PRINCIPAL COMMISSIONER OF INCOME TAX- I V. M/S N.S. PUBLICITY PVT. LTD.

ITA/341/2018

AI Insights

The case revolves around an appeal by the Principal Commissioner of Income Tax against M/s N.S. Publicity Pvt. Ltd., concerning the addition of Rs. 72,76,821 as undisclosed receipts in the assessee's income. The assessee had declared a total income of Rs. 1,16,41,540 in their return, which was accepted initially. However, discrepancies noted between the income tax return and the 26AS statement led to a reassessment. The CIT(A) and Tribunal found that the discrepancy was due to the accounting treatment of service tax and TDS, which the assessee had correctly accounted for. The High Court, after reviewing the material on record, agreed with the Tribunal's decision and dismissed the appeal, finding no substantial question of law.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 746108 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 15-01-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: ANUROOP SINGHI
• Keywords: 26AS; Assessment; Income Tax; Service tax; TDS; Undisclosed receipt
• Section: 148; 143(3)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D. B. Income Tax Appeal No. 341/2018 Principal Commissioner of Income Tax- I, New Central Revenue Building, Statue Circle, Jaipur (Raj.). ----Appellant Versus M/s N.S. Publicity Pvt. Ltd., C-21, Chomu House, Sardar Patel Marg, Jaipur. ----Respondent For Appellant(s) : Mr. Anuroop Singhi. HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE GOVERDHAN BARDHAR Judgment 15/01/2019 (Per Hon’ble Mr. Justice Mohammad Rafiq) This appeal has been filed by the appellant-revenue assailing the judgment dated 25.06.2018 passed by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short ‘the Tribunal’) whereby the appeal filed by the appellant has been dismissed. The respondent-assessee has e-filed its return on 15.10.2010 declaring total income of Rs. 1,16,41,540/-. The assessment under Section 143(3) was completed on 21.06.2012 at return income. During the examination of record, it was noticed that the assessee had declared total receipts of Rs. 18,91,17,934/-, however, as per ITS data, the total receipts were Rs. 19,42,22,978/-. Therefore, after recording reasons and taking approval from the Principal CIT-I Jaipur, notice under Section 148 (2 of 6) [ITA-341/2018] of the Income Tax Act, 1961 (for short ‘the Act’) was issued on 31.03.2016. During the assessment proceedings, the assessee was asked to furnish explanation for difference of receipts. The assessee has furnished reply, but has not furnished any justification or explanation about Rs. 72,76,821/-. The assessee did not disclose the receipt as shown in 26AS statement. Accordingly the assessing officer made addition of Rs. 72,76,821/- on account of undisclosed receipt. The assessee being aggrieved filed appeal before Commissioner of Income Tax, Appeals-I, Jaipur [for short ‘the CIT(A)]which was allowed and aforesaid addition was deleted. The appellant-revenue being aggrieved filed appeal before the Tribunal which was dismissed vide judgment dated 25.06.2018. Hence, this appeal. Learned counsel for the appellant argued that the impugned judgment passed by the Tribunal is against the law and without considering the facts available on record and thus is erroneous and non sustainable in the eyes of law. The Tribunal has committed a very serious and apparent illegality by passing a non- speaking, unreasonable, injudicious, presumptive and capricious order which was fully based on suspicions and surmises. The Tribunal being a final fact finding authority is duty bound to pass a well reasoned and speaking order, which in the instant case it has failed to do so. The Tribunal as well as the CIT(A) have erred by deleting the addition of Rs. 72,76,821/- made by the assessing officer, without considering the fact that the assessee has failed to furnish any explanation or justification of Rs. 72,76,821/-. During the assessment proceedings, the assessing officer observed difference in total receipts as per books of accounts and receipts (3 of 6) [ITA-341/2018] as per 26AS and accordingly assessing officer made addition of Rs. 72,76,821/- on account of undisclosed receipt. But, the Tribunal as well as the CIT(A) have erred by not considering the difference amount of Rs. 72,76,821/- as undisclosed receipt of the assessee made by the assessing officer. The Tribunal has failed to consider the fact that the assessee has claimed deduction of service payable on Rs. 1,61,36,763/-. However, this amount was not paid to the Central Excise Department during the year under consideration and thus, the assessee has not claimed deduction of full amount in the profit and loss account. The Tribunal has failed to consider the fact that as per the service tax return the assessee has shown the receipt of Rs. 15,02,04,707/-. whereas as per the bill raised including the service tax the amount is Rs. 20,52,54,497/-. Thus, there is also a discrepancy in the amount shown in the service tax return as against the actual receipt of the assessee. We have heard learned counsel for the appellant and carefully perused the material on record. The CIT(A) while allowing the appeal of the respondent- assessee in para 3.2.2 held as under: “3.2.2 Determination: (i) I have duly considered the submissions of the appellant, assessment order and the material placed on record. The appellant was engaged in the business of advertisement and as per its profit and loss account for the year under consideration, it has declared advertisement sales at Rs. 18,91,17,934/- whereas as per the ITS details, the receipts by the appellant were shown at Rs. 19,42,22,978/- and in view of this difference, it was observed by the AO that the appellant has suppressed its sales to the tune of Rs. 51,05,044/-. During the assessment proceedings, the appellant has submitted a reconciliation statement which was reproduced on page 2 of the assessment order. (4 of 6) [ITA-341/2018] However, the AO was not satisfied with the same and observed as under: * The appellant has disclosed total receipts in the service tax return for the year at Rs. 15,02,04,707/-. * The bills including service tax were raised for a sum of Rs. 20,52,54,497/-. * The TDS was deducted on service tax amount of Rs. 1,61,36,763/-. * The appellant has shown different receipts in income tax return and in service tax return. * The appellant has claimed that some parties have wrongly credited the amount in its account but the evidences were not produced. In view of the above observations, it was concluded by the AO that the appellant has not disclosed receipts to the tune of Rs. 72,76,821/-. (ii) It is noted from the from the reconciliation statement that gross receipts shown in service tax return and gross receipts shown in books of accounts are as under: Amount for which invoices issued as per service tax return Amount received agaisnt service provided as per service tax return Total 1,8,62,42,673/- 15,02,04,707/- Less: credit note issued during the year 40,90,034/- - Add: credit note reversed during the year 69,65,295/- - Gross receipt shown in books of accounts & gross receipt shown in service tax return respectively 18,91,17,933.97 15,02,04,707/- (iii) Thus, the same as per books of accounts was much more then the sales shown in the service tax returns and reason for the same was submitted that till 31.03.2011, the service tax was payable on collection or receipt basis but w.e.f. 01.04.2011, service tax has to be paid irrespective of the fact whether the payment of the service is received or not. The appellant was maintaining its books of accounts on mercantile basis i.e. on the basis of invoices raised for service provided whereas the service tax returns were filed on the basis of amount received against services provided and due to this difference in accounting treatment, there was a difference between the receipts declared by the (5 of 6) [ITA-341/2018] appellant in its return of income and in the service tax return. (iv) It is noted from the party-wise details of amount paid / credited and TDS thereon by the customers of the appellant, prepared on the basis of Form 26AS as on 31.05.2017 that total amount from 91 parties was shown at Rs. 19,81,98,545.18 on which tax of Rs. 37,93,548.37 was deducted at source. The appellant has also filed a reconciliation of receipts as per 26AS with that of receipts recorded in the books of accounts as under: S No. Particulars Amount 1. Receipts as per 26AS u/s 194C 19,81,09,923.18 Less:- Service tax included in receipts as per 26AS (1,61,36,563) Net receipts as per 26AS 18,19,73,360.18 Receipts as per books of accounts excluding service tax 18,91,17,934/- The amount paid by the customers on which no TDS was made. 71,44,574 (v) Thus, it is evident from the above details that the appellant has /declared more receipts (revenue) than shown in 26AS and it is on account of the element of service tax on which TDS was made by the customers/ deductor of the appellant, the amount in 26AS is appearing on the higher side. Therefore, in view of the totality of facts and circumstances of the case, it is held that the AO was not justified in making impugned addition under consideration and thus the same is hereby deleted.” The Tribunal on consideration of the aforesaid has held that the CIT(A) has considered specific fact of discrepancy in the amount shown in the 26AS in comparison to the books of account. The bills including service tax were raised and the TDS was deducted inclusive of service tax amount of Rs. 1,61,36,763/-. The revenue has not brought any fact or material to contradict the factual details recorded by the CIT(A). The appeal of the revenue was therefore dismissed by the Tribunal. (6 of 6) [ITA-341/2018] Even though the learned counsel for the appellant- revenue has reiterated the same arguments which were raised before the Tribunal but on consideration of the material on record, we do not find any substantial question of law arising in the present appeal. The appeal is therefore dismissed. (GOVERDHAN BARDHAR),J (MOHAMMAD RAFIQ),J Manoj/ "