LATE SHRI OM NARAYAN SINGH PARIHAR,BHILAI V. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), BHILAI

ITA 385/RPR/2024

AI Insights

The case involves an appeal by the legal heir of Late Shri Om Narayan Singh Parihar against the order of the Commissioner of Income-Tax (Appeals), which upheld the addition of Rs.1,04,05,985 to the assessee's income for the assessment year 2017-18. This addition was based on a discrepancy between the business receipts reported in the assessee's books and those reflected in Form 26AS. The A.O had added this amount to the assessee's income, claiming it was unaccounted for in the financial year 2017-18, despite the assessee's explanation that the invoices were recorded in the subsequent financial year by HSCL. The Tribunal found merit in the assessee's arguments regarding the timing of income recognition by HSCL and the subsequent correction in financial year 2018-19 post-GST implementation, leading to the decision to remand the matter back to the A.O for further examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35686 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 20-08-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: S.R. RAO
• Keywords: Set aside; Business income; Opportunity of being heard; TDS; FORM 26AS
• Section: 143(3)

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 385/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Late Shri Om Narayan Singh Parihar (Through legal heir: Ravindra Singh Parihar) Plot No.84, Ward No.12, Sundar Nagar, Supela, Bhilai, Dist. Durg-490 023 PAN : AJQPS7389P .......अपीलाथȸ / Appellant बनाम / V/s. The Assistant Commissioner of Income Tax, Circle-1(1), Bhilai (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri S.R. Rao, Advocate Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 01.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 08.10.2024 2 Late Shri Om Narayan Singh Parihar Vs. ACIT, Circle-1(1), Raipur ITA No. 385/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 21.06.2024, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income- tax Act, 1961 (in short ‘the Act’) dated 19.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. In the facts and circumstances of the case and in law, learned Commissioner of Income Tax (Appeals), NFAC has erred in upholding order of learned Assessing Officer making addition of Rs.1,04,05,985/- on account of difference in business receipts between books of account and form 26AS without calling for remand report despite observing that Appellant failed to get MS effect as per 26AS for preceding financial year i.e. FY 2015-16 and Assessing Officer shall call for 26ASPI DS details effected. 2. In the facts and circumstances of the case and in law, learned Commissioner of Income Tax (Appeals), NFAC has erred in not deciding the specific ground of ad-hoc disallowance Rs.66,760/- being 1/5th of expenses claimed towards petrol expenses and telephone expenses. 3. The impugned order is bad in law and on facts. 4. The appellant reserves the right to add, alter, omit all or any of the grounds of appeal with the permission of the Hon'ble appellate authority.” 2. Controversy involved in the present appeal boils down to the issue i.e. sustainability of the addition of Rs.1,04,05,985/- made by the A.O qua 3 Late Shri Om Narayan Singh Parihar Vs. ACIT, Circle-1(1), Raipur ITA No. 385/RPR/2024 the difference in the contract receipts disclosed in “Form 26AS” of the assessee i.e. Rs.4,28,62,749/- as against that disclosed by him in his books of account i.e. Rs.3,24,56,749. 3. On being queried by the A.O, it was the claim of the assessee that the impugned variance of Rs.1,04,05,985/- (supra) was for the reason that though the invoices were made by him in 1st quarter of F.Y.2017-18, but HSCL had accounted for the said bill in its “books of account” of the immediately preceding year, i.e. F.Y.2016-17. However, the aforesaid explanation of the assessee did not find favour with the A.O, who had made an addition of the amount of Rs.1,04,05,985/- to the returned income of the assessee. 4. Apart from that, the A.O disallowed an amount of Rs.66,760/-on ad- hoc basis, i.e. 1/5th of the assessee’s claim for deduction of telephone and vehicles expenses, based on the reason that the personal usage of the same could not be ruled out. Accordingly, the A.O vide his order passed u/s. 143(3) of the Act, dated 19.12.2019 after making the aforesaid disallowances determined the income of the assessee at Rs.1,24,84,060/-. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: “VI. FINDINGS OF THE CIT(APPEALS) 4 Late Shri Om Narayan Singh Parihar Vs. ACIT, Circle-1(1), Raipur ITA No. 385/RPR/2024 6. As discussed in the earlier paragraphs HSCL credits income in the earlier year compared to the taxpayer. if income relates to the month of May, it is credited by HSCL in March. So there is change in financial year as far as crediting income is concerned. No income escaped, but this income difference is due to HSCL policy. Instead we pay Indirect tax on this invoice as per our invoice date. Our sales are matched with our Service Tax return. And also HSCL pay us that indirect tax without objection in invoice date/period. If you taxed this 1,04,05,985.00 in financial year then it is doubled taxed as already we pay tax on this amount in A.Y. 2018-19. This argument of the taxpayer is wrong. Service Tax is paid on the invoice value, but not income tax. Once service tax is paid, it is claimed in the IT return. For clarification here we submit form 26AS of A.Y. 2018-19 and 2017-18, from which it is clearly seen that HSCL was taken all bill of next financial year in previous financial year. This is not true. The details of 26AS for FY 2016-17 and 2017-18 were submitted. But that of FY 2015-16 was not submitted. No one to one correlation between income declared and TDS effected was done. 6.1 Again in A.Y. 2018-19 HSCL was started TDS deduction in the month of August 2017 while taxpayer pays indirect tax for April to June in our service tax return of Rs. 1,14,89.153.00, this sales was reflected in previous year A.Y. 2017-18. In A.Y. 2018-19 HSCL credited TDS of RS. 1,27,78,033.00 on a single day 31/03/2018. From above it is seen that HSCL practice is to book invoice of next financial year in to current financial year. Further this practice of HSCL is continued till the GST comes in, because GST portal matches with Invoice Number and Date. From Financial year 2018-19 they corrected their system and match with our invoice date. Here we submit a tabular data (see TABLE above) for easily understanding of difference in GST invoice and TDS mismatched. At the cost of repetition the TABLE is reproduced here – 5 Late Shri Om Narayan Singh Parihar Vs. ACIT, Circle-1(1), Raipur ITA No. 385/RPR/2024 6.2 For Fy 2016-17 as per TDS the turnover is Rs 42862749, where as Turnover as per Service Tax is Rs 32456764. The difference of Rs 10405985 was brought to tax by the assessing officer. In Fy 2017-18 the difference between Turnover as per TDS and as per Service Tax is Rs 1179647. Again in Fy 2016-17 the difference in Turnover as per TDS and as per Service Tax is Rs 10T659857thisamount was added back by the assessing authority and is the subject matter of appeal. The TDS effected as per 26AS for Fy 2015-16 would have clarified the position and matter settled permanently. Taxpayer failed to do that. The assessing officer shall call for 26AS/details of TDS effected. According to the taxpayer the anomaly got corrected in Fy 2018- 19 once GST came into picture. Now the invoice value and 26AS match. Considering the facts of the case the addition on account of mismatch with TDS income @ 10405985 is upheld. 6.3 In the result appeal is partly allowed/dismissed.” 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 7. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and material available on record. 6 Late Shri Om Narayan Singh Parihar Vs. ACIT, Circle-1(1), Raipur ITA No. 385/RPR/2024 8. Apropos the addition of Rs.1,04,05,985/- that had been upheld by the CIT(Appeals), we find substance in Ld. AR’s contention that the sustaining of said addition was in itself in contradiction of the observation of the CIT(Appeals). As stated by the Ld. AR, and rightly so, though the CIT(Appeals), had observed, that it was the assessee’s claim that the anomaly got corrected in F.Y 2018-19 once GST came into picture, and pursuant thereto the mismatch between the contract receipts was reconciled/corrected, but we find that he had thereafter upheld the aforesaid addition. As the assessee’s claim explaining the discrepancy in hand, as had been considered by the CIT(Appeals) had not been brought to a logical end by directing necessary verification of the same, therefore, we are of the view that the matter in all fairness requires to be restored to the file of the A.O with a direction to re-adjudicate the same afresh. Needless to say, the A.O. in the course of the set aside proceedings shall afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate his claim/reconcile the discrepancy on the basis of fresh documentary evidence, if any. Thus, the Ground of appeal No.1 raised by the assessee is allowed for statistical purposes in terms of our aforesaid observations. 9. Apropos, the disallowance made by the A.O on ad-hoc basis as regards the assessee’s claim for deduction of telephone and vehicles expenses, we find that the same had been made for the reason that the 7 Late Shri Om Narayan Singh Parihar Vs. ACIT, Circle-1(1), Raipur ITA No. 385/RPR/2024 assessee had not maintained any call register for telephone expenses and a log book for vehicles. Although, we are principally in agreement with the CIT(Appeals)’s observations, but are of the considered view that quantification of the disallowance i.e. 20% (1/5th of expenses) is on the higher side. We, thus, in all fairness, restrict the disallowance of the aforesaid expenses to 10% (1/10th of the expenses). Accordingly, the Ground of appeal No.2 raised by the assessee is partly allowed in terms of our aforesaid observations. 10. Grounds of appeal No. 3 & 4 being general in nature are dismissed as not pressed. 11. In the result, appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 08th day of October, 2024. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 08th October, 2024. *****SB, Sr. PS. आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. The Pr. CIT, Raipur-1 (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, 8 Late Shri Om Narayan Singh Parihar Vs. ACIT, Circle-1(1), Raipur ITA No. 385/RPR/2024 रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "