CHARGES RECEIVED/SUNDRY DEBT ORS IN HIS BOOKS OF ACCOUNTS AS ON 31.3.2004. IT WAS FURTHER SUBMITTED THAT SINCE THE BALANCE SHEET AS ON 31.3.2004 DID NOT SHO W THIS AMOUNT AS SUNDRY DEBTORS/HIRE CHARGES RECEIVABLE, IT IS A CLEAR INDICATION THAT THE SAID AMOUNT OF RS.9,25,549/- IS NOT ACCOUN TED FOR BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS FOR THE CONCERNED ASST. YEAR, NAMELY, 2004-05. PAGE 5 OF 6 ITA NO.909/BANG/2010 5 8. THE LEARNED AR SUBMITTED THAT PURSUANT TO THE IMPUGNED ORDER OF THE FIRST APPELLATE AUTHORITY, TH E AMOUNT OF RS.9,25,549/- DELETED FOR THE CONCERNED ASST. YEAR NAMELY AY 2004- 05 WAS ADDED FOR THE AY 2005-06 BY REOPENING THE AS SESSMENT U/S 148 OF THE ACT. A COPY OF THE ASSESSMENT ORDER FOR THE AY 2005-06, DATED 29.10.2010 IS PLACED ON RECORD. HE PLEADED T HAT THE SAME AMOUNT CANNOT BE TAXED TWICE AND THEREFORE, THE MATT ER SHOULD BE REMITTED BACK TO THE AO FOR A DENOVO CONSIDERATION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICED THAT THE AMOUNT DELE TED BY THE FIRST APPELLATE AUTHORITY HAS BEEN ADDED IN ASSESSMENT CO MPLETED FOR AY 2005-06 (VIDE ORDER DATED 29.10.2010). IT IS A CAS E OF THE ASSESSEE THAT THE ENTIRE RECEIPT OF RS.13,56,542/- RECEIVED FROM THE BPCL & HPCL HAS BEEN DECLARED IN THE RETURN OF INCOME FILE D BY HIM FOR THE AY 2004-05. THIS CONTENTION OF THE ASSESSEE HAS BE EN PARTLY ACCEPTED BY THE FIRST APPELLATE AUTHORITY. THE FIRS T APPELLATE AUTHORITY HELD THAT RS.9,25,549/- HAS BEEN DISCLOSE D BY THE ASSESSEE IN HIS RETURN OF INCOME FOR THE CONCERNED ASST. YEAR. SINCE WE HAVE NOTICED THAT THE AMOUNT DELETED BY TH E FIRST APPELLATE AUTHORITY HAS BEEN BROUGHT TO TAX IN THE SUBSEQUENT YEAR, IT IS ONLY IN THE INTEREST OF JUSTICE, THE ISSUE NEEDS TO BE RESO LVED BY THE AO TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS . IT IS FUNDAMENTAL PRINCIPLE THAT THE INCOME IS TO BE TAXED IN THE CORR ECT ASST. YEARS DEPENDING UPON THE SYSTEM OF ACCOUNTING THAT IS FOL LOWED BY THE ASSESSEE AND IT IS ALSO FUNDAMENTAL THAT THE INCOME CANNOT BE TAXED TWICE. THEREFORE, THE MATTER IS REMITTED TO THE AO . HE SHALL EXAMINE THE YEAR OF ASSESSABILITY OF THE SUM OF RS.9,25,549 /- DELETED BY THE CIT(A) AND BRING THE SAME TO TAX IN ACCORDANCE WITH LAW. PAGE 6 OF 6 ITA NO.909/BANG/2010 6 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED ON THE 11 TH DAY OF OCTOBER, 2011 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.