Smt. Hema M. Pachchigar, Surat V. The Addl.CIT, Range-3, Surat

ITA 920/AHD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6307 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.920/AHD/2015 / ASSTT. YEAR: 2011-2012 HEMA M. PACHCHIGAR 33/1/98, KHANSAHEB NI WADI AMBICA NIKETAN ATHWALINES SURAT. PAN : AAZPD 2823 K VS. ACIT, RANGE-3 SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH, AR REVENUE BY : SHRI ASHISH POPHARE, SR.DR ! / DATE OF HEARING : 07/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 03/04/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-II, SURAT DATED 28.1.2015 PASSED FOR THE ASSTT.YEAR 2011-12. 2. SOLE SUBSTANTIAL GRIEVANCE OF THE ASSESSEE IS TH AT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,71,40, 163/- TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.920/AHD/2015 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. AT THE TIME RELEVANT TIME, SHE WAS ENGAGED IN CIVIL CO NSTRUCTION CONSULTANCY BUSINESS ON JOB WORK BASIS IN THE NAME AND STYLE OF M/S.AAPIL PLANNING CONSULTANCY. SHE HAS FILED HER R ETURN OF INCOME ON 27.9.2011 DECLARING TOTAL INCOME AT RS.17,52,050/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 3.8.2012. ON SCRU TINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT THE ASSESSEE HAS EXECUTE D JOB AWARDED BY THE MUNICIPAL CORPORATION. SHE HAS DISCLOSED GP AT THE RATE OF 13.50% ON THE TOTAL TURNOVER OF RS.9,92,47,244/- AND NET P ROFIT AT THE RATE OF 1.96% ON THE TOTAL TURNOVER OF RS.9,92,47,244/-. HER GP RATE WAS LOWER THAN IMMEDIATELY PRECEDING YEAR, BUT NET PROF IT WAS BETTER IN THIS YEAR. THE LD.AO DID NOT DISTURB GP/NP DISCLOSED BY THE ASSESSEE ON THE TURNOVER ACCOUNTED BY HER. THE LD.AO OBSERVED THAT THE ASSESSEE HAS SHOWN TOTAL RECEIPT OF RS.9,92,47,244/-, WHEREAS ON VERIFICATION OF 26AS I.E. DETAILS OF TDS IT WAS FOUND THAT THE ASSE SSEE HAS RECEIVED TOTAL CONSULTANCY/CONSTRUCTION RECEIPTS OF RS.11,63 ,87,407/-. THERE WAS A DIFFERENCE OF RS.1,71,40,163/- IN THE RECEIPT S SHOWN BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT VIS-A-VIS TDS RETURNED BY THE PAYER. THE LD.AO HAS CONFRONTED THE ASSESSEE AS TO WHY RECEIPT SHOWN BY THE PAYER IN THE TDS DETAILS SHOULD NOT BE CONSI DERED AS RECEIPT OF THE ASSESSEE IN THIS YEAR. IN RESPONSE TO THE SHOW CAUSE, THE ASSESSEE HAS GIVEN THE FOLLOWING REPLY: 4.3. IN RESPONSE TO ABOVE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED HIS REPLY VIDE LETTER DATED 18.2.2014, WH ICH INTER-ALIA READS AS UNDER : WITH REFERENCE TO THE ABOVE MENTIONED SUB JECT AND WITH REFERENCE TO OUR BOOKING OF INCOME NOT MATCHIN G WITH 26AS, WE HEREWITH CLARIFY THAT ASSESSEE HAD ONGOING CONTRACT WITH NANDED WAGHELA MUNICIPAL CORPORATION, NANDED. WORK WAS NOT QUANTIFIED BY CORPORATION WITH IN REASONABLE TIME. PAYMENTS WERE GIVEN AND AS PER CORPORATION'S WORKING. COPIES OF LETTER RECEIVED NA NDED. ITA NO.920/AHD/2015 3 WAGHELA MUNICIPAL CORPORATION, NANDED ARE ATTACHED HEREWITH TO SUPPORT THE FACT OF EXISTENCE OF DISPUT E. DUE TO ONGOING CONTROVERSEY, THE ASSESSEE HAD TO BO OK 76 AS AND WHEN CHEQUE WAS RECEIVED. THAT WAS THE ONLY AVAILAB LE RECOURSE TO THE ASSESSEE TO DETERMINE HER APPROVED. IT CAN B E SEEN FROM 26AS THAT NANDED WAGHELA MUNICIPAL CORPORATION, NAN DED HAS BOOKED ALL HIS TDS FINALLY ON F.Y.2012-13. ALL THE BILLS WERE FINALIZED IN JUNE, 2012 AND SEPTEMBER, 2012 WHICH I S LONG AFTER ASSESSEE HAS FILED HER RETURN OF INCOME. ON THE OTHER HAND, THE ASSESSEE HAS DISCLOSED ALL HER RECEIPT IN THE BOOKS OF ACCOUNTS. THEREFORE, YOUR GOODSELF IS REQUESTED NOT TO MAKE ADDITION OF DIFFERENCE OF INC OME AS COMPARED TO 26AS. 4. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT MUNICIPAL CORPORATION HAS CREDIT ED THE AMOUNTS DURING THIS ACCOUNTING YEAR, AND DEDUCTED TDS. THE ASSESSEE HAS TAKEN CREDIT OF TDS IN THIS YEAR, AND THEREFORE, SH E CANNOT SHIFT THE INCOME EMBEDDED IN THESE RECEIPTS. ACCORDINGLY, HE MADE ADDITION OF RS.1,71,40,163. 5. ON APPEAL, THE LD.CIT(A) HAS CONFIRMED THE ADDIT ION, BUT THE LD.CIT(A) HAS OBSERVED THAT THIS WILL NOT CAUSE A P REJUDICE TO THE RIGHTS OF THE ASSESSEE TO MAKE AN APPROPRIATE APPLICATION BEFORE THE AO AS PER THE PROVISIONS OF THE ACT IN NEXT ASSESSMENT YEAR, BECAUSE THE ASSESSEE HAS CONTENDED THAT SHE HAS ACCOUNTED THESE RECEIPTS IN THE ASSTT.YEAR 2012-13 AND IT WILL AMOUNTED TO DOUBLE TAXATION. 6. OBSERVATIONS OF THE LD.CIT(A) RECORDED IN PARA 6 .1.4 IS WORTH TO NOTE. IT READS AS UNDER: 6.1.4 IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES, I T IS EVIDENT THAT THE APPELLANT WAS FOLLOWING THE MERCAN TILE SYSTEM OF ACCOUNTING AND AS REQUIRED TO INCLUDE ALL RECEIPTS/ INCOME RECEIVED OR ACCRUED IN THE FY 2010-11 IN THE RELEVANT FINANC IAL YEAR ITSELF. THE APPELLANTS CONTENTION THAT THE RECEIPTS OF RS.1 ,71,40,163/- IS ACCOUNTED IN FY 2011-12 IS NOT ACCEPTABLE. HOWEVER , IT DOES NOT PREJUDICE THE LEGAL RIGHTS OF THE APPELLANT TO MAKE APPROPRIATE ITA NO.920/AHD/2015 4 APPLICATION BEFORE THE AO AS PER THE PROVISIONS OF THE ACT, AND THE AO WILL DECIDE ACCORDINGLY AS PER LAW. THE ADDITIO N MADE BY THE AO IS UPHELD AND THE GROUND OF APPEAL IS DISMISSED. 7. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET CONTENDED THAT THESE RECEIPTS HAVE BEEN ACCOUNTED FOR BY THE ASSES SEE IN THE NEXT YEAR, WHEN THE MUNICIPALITY HAS GIVEN HER CHEQUE AN D CONFIRMED THE PAYMENTS. THE ASSESSEE HAS ALSO RECEIVED THESE REC EIPTS IN NEXT YEAR. ALTERNATIVELY, HE CONTENDED THAT THE GROSS RECEIPTS CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. IT IS THE INCOME WHICH IS EMBEDDED IN THE GROSS RECEIPTS WHICH CAN ONLY BE CONSIDERED FOR THE ADDITION. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES BELOW. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. AS FAR AS TAXING OF INCOME EMBED DED WITH REGARD TO THE RECEIPT OF RS.1,71,40,163/- IN THE ASSTT.YAR 20 11-12 IS CONCERNED, WE DO NOT FIND ANY MERIT IN THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE. SIMPLE REASON IS THAT THE ASSESSEE HAS E XECUTED THIS WORK IN THIS YEAR. MUNICIPAL CORPORATION HAS ACCOUNTED THE WORK IN ITS BOOKS AND ALSO CREDITED THE ACCOUNTS OF THE ASSESSEE. TH E ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTANCY. THEREF ORE, SHE HAS TO RECOGNIZE THIS RECEIPT AS HER INCOME HOWEVER, WE FIND FORCE IN THE ALTERNATIVE CONTENTIONS OF THE ASSESSEE. THIS WOUL D AT THE MOST BE ADDED TO THE GROSS RECEIPTS SHOWN BY THE ASSESSEE. THE INCOME PART INVOLVED IN THE GROSS RECEIPTS COULD ONLY BE ADDED IN THE TOTAL INCOME OF THE ASSESSEE. IT IS PERTINENT TO MENTION THAT THE ASSESSEE HAS SHOWN GROSS RECEIPT AT RS.9,92,47,244/- AND SHOWN NET PRO FIT OF RS.19,44,261/- I.E. AT THE RATE OF 1.96%. THE AO HAS MADE THE ADDITION OF RS.1,71,40,163/- AS IF THE ASSESSEE HAS TREATED THE GROSS RECEIPTS OF RS.9,92,47,244/- AS HER INCOME. THE AO TOTALLY FAILED TO APPRECIATE THAT FOR RECEIVING GROSS RECEIPT, SHE MI GHT HAVE INCURRED EXPENDITURE. THEREFORE, HE AT THE MOST CAN CONSIDE R THE INCOME AT THE ITA NO.920/AHD/2015 5 RATE OF 1.96% OF THE TURNOVER REMAINED TO BE ACCOUN TED. IN OTHER WORDS, THE ADDITIONS IS CONFIRMED TO THE EXTENT OF 1.96% OF DIFFERENT I.E. RS.1,71,40,163/-. THE LD.AO SHALL CALCULATE THE AM OUNT AND MADE ADDITION IN THE INCOME DECLARED BY THE ASSESSEE. I T IS ALSO OBSERVED THAT SINCE THIS AMOUNT HAS ALREADY SUFFERED TAX IN THE NEXT ASSESSMENT YEAR, THE ASSESSEE WILL BE AT LIBERTY TO APPROACH T HE AO FOR EXCLUSION OF THAT AMOUNT FROM TAXATION IN THE NEXT YEAR, BECAUSE THAT WILL TAX THE ASSESSEE TWICE ON THE SAME RECEIPTS. IN VIEW OF TH E DISCUSSION ABOVE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 3 RD APRIL, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER