PREETI GOVID JHANGIANI, V. ITO WD 11(1)(3),

MA 83/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8819 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHA SARATHI NAIK
• Assessee Lawyers: R C JAIN

Judgement Text

MA NOS.520 OF 2011 AND 83 OF 2012 PREET JHANGIANI M UMBAI-C BENCH PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND M.A.NO.520/MUM/2011 (ARISING OUT OF ITA NO.5211/MUM/2009) (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER 11(1)3 MUMBAI VS MS. PREETI GOBIND JHANGIANI 17 SEA MIST, 14 PALI ROAD BANDRA (W) MUMBAI 400050 PAN NO.ACZPJ 7129 C (APPELLANT) (RESPONDENT) M.A.NO. 83/MUM/2012 (ARISING OUT OF ITA NO.5211/MUM/2009) (ASSESSMENT YEAR: 2006-07) MS. PREETI GOBIND JHANGIANI 17 SEA MIST, 14 PALI ROAD VS INCOME TAX OFFICER 11(1)3 MUMBAI BANDRA (W) MUMBAI 400050 PAN NO.ACZPJ 7129 C (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI PARTHASARATHI NAIK, DR ASSESSEE BY: SHRI R.C. JAIN DATE OF HEARING: 08/06/2012 DATE OF PRONOUNCEMENT: 27/06/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THESE ARE THE MISCELLANEOUS APPLICATIONS FILED BOTH BY ASSESSEE AND REVENUE ON THE ORDER OF THE ITAT IN IT A NO.5211/MUM/2009 DATED 16.3.2011. 2. BRIEFLY STATED, ASSESSEE IS AN ACTRESS AND SHOWED G ROSS RECEIPTS OF ` 30,92,000/- IN HER INCOME EXPENDITURE STATEMENT. SH E HAS SHOWN AN AMOUNT OF ` 35,75,000/- AS ADVANCE RECEIVED. AO ON NOTICING THAT ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING, MA NOS.520 OF 2011 AND 83 OF 2012 PREET JHANGIANI M UMBAI-C BENCH PAGE 2 OF 4 BROUGHT THE AMOUNT TO TAX. THE SAME WAS UPHELD BY T HE CIT (A). IN THE APPEAL BEFORE THE TRIBUNAL THIS ISSUE WAS AGITA TED. THE TRIBUNAL NOTED THAT SINCE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING, MONEYS RECEIVED DURING THE YEAR SHOULD BE BROUGHT T O TAX. ACCORDINGLY , IT DIRECTED AO TO CONSIDER THE AMOUNT RECEIVED AS ADVANCE IN EACH OF THE YEAR IN THAT YEAR AND DIRECT ED TO TAKE CONSEQUENTIAL MEASURES BY REOPENING THE ASSESSMENT AND BRING TO TAX THE AMOUNT RECEIVED AS ADVANCE IN THE RESPECTIV E PRECEDING YEARS (PARA 6.1 OF THE ORDER). 3. ANOTHER ISSUE WHICH WAS CONTESTED IS WITH REFERENCE TO THE DISALLOWANCE OF ` 5,60,000/- MADE BY AO UNDER SECTION 40(A)(IA). THIS AMOUNT WAS CLAIMED AS COMMISSION PAID AND AO D ISALLOWED THE SAME AS ASSESSEE HAS NOT DEDUCTED THE TAX AT SO URCE. THE TRIBUNAL VIDE ORDER (PARA-9) CONSIDERED THAT AN AMO UNT OF ` 3.00 LAKHS WAS SHOWN AS OUTSTANDING THEREFORE, ` 3 LAKHS CANNOT BE ALLOWED SINCE ASSESSEE FOLLOWS CASH SYSTEM OF ACCOU NTING. WITH REFERENCE TO THE BALANCE OF ` 2,60,000/- IT WAS HELD THAT THE PROVISIONS OF SECTION 194H ARE NOT APPLICABLE TO AS SESSEE, SINCE THE GROSS RECEIPTS DURING THE YEAR WERE ` 30,92,000/- WHICH IS BELOW THE PRESCRIBED LIMIT OF ` 40 LAKHS FOR AN INDIVIDUAL FOR ATTRACTING THE PROVISIONS OF SECTION 194H. ACCORDINGLY, SECOND ISS UE IN THE GROUNDS OF APPEAL WAS PARTLY ALLOWED. 4. THE REVENUE IN ITS MISCELLANEOUS APPLICATION HAS BR OUGHT TO THE NOTICE OF THE TRIBUNAL THAT ASSESSEE BEING AN I NDIVIDUAL PROFESSIONAL IS COVERED BY THE PROVISIONS OF SECTIO N 194H AS THE LIMIT PRESCRIBED IS ONLY ` 10 LAKHS AND NOT ` 40 LAKHS AS CONSIDERED BY THE ITAT. ASSESSEE IN HER MISCELLANEOUS APPLICAT ION, HOWEVER, CONTENDS THAT THE SUBMISSIONS MADE BEFORE THE ITAT ARE NOT CORRECTLY RECORDED. WHILE ACCEPTING THAT ASSESSEE I S COVERED BY THE PROVISIONS OF SECTION 44B WITH REFERENCE TO AUDIT O F ACCOUNTS AND CONSEQUENTLY THE FINDINGS OF THE TRIBUNAL REGARDING SECTION 194H IS MA NOS.520 OF 2011 AND 83 OF 2012 PREET JHANGIANI M UMBAI-C BENCH PAGE 3 OF 4 A MISTAKE HOWEVER, SUBMITS THAT ASSESSEES CONTENTI ONS WERE THAT THEY ARE NOT COVERED BY THE PROVISIONS OF SECTION 1 94H, WERE NOT CONSIDERED OR ADJUDICATED BY THE ITAT. NOT ONLY THA T ASSESSEE FURTHER OBJECTED TO THE FINDINGS OF THE ITAT WITH R EFERENCE TO CASH SYSTEM OF ACCOUNTING AND THE DIRECTIONS GIVEN TO TA KE CONSEQUENTIAL MEASURES FOR REOPENING THE ASSESSMENT IN THE PRECED ING YEARS. IT WAS THE OBJECTION THAT EVEN THOUGH ASSESSEE IS FOLL OWING THE CASH SYSTEM OF ACCOUNTING, FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX. V. SHOORJI VALLABHDAS & CO, 46 ITR 144 RELIED ON BY THE COUNSE L BEFORE THE BENCH THAT MERE ADVANCE RECEIVED DOES NOT PARTAKE T HE CHARACTER OF INCOME, IT IS NECESSARY TO EXAMINE WHETHER THE ADVA NCES ARE IN THE NATURE OF REVENUE RECEIPT OR NOT. NOT ONLY THAT THE AMOUNTS ACCRUED TO THE APPLICANT OUT OF THE ADVANCE RECEIVED IN THE ASSESSMENT YEAR 2005-06 WERE ALREADY TRANSFERRED TO PROFESSIONAL IN COME AND WERE ASSESSED AS SUCH. IT IS ALSO FURTHER OBJECTED THAT THE ITAT HAS NOT TAKEN INTO ACCOUNT THE PROVISIONS OF SECTION 150(2) OF THE I.T. ACT AS AN AMOUNT OF ` 19,73,951/- WAS THE OPENING BALANCE AS ON 1.4.2005 WHICH CANNOT BE BROUGHT TO TAX IN VIEW OF THE LIMIT ATION PROVIDED UNDER SECTION 150(2) AND THEREFORE, THE DIRECTION G IVEN FOR ASSESSMENT YEAR PRIOR TO ASSESSMENT YEAR 2004-05 IS NOT CORRECT. IT WAS SUBMITTED THAT THE ORDER HAS TO BE RECALLED AND REHEARD AS THE ORDER WAS NOT ACCORDING TO THE PROVISIONS OF THE AC T AND ALSO THE SUBMISSIONS MADE BY THE PARTIES ARE NOT BEING CONSI DERED. 5. WE HAVE CONSIDERED THE MISCELLANEOUS APPLICATIONS O F BOTH THE PARTIES. THE OBSERVATIONS IN PARA 9.1 WITH REFE RENCE TO LIMIT OF AUDIT OF ` 40 LAKHS IS CERTAINLY A MISTAKE AS ASSESSEE IS AN I NDIVIDUAL PROFESSIONAL AND THE LIMIT PRESCRIBED IS ONLY FOR ` 10 LAKHS. THEREFORE, WHETHER THE PROVISIONS OF SECTION 194H A RE APPLICABLE OR NOT HAS TO BE CONSIDERED ON MERITS. THE OBJECTION R EGARDING ACCRUAL OF ADVANCE AS INCOME IS ALSO A VALID POINT AS THE E NTIRE ADVANCE MA NOS.520 OF 2011 AND 83 OF 2012 PREET JHANGIANI M UMBAI-C BENCH PAGE 4 OF 4 SHOWN AS OUTSTANDING CANNOT BE CONSIDERED AS INCOME IN THE ABSENCE OF ANY RIGHT TO RECEIVE AND THIS ASPECT WAS NOT EXAMINED. FURTHER THE LIMITATIONS PLACED U/S 150(2) ARE ALSO TO BE EXAMINED FOR GIVING DIRECTIONS FOR REOPENING EARLIER YEARS W HICH ARE NOT BEFORE THE ITAT. SINCE THESE ASPECTS WERE NOT PROPERLY EXA MINED AND AS BOTH THE PARTIES ARE OBJECTING TO THE ORDER ON DIFF ERENT REASONS, WE, IN THE INTEREST OF JUSTICE, RECALL THE ORDER TO THE EXTENT OF GROUND NOS. 1 & 2 RAISED BY ASSESSEE IN THE APPEAL. REGIST RY IS DIRECTED TO POST THE CASE IN DUE COURSE. 6. IN THE RESULT BOTH THE MISCELLANEOUS APPLICATIONS A RE ACCORDINGLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2012. SD/- SD/- ( D. MANMOHAN ) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 27 TH JUNE, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI