M/s Chougule Brothers Private Limited., Goa V. Assistant Commissioner of Income Tax, Circle-2., Margao

MA 30/PAN/2015

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4127 (ITAT-PANAJI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-02-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 19-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Revised return
• Section: 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER MA NOS. 29 & 30/PNJ/2015 (ASST. YEAR : 200 0 - 0 1 & 2001 - 02 ) M/S. CHO WGULE BROTHERS PVT. LTD., SUCCESSOR TO CHOWGULE BROTHERS , CHOWGULE HOUSE, MORMUGAO HARBOUR, GOA. VS. ACIT, CIRCLE - 2, MARGAO GOA. PAN NO. AABFC 3959 R (APPELLANT) (RESPONDENT) ITA NO S . 14 & 15 /PNJ/201 4 (ASST. YEAR : 200 0 - 0 1 & 2001 - 02 ) ACIT, CIRCLE - 2, MARGAO GOA. VS. M/S. C H O WGULE BROTHERS, CHOWGULE HOUSE, MORMUGAO HARBOUR, GOA. PAN NO. AABFC 3959 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MIHIR NANIWADEKAR ADV. DEPARTMENT BY : SHRI R.N. SIDDAPP A JI - D R DATE OF HEARING : 03 / 0 2 /201 6 . DATE OF PRONOUNCEMENT : 03 / 0 2 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER SHRI R.N. SIDDAPPAJI , DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE AND SHRI MIHIR NANIWADEKAR , ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 2. AT THE TIME OF HEARING, LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE WISH TO WITHDRAW THE MISC. APPLICATIONS 2 M A N O S . 2 9 & 3 0 / P N J / 2 0 1 5 & ITA NO S . 1 4 & 15 /PNJ/201 4 FILED, TO WHICH THE DEPARTMENTAL REPRESENTATIVE DID NOT RAISE ANY OBJECTION. CONSEQUENTLY, THE MISC. APPLICATIONS FILED BY THE ASSESSEE STAND DISMISSED AS WITHDRAWN. 3 . ITA NO S . 14 & 15/PNJ/2014 ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) PANAJI IN ITA NO. 201/MRG/2007 - 08 & ITA NO. 317/MRG/10 - 11 DATED 23/10/2013 FOR THE ASSESSMENT YEARS 2000 - 01 & 2001 - 02 . 4 . IT WAS THE SUBMISSION THAT ORIGINALL Y THESE APPEALS WERE DISPOSED OF BY THE COORDINATE BENCH OF THIS TRIBUNAL VIDE AN ORDER DATED 15/01/2015 . THE SAME WAS SUBJECT MATTER BEFORE THE HONBLE HIGH COURT OF BOMBAY AT GOA , PANAJI AND THE HONBLE HIGH COURT HAD VIDE ITS ORDER DATED 21/10/2015 SET ASIDE THE ORDER OF THE TRIBUNAL AND RESTORED THE ISSUE TO THE FILE OF THE TRIBUNAL FOR RE - ADJU DI CATION . IT WAS THE SUBMISSION BY THE DEPARTMENTAL REPRESENTATIVE THAT THE ISSUE IN BOTH THE APPEALS WERE INTERCONNECTED. IT WAS THE SUBMISSION T HA T THE ISSUE INVOLVED IN THESE APPEALS IS NON - DISCLOSURE OF PROFESSIONAL RECEIPTS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD RECEIVED TDS CERTIFICATE FOR 5,92,211 / - IN AUGUST 2000 FROM FLANDERS DREDGING CORPORATION (HEREAFTER REFE R RED TO AS FDC, FOR SHORT) . WHEN FILING THE INCOME - TAX RETURN FOR THE ASSESSMENT YEAR 2001 - 02 , THE ASSESSEE HAD SHOWN A RECEIPT OF 1,07,67,465/ - IN ITS BOOKS AS INCOME AS ON 31/03/2001 AND HAD ALSO WRITTEN OFF OF THE SAID AMOUNT AS BAD DEBT AND HAD CLAIMED THE TDS OF 5,92,211/ - . I N THE COURSE OF ASSESSMENT FOR THE ASSESSMENT YEAR 200 0 - 01 , THE ASSESSING OFFICER HAD WRITTEN A LETTER TO FDC ASKING FOR CLARIFICATION IN RESPECT OF THE SAID AMOUNT. THE ASSESSING OFFICER HAD RECEIVED A LETTER FROM S.R. BATLIBOI & CO . WHEREIN CERTAIN CLARIFICATIONS WERE PROVIDED IN RESPECT OF THE TRANSACTION WITH FDC. THE TRANSACTION RELATED TO THE ASSESSMENT YEAR S 2000 - 01, 2001 - 02 & 2002 - 03 AND AS ON 31/03/2003 T HE OUTSTANDING AMOUNT HAS BEEN SHOWN AS NIL. WHEN THE SAID INFORMATION WAS PROVIDED TO THE ASSESSEE, THE ASSESSEE GAVE A REPLY QUESTIONING THE VERACITY OF FDCS CLAIM . THE 3 M A N O S . 2 9 & 3 0 / P N J / 2 0 1 5 & ITA NO S . 1 4 & 15 /PNJ/201 4 ASSESSING OFFICER HAD DRAWN A CONCLUSION TH AT THE BAD DEBT HAD NOT BECOME IR RECOVERABLE AND CONSEQ UENTLY ASSESSEES CLAIMED WAS DENIED . 5. ON APPEAL, BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , THE COMMISSIONER OF INCOME TAX (APPEALS) HAD HELD THAT THE AMOUNT OF 1,07,67,465/ - REL A T ED TO THE ASSESSMENT YEAR 2009 - 10 AND CONSEQUENTLY DIRECTED THAT THE INCOME WAS LIABLE TO BE ASSESSED AND THE TDS BENEFIT WAS LIABLE TO BE GIVE N FOR THE ASSESSMENT YEAR 2000 - 01 . APPEAL , AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , FILED BY THE ASSESSEE BEFORE THE TRIBUNAL CAME TO BE DISPOSED OF WITH A DIRECTION THAT A DETAILED ENQUIRY WAS LIABLE TO BE MADE AND BOTH THE ASSESSMENT YEAR S MUST BE HEARD TOGETHER . THIS WAS THE ORDER OF THE TRIBUNAL DATED 12/07/2007 . CONSEQUENT TO THE ORDER OF THE TRIBUNAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DISPOSED OF BOTH THE APPEALS FOR THE ASSESSMENT YEAR S 2000 - 01 & 2001 - 02 WHICH IS THE ORDER IMPUGNED HEREINUNDER , WHEREIN COMMISSIONER OF INCOME TAX (APPEALS) CAME TO THE CONCLUSION THA T THE ASSESSEE HAD ENTERED INTO AGREEMENT WITH A NON - RESIDENT FOREIGN COMPANY FOR PROVIDING ANCILLARY SERVICE S IN LIEU OF PAYMENT OF SERVICE FEES . EVEN BEFORE ANY SERVICE COULD BE PROVIDED BY THE ASSESSEE, THE FOREIGN PRINCIPAL CREDITED SOME AMOUNT IN ITS BOOKS THOUGH NO ACTUAL PAYMENT WAS MADE TO THE ASSESSEE AND ISSUED TDS CERTI FI CATE FOR 5,92,211/ - . CONSEQUENTLY, COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT SINCE NO INCOME AROSE TO THE ASSESSEE, THERE WAS NO QUESTION OF GIVING ANY CREDIT FOR THE TDS. THE COMMISSIONER OF INCOME TAX (APPEALS) CAME TO THE CONCLUSION TH A T THERE WAS NO INCOME , WHICH HAS BEEN RECEIVED BY THE ASSESSEE. 6 . IT WAS THE SUBMISSION THAT THIS FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS ) WAS ERRONEOUS INSOFAR AS THE ASSESSEE ITSELF HAD SHOWN THE INCOME FOR THE ASSESSMENT YEAR 2001 - 02 AND HAD CLAIMED THE BAD DEBT THEREON . THE ASSESSEE IN ITS LETTER TO THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT FOR THE ASSESSMENT YEAR 2001 - 02 HAD 4 M A N O S . 2 9 & 3 0 / P N J / 2 0 1 5 & ITA NO S . 1 4 & 15 /PNJ/201 4 ALS O ADMITTED THAT IT HAS RECEIVED AN AMOUNT OF 46,23,540/ - IN ASSESSMENT YEAR 2003 - 04 AND THERE WAS A CREDIT BALANCE IN FA V OUR OF FDC AND 39,967/ - FOR THE ASSESSMENT YEAR 2001 - 02 . IT WAS THE SUBMISSION TH A T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE REVERSED AND THE AMOUNT OF 1,07,67,465/ - WAS LIABLE TO BE TREATED AS INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2000 - 01 . 7 . IN REPLY, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IT WAS ONLY FOR THE PURPOSE OF TAKING THE BENEFIT OF TDS CERTIFICATE ISSUED BY THE FDC THAT THE ASSESSEE HAD SHOWN THE INCOME AS ON 31/03/2001 AND HAD CLAIMED THE BAD DEBT . IT WAS THE SUBMISSION THAT THE ASSESSEE HAD NOT RECEIVED NOR THERE WAS ACCRUAL OF INCOME FROM FDC . IT WAS THE SUBMISSION THAT THE ASSESSEE HAD NOT RENDERED ANY SERVICE TO THE FDC DURING THE ASSESSMENT YEAR 2001 - 02 . ON A SPECIFIC QUERY FROM THE BENCH AS TO THE RECON CILIATION OF THE AMOUNT OF 1,07,67,465/ - AND THE NATURE OF THE SERVICES AS ALSO THE BREAKUP OF THE SAME, IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT NO SERVICE HAS BEEN RENDERED BY THE ASSESSEE TO FDC AND CONSEQUEN TLY NO INCOME WAS DUE TO THE ASSESSEE FROM FDC. WHE N IT WAS POINTED OUT TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE , IF THERE WAS NO INCOME RECEIVABLE FROM FDC AND THERE WAS NO SERVICE RENDERED TO FDC , THEN THE ACT OF THE ASSESSEE IN DISCLOSING THE INCOME OF 1,07,67,465/ - FROM FDC DURING THE ASSESSMENT YEAR 20 0 1 - 02 AND CLAIMING OF BAD DEBT WAS IN FACT A MALAFIDE ACT WITH AN INTENTION OF DEFRA U DING NOT ONLY THE REVENUE IN RESPECT OF TDS AMOUNT OF 5,92,211/ - BUT ALSO FDC , IT WAS THE SUBMISSION BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT IT WAS A MISTAKE AND NOTHING MORE COULD BE SAID. IT WAS THEN PUT TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AS TO , IF NO SERVICES HAD BEEN RENDERED BY THE ASSESSEE TO THE FDC THEN WHAT IS THE MEANING OF LETTER ISSUED BY S.R. BATLIBOI & CO. REPRESENTING FDC WHEREIN FDC HAS CATEGORICALLY ADMITTED TH A T THE 5 M A N O S . 2 9 & 3 0 / P N J / 2 0 1 5 & ITA NO S . 1 4 & 15 /PNJ/201 4 ASSESSEE HAD ACTED AS CUSTOM S AGENT FOR FDC IN INDIA AND FDC HAS MADE A TOTAL PAYMENT OF 1,23,45,290/ - FOR THE ASSESSMENT YEAR 2000 - 01, 78,137/ - FOR THE ASSESSMENT YEAR 2001 - 02 AND 52,79,242/ - FOR THE ASSESSMENT YEAR 2003 - 04 , T HE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE HAD NOTHING MORE TO SUBMIT . IT WAS THEN PUT TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE FACTS ARE NOT BEING PLACED BEFORE US IN ITS ENTIRETY AND THEREFORE, THE ISSUES IN THIS APPEAL WOULD HAVE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJU DI CATION AND IF T HE ASSESSEE IS UNABLE TO COOPERATE IN SET ASIDE PROCEEDINGS , THEN ASSESSING OFFICER WOULD BE AT LIBERTY TO DRAW ADVERSE INFERENCE AS THE ASSESSEE HAS HIMSELF SHOWN MALAFIDE ACT AND IS NOW ATTEMPTING TO COVER UP HIS ACT BY SUPPRESSING THE DETAILS WHICH WOULD HAVE TO BE READ AS CLEAR CONTUMATIOUS CONDUCT. IT WAS ALSO BROUGHT TO THE ATTENTION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE ASSESSEE ITSELF HAS ALSO OFFERED AN INCOME OF 01,01,66,637/ - FOR THE A SSESSMENT YEAR 2001 - 02 AND THE ASSESSEE HAVING NOT WITHDRAWN THE SAID AMOUNT FROM ITS RETURN BY FILING A REVISED RETURN, THERE WAS NO PROVISION BY WHICH AN APPELLATE AUTHORITY OR THE ASSESSING AUTHORITY TO REDUCE THE ASSESSED INCOME BELOW THE RETURNED INCOME , UNLESS THE ASSESSEE ITSELF PROVIDES SUBSTANTIAL EVIDENCE TO SUPPORT HIS CLAIM THAT THE ASSESSEE DID NOT HAVE SUCH INCOME . T HIS IS THE CASE WHERE THE ASSESSEE HAS IGNORANTLY NOT CLAIMED ANY DEDUCTIONS OR HAS BY IGNORANCE OFFERED ANY INCOME, THIS IS A CLASSIC CASE WHERE THE ASSESSEE HAS WITH CLEAR MALAFIDE INTENTIONS , OFFERED AN INCOME FOR THE ASSESSMENT YEAR 2001 - 02 UNDER THE HEAD BUSINESS AND HAD CLAIMED WRITE OFF OF THE SAME AS BAD DEBT WITH AN INTENTION OF CLAIMING REFUND OF TDS WHICH DID NOT RELATE TO THAT YEAR ALSO . THE PRIMARY QUESTION THAT WOULD ALSO RISE IN SUCH SITUATION WOULD BE WHETHER THE SAID AMOUNT OFFERED BY THE ASSESSEE ITSELF IS A BUSINESS INCOME OR WHETHER ITS INCOME UNDER THE HEAD OTHER SOURCES . W HERE HAS THE ASSESSEE INCURRED EXPENDITURE FOR EARNING SUCH INCOME . ADMITTEDLY, THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. IT IS THE ASSESSEE WHO 6 M A N O S . 2 9 & 3 0 / P N J / 2 0 1 5 & ITA NO S . 1 4 & 15 /PNJ/201 4 KNOWS THE CLEAR FACTS OF THE SAID AMOUNT WHICH THE ASSESSEE IS NOT WILLING TO PLACE BEFORE THE TRIBUNAL. THIS BEING SO, FOR THE PURPOSE OF ASCERTAINING THE CORRECT FACTS, THE ISSUES IN THIS APPEAL ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION FOR BOTH THE ASSESSMENT YEARS 2000 - 01 & 2001 - 02 . HERE WE MAY MENTION THAT THE INCOME FOR THE ASSESSMENT YEAR 2001 - 02 HA VING BEEN OFFERED BY THE ASSESSEE , IT IS FOR THE ASSESSEE TO PROVE THAT THE SAID INCOME DOES NOT RELATE TO THIS YEAR OR IS NOT ASSESSABLE DURING THE ASSESSMENT YEAR 2001 - 02 . THE CLAIM OF BAD DEBT ADMITTEDLY CAN BE CONSIDERED ONLY WHEN THE ASSESSEE SPECIFICALLY SHOWS FROM WHOM THE AMOUNT IS DUE , FOR WHAT , THE NATURE OF INCOME AND HOW EARNED . ONLY THEN THE QUESTION OF WRITE OFF CAN BE CONSIDERED. IN RESPECT OF TDS OF 5,92,211/ - , THE ASSESSING OFFICER IS TO ASCERT AIN TO WHICH YEAR THE SAID TDS RELATES AND LIBERTY SHALL BE GIVEN TO THE ASSESSEE TO DEMONSTRATE THAT THE RECEIPTS ON WHICH TDS HAS BEEN DEDUCTED DOES NOT BELONG TO THE ASSESSEE OR IS NOT INCOME OF THE ASSESSEE , FAILING WHICH THE ASSESSING OFFICER SHALL BE AT LIBERTY TO ASSESS THE SAID RECEIPTS IN THE YEAR TO WHICH THE SAID TDS RELATE S . I N THE EVENT, THE ASSESSEE DOES NOT COOPERATE IN THE ASSESSMENT PROCEEDINGS, LIBERTY SHALL BE AVAILABLE TO THE ASSESSING OFFICER TO DRA W ADVERSE INFERENCE . 8 . IN THE RESULT, MISC. APPLICATIONS FILED BY THE ASSESSEE ARE DISMISSED AS WITHDRAWN AND THE APPEAL S FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 0 3 RD DAY OF FEBRUARY , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 3 RD FEBRUARY , 201 6 . VR/ - 7 M A N O S . 2 9 & 3 0 / P N J / 2 0 1 5 & ITA NO S . 1 4 & 15 /PNJ/201 4 COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 8 M A N O S . 2 9 & 3 0 / P N J / 2 0 1 5 & ITA NO S . 1 4 & 15 /PNJ/201 4 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 03 . 0 2 .201 6 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 0 4 .02.2016 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 04.02.2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 04.02.2016 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 04.02.2016 SR.PS 6. DATE OF PRONOUNCEMENT 04.02.2016 SR.PS 7. FILE SENT TO THE BENCH CLERK 04.02.2016 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER