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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI S RIFAUR RAHMAN
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.1045/M/2023 Assessment Year: 2014-15
M/s. Rapid Inexci Services Income Tax Officer, Pvt. Ltd., Ward-13(3)(1), Room No.227, 2nd Floor, Shop No.1, Shantivan-1, Vs. Raheja Township, Aayakar Bhavan, Malad (East), M.K. Road, Mumbai – 400 097 Mumbai – 400 020 PAN: AAACR7523G (Appellant) (Respondent)
Present for: Assessee by : Ms. Dingle Haria, A.R. Revenue by : Smt. Mahita Nair, D.R. Date of Hearing : 30 . 08 . 2023 Date of Pronouncement : 24 . 11 . 2023
O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. Rapid Inexci Services Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 31.01.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2014-15 on the grounds inter-alia that :- “1. VIOLATION OF PRINCIPLES OF NATURAL JUSTICE
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1.1 In the facts and the circumstances of the case, and in law, the appellate order so framed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi ("NFAC") ['Ld. CIT (A)'] be held as bad and illegal, as: (i) The same is framed in breach of the statutory provisions and the scheme; (ii) The same is perverse, passed without any application of mind to the facts on record; and (iii) The same is passed in flagrant breach of the principle of natural justice. 2. WITHOUT PREJUDICE TO THE ABOVE
2.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making addition of Rs. 1,00,65,783/- on account of the alleged difference between the income as reflected in Form 26AS and the income shown by the Appellant in Profit & Loss Account. 2.2. While doing so, the Ld. CIT (A) failed to appreciate that: (i) The said amount clearly and admittedly was in the nature advance; and (ii) All possible proofs, including reconciliation statement, confirmation, ledger accounts, etc. were already placed on record. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. 2.4 Without prejudice to the above, in the alternative, assuming- but not admitting -- that some addition was called for, it is submitted that in the facts and the circumstances of the case, the computation of the same is not in accordance with the law, is arbitrary and excessive. 3. WITHOUT FURTHER PREJUDICE TO THE ABOVE
3.1 The Ld. CIT (A) erred in not granting credit of the corresponding TDS of Rs. 2,01,316/- relating to the amount of the addition made by the A.O. 4. LIBERTY 4.1 The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.”
Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee is into the business of building construction activity, a labour contractor of
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builders. The assessee’s return of income filed for the year under consideration was subjected to limited scrutiny to verify the receipt under section 194C & 194J (as per 26AS) of the Income Tax Act, 1961 (for short ‘the Act’) as the same are more than the receipt shown in the ITR. Necessary notices under section 143(2) & 142(1) of the Act along with questionnaire were issued to which the assessee has duly replied. During the scrutiny proceedings the Assessing Officer (AO) noticed from the perusal of 26AS that the assessee company has earned income from the contract under section 194C of the Act to the tune of Rs.2,41,59,834/- from M/s. Shah Housecon Pvt. Ltd., whereas the assessee has shown revenue from operations for an amount of Rs.1,40,94,071/-. Notice under section 133(6) of the Act was issued to M/s. Shah Housecon Pvt. Ltd. but no response was received. Being not satisfied with the submissions made by the assessee to reconcile receipts as per 26AS with regard to TDS deducted under section 194C and 194J and receipt as per ITR the AO proceeded to hold that as per 26AS revenue receipt is Rs.2,41,59,834/- whereas the assessee has shown in the P&L account revenue receipt of Rs.1,40,94,071/- showing a difference of Rs.1,00,65,783/-. On failure of the assessee to explain the discrepancies in the revenue receipt as per 26AS and P&L account the AO proceeded to make the addition of Rs.1,00,65,783/- to the total income of the assessee and thereby framed the assessment under section 143(3) of the Act.
The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by
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the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly M/s. Shah Housecon Pvt. Ltd. deducted TDS of Rs.4,83,194/- on payment of Rs.2,41,59,834/- to the assessee as shown in form 26AS while complying the provisions contained under section 194C(1). It is also not in dispute that out of total payment of Rs.2,41,59,834/- made to the assessee an amount of Rs.1,00,65,783/- was on account of advance on which TDS of Rs.2,01,315/- was deducted and Rs.1,40,94,271/- was on account of labour charges bill payment on which TDS @ 2% amount of Rs.2,81,880/- was deducted. It is also not in dispute that the assessee has wrongly claimed full credit of TDS deducted to the tune of Rs.4,83,195/- instead of eligible credit of Rs.2,81,880/- in terms of section 191(3) read with rule 37BA.
In the backdrop of the aforesaid undisputed facts the Ld. A.R. for the assessee contended inter-alia that the addition made by the AO to the tune of Rs.1,00,65,783/- to the income of the assessee is liable to be deleted on the ground that TDS itself does not lead to the conclusion that the whole amount mentioned in it should be taxed in a particular year because deduction of tax and completion of assessments are two different things; that the AO has never referred to section 194C(1) in the assessment order; that
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M/s. Shah Housecon Pvt. Ltd. deducted TDS on advances given to the assessee.
However, on the other hand, the Ld. D.R. for the Revenue relied upon the order passed by the Ld. CIT(A).
When we examine the contentions raised by the Ld. A.R. for the assessee in the light of the aforesaid undisputed facts it has come on record that the Revenue has not disputed that the amount on which TDS was deducted was taken as advance. When advance on which TDS has been deducted is not to be considered as income the addition made by the Ld. CIT(A) is not sustainable.
The co-ordinate Bench of the Tribunal while deciding the identical issue in case of Dy. CIT vs. Rajeev G. Kalathil cited as (2014) 51 taxmann.com 514 (Mumbai-Trib.) observed that “TDS itself does not mean that whole amount mentioned in it should be taxed in a particular year; deduction of tax and completion of assessments are two different things while finalizing the tax liability of the assessee and the AO is required to take all facts and circumstances into consideration while framing the assessment and not only to see the TDS certificate”.
The assessee has brought on record the reply filed by the assessee before the AO available at page 66 of the paper book wherein it is duly explained that the amount considered by the assessee from the TDS certificate is an advance but this fact has not been considered in the order. The assessee has also brought on record the ledger account of M/s. Shah Housecon Pvt. Ltd., wherein it is duly reflected that the amount of Rs.1,09,03,001/- is an
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advance on which TDS was deducted. The AO has ignored all these documents which lead to the conclusion that merely on the basis of discrepancy in the TDS certificate addition is not sustainable in the eyes of law. However, the AO is to disallow the credit of TDS wrongly claimed by the assessee to the tune of Rs.2,01,315/- because the assessee has wrongly claimed full credit of TDS deducted amounting to Rs.4,83,195/- instead of eligible credit of Rs.2,81,880/-. Because the assessee company may claim the same in the year in which the income pertaining to the TDS is offered for taxation. So the AO is directed to disallow an amount of Rs.2,01,315/- wrongly claimed by the assessee.
In view of what has been discussed above, the appeal filed by the assessee is allowed. Order pronounced in the open court on 24.11.2023.
Sd/- Sd/- (S RIFAUR RAHMAN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 24.11.2023. * Kishore, Sr. P.S.
Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order
Dy/Asstt. Registrar, ITAT, Mumbai.