R.Ramesh, CHENNAI V. ITO, CHENNAI

ITA 924/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8385 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: G BASKAR
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER] ./ I.T.A.NO.924/MDS/2016 / ASSESSMENT YEAR : 2007-08 SHRI R. RAMESH C-3, ANSARI APARTMENTS 7/30 MADLEY ROAD T. NAGAR, CHENNAI 600 017 VS. THE INCOME TAX OFFICER NON-CORPORATE WARD 2(3) CHENNAI [PAN AIMPR 1927 R ] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT / DATE OF HEARING : 19 - 09 - 2016 ! / DATE OF PRONOUNCEMENT : 23 - 0 9 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-2, CHENNAI , DATED 29.2.2016 FOR ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN THIS APP EAL IS ADDITION OF ` 19,98,262/- MADE BY THE ASSESSING OFFICER. 2 I .T.A. NO.924/16 3. THE ASSESSMENT WAS COMPLETED IN THIS CASE BY AN ORD ER U/S 143(3)OF THE ACT DATED 31/12/2009 ASSESSING THE TOTAL INCOME AT ` 29,46,169/-. THE ASSESSING OFFICER MADE THE ADDITION OF ` 19,98,262/- DUE TO DIFFERENCE IN TDS RECEIPTS IN FORM 16 AND THE RECEIPTS ADMITTED IN THE RETURNED I NCOME. THE APPEAL IS INSTITUTED AGAINST THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION MADE BY THE ASSE SSING OFFICER ON THE ABOVE ISSUE. THE ASSESSEE WENT IN APPEAL BEF ORE THE CIT(A) AND THE CIT(A) CONFIRMED THE ADDITION HOLDIN G THAT ASSESSEE FAILED TO EXPLAIN THE TRANSACTION. HENCE T HE APPEAL FILED BY THE ASSESSEE BEFORE US. 4. DURING THE HEARING, THE LD.AR SUBMITTED THAT ASSEE SSEE HAS RECEIVED THE GROSS RECEIPTS OF ` 1,12,19,558/- AND ADMITTED THE SAME IN THE RETURN OF INCOME. HOWEVER, THE ASSE SSEE ALSO RECEIVED THE TDS RECEIPTS FOR AN AMOUNT OF ` .1,32,17,820/- AND THE PAYER HAS DEDUCTED THE TDS ON TOTAL RECEIPTS. T HE DIFFERENCE AMOUNT OF ` .19,98,262/- WERE EXPLAINED TO BE ADVANCES RECEIVED FROM THE PAYER AND SHOWN AS ADVANCES RECEIVED. DUR ING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS CA LLED FOR THE RECONCILIATION WHICH WAS SUBMITTED BEFORE HIM. THE ASSESSING OFFICER HAS CALLED FOR THE BOOKS OF ACCOUNTS AND T HE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS SINCE ASSES SEE ADOPTED 3 I .T.A. NO.924/16 ESTIMATION OF INCOME AS PER SECTION 44AD OF THE ACT IN THE SUBSEQUENT YEAR. BEFORE THE LD. CIT(A), THE ASSESSE E HAS SUBMITTED THE PROOF REGARDING FILING OF RETURN OF I NCOME ADMITTING THE SAID RECEIPTS AS INCOME IN THE SUBSEQ UENT ASSESSMENT YEAR. THE CIT(A) HAS CALLED FOR THE REMA ND REPORT AND THE ASSESSING OFFICER SUBMITTED THE REMAND REP ORT STATING THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACC OUNTS FOR THE A.Y.2008-09 WITH AN INTENTION TO CURTAIL THE TA X PAYMENT FOR THE A.Y 2007-08. THE CIT(A) CONFIRMED THE ADDITION HOLDING THAT ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST UP O N HIM AND FAILED TO PRODUCE THE EVIDENCE TO VERIFY THE GENUIN ENESS OF THE TRANSACTION. FURTHER THE ASSESSEE ALSO PLACED ALTER NATIVE PLEA BEFORE THE CIT(A) STATING THAT THE ENTIRE RECEIPTS CANNOT BE ASSESSED AS INCOME AND REQUESTED FOR ESTIMATION OF INCOME. THE ALTERNATIVE PLEA ALSO REJECTED BY THE CIT(A) AND DI SMISSED THE APPEAL. THE AR VEHEMENTLY ARGUED THAT THE CIT(A) HA S COMMITTED AN ERROR IN CONSIDERING THAT ADVANCES DO NOT FORM PART OF INCOME SINCE THE EXPENDITURE RELATED TO THE ADVANCES WAS NOT ACCOUNTED BY THE ASSESSEE. FURTHER, THE LD. A.R ARGUED THAT THE CIT(A) ALSO COMMITTED AN ERROR IN CONSIDER ING THE ALTERNATIVE PLEA. 5. ON THE OTHER HAND, THE LD.DR ARGUED THAT THE ASSES SEE HAS FAILED TO FURNISH THE EVIDENCE REGARDING THE AD MISSION OF 4 I .T.A. NO.924/16 INCOME IN THE SUBSEQUENT YEAR AND DID NOT PRODUCE T HE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER DURING THE AS SESSMENT AND REMAND PROCEEDINGS, THEREFORE, THE ASSESSING OFFIC ER HAS RIGHTLY MADE THE ADDITION. THE CIT(A) CONFIRMED THE ADDITIO N SINCE THE TRANSACTION WAS NOT PROPERLY EXPLAINED AND HELD THA T WITH AN INTENTION TO EVADE THE TAX THE ASSESSEE ADMITTED TH E RECEIPT IN THE SUBSEQUENT A.Y. THE LD.DR ALSO INVITED OUR ATTE NTION TO SECTION 198 OF INCOME TAX ACT. THE LD. DR VEHEMENTL Y SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL PLACED BEFORE US. THE ASSESSEE SUBMITTED A TDS CERTIFICATE DISCLOSING THE PAYMENTS OF ` 1,32,17,820/- AND ADMITTED THE GROSS RECEIPTS OF ` 1,12,19,558/- AND THERE WAS DIFFERENCE OF ` 19,98,262/-AS PER FORM 26AS AND THE TDS CERTIFICATE. THE ASSESSING OFFICER HAS ASKED FOR EX PLANATION AND ASSESSEE HAS EXPLAINED IT AS THE ADVANCES RECEIVED. THE ASSESSING OFFICER HAS ASKED FOR EVIDENCE IN FORM O F BOOKS OF ACCOUNTS OF THE SUBSEQUENT A.Y AND THE RETURN OF I NCOME, BUT THE AASEESSEE FAILED TO PRODUCE THE SAME. THE BOOKS OF ACCOUNTS COULD NOT BE PRODUCED SINCE ASSESSEE HAS ADOPTED ES TIMATION OF INCOME AS PER SECTION 44AD OF THE ACT AND DID NOT MAINTAIN THE BOOKS OF ACCOUNTS. THE RETURN COULD NOT BE FURNISHE D FOR THE SUBSEQUENT A.Y I.E A.Y 2008-09 BECAUSE THE RETURN WAS NOT FILED 5 I .T.A. NO.924/16 BY THE TIME ASSESSMENT WAS COMPLETED. THE ASSESSEE HAS FURNISHED THE RETURN OF INCOME AND PRODUCED THE EVI DENCE BEFORE THE CIT(A), BUT THE CIT(A) CONFIRMED THE ADDITION H OLDING THAT THE ASSESSEE HAS MADE ATTEMPT TO REDUCE THE TAXES BY SH IFTING THE RECEIPT TO THE A.Y.2008-09. BOTH THE CIT(A) AND THE ASSESSING OFFICER WERE OF THE OPINION THAT THE ASSESSEE HAS B OOKED THE ENTIRE EXPENDITURE RELATING TO THE A.Y.2007-08 AND THE ALTERNATE PLEA TO ESTIMATE THE INCOME WAS ALSO REJECTED. THE ASSESSEE EXPLAINED THAT THE DIFFERENCE AMOUNT OF ` 19,98,262/- REPRESENTED THE ADVANCES RECEIVED BUT NOT THE INCOM E RELATING TO THE A.Y.2007-08. THE ASSESSEE HAS ADMITTED THE INC OME IN A.Y.2008-09 AND PRODUCED THE NECESSARY EVIDENCE. WH EN ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCO UNTING THE RECEIPTS MAY OVERLAP FOR THE DIFFERENT A.Y. SINCE I NCOME HAS TO BE ADMITTED AS PER THE SYSTEM OF ACCOUNTING. THE ASSES SEE HAS CLAIMED THE DIFFERENCE AS ADVANCES AND THE ASSESSIN G OFFICER HAS NOT PROVED THAT THE DIFFERENCE AMOUNT OF RECEIPTS WAS ACCRUED AS INCOME FOR THE RELEVANT A.Y UNDER CONSIDERATION . THE ASSESSING OFFICER SOLELY MADE THE ADDITION RELYING ON THE FORM26AS WHICH IS NOT A CORRECT APPROACH, SINCE THE DEDUCTOR HAS TO DEDUCT THE TDS ON THE ENTIRE PAYMENTS INCLUDING THE ADVANCES AS PER THE PROVISIONS OF TDS. THEREFORE, DIFFERENCE NEEDS TO BE EXPLAINED WITH RECONCILIATION STATEMENT WHICH THE ASSESSEE HAS 6 I .T.A. NO.924/16 COMPLIED. THE ASSESSING OFFICER HAS NOT GIVEN ANY F INDING TO CONTROVERT THE CLAIM OF THE ASSESSEE TO PROVE THAT RECEIPTS DO NOT REPRESENT ADVANCES BY MAKING NECESSARY ENQUIRIES. S IMILARLY THE ASSESSING OFFICER HAS NOT MADE OUT CASE THAT THE E XPENDITURE RELATING TO THE ADVANCES WERE ACCOUNTED FOR AND CLA IMED IN THE A.Y.2007-08. THEREFORE, WE ARE OF THE CONSIDERED OP INION THAT THERE IS NO CASE FOR MAKING ADDITION AND SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2016, AT CHENNAI. SD/- SD/- ( ' . ' / . 0 ) ( N.R.S. GANESAN ) / JUDICIAL MEMBER ( . . ' #$ ) (D.S. SUNDER SINGH) & / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 23 RD SEPTEMBER, 2016 RD %& '( )( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+, - / DR 3. * () / CIT(A) 6. ,0 1 / GF