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Income Tax Appellate Tribunal, HYDERABAD ‘ S.M.C.’ BENCH, HYDERABAD.
Before: SMT. P. MADHAVI DEVI
O R D E R This appeal is filed by the assessee for the Assessment Year 2014-15 against the order of Commissioner of Income Tax (Appeals)-6, Hyderabad Dt.1.12.2017.
The brief facts of the case are that the assessee-firm carrying on dealer-ship for Tata Docomo Services, filed its Return declaring NIL income. During the course of assessment proceedings u/s. 143(3) of the Act pursuant selection for scrutiny under CASS, a notice u/s. 143(2) was issued and the Assessing Officer observed that the assessee has shown unpaid statutory liability of Service Tax of Rs.32,51,334 in the Balance Sheet but has not produced evidence to this effect that the same was paid before filing of the Return of Income. He also observed that for the Assessment Year 2012-13 also Sales Tax of Rs.13,36,484 (outstanding) had not been paid and hence it was added to the returned income and similar addition was made in the Assessment Year 2013-14 also.
Therefore the balance of Service Tax of Rs.8,70,684 which remained unpaid, the Assessing Officer added it to the income of the assessee u/s. 43B of the Act.
Further, the Assessing Officer also observed that the assessee has debited to the Profit and Loss Account certain expenditure totalling to Rs.4,68,464 which are not supported by proper vouches and only self-made vouchers are maintained. The Rs.93,693 and brought it to tax. Aggrieved, the assessee preferred an appeal before the CIT(Appeals) who dismissed the same and also enhanced the income by making a further disallowance u/s. 40(a)(3) of the Act in respect of expenditure incurred in cash exceeding Rs.20,000/-. The assessee has raised the following grounds of appeal :
1. That the Commissioner of Appeals committed error and not consider that Service Tax is not a trading receipt and the department has clarified as TDS need not be deducted on the service Tax commission income Rs.79,15,047.67 was deducted by Mis Tata Tele services limited and remitted the same into central Government account, as such demanding to pay Rs.2,24,6701 - is not tenable and not sustainable under law.
2. That the Commissioner of Appeals did not Consider that the amount of Service Tax collected by the assessee during the Financial Year of Rs.8,70,6841/- is not income of the assessee for the impugned Annual Year 2014-15, as such remitting the amount as contemplated under section 43B of the Income Tax Act does not arise.
3. That Commissioner of Appeals failed to appreciate that the Provisions of Section 28(iv) of the Income Tax Act are applicable only in respect of any benefit or perquisite received in kind rather than in cash.
Hence, it is just and necessary that this Hon'ble Tribunal may be pleased to setaside the impugned order passed by 4 the Commissioner of Income Tax (AppeaIs) - 6, Hyderabad, Telangana State vide Appeal No. 0237/2015- 16/B2/ClT(A)-6, Dated:01.12.2017 and same was communicated to the Income Tax Practitioner of appellant on Dated: 05.02.2018, confirming the original impugned order passed by the Assessing Officer i.e Income Tax Officer, Ward. 10(10 Hyderabad Under Section 143(3) of the Income Tax Act 1961 Da ted: 23. 12.20 16 for the Assessment Year 2014- 15 relevant to the FinanciaI year 2013-14, and to pass such order or orders as this Hon'ble Tribunal may deem fit and in the proper in the circumstances with the interest of the Justice.”
In addition to the above, the assessee has also raised the following additional grounds of appeal :
“ That on the facts and in the circumstances of the case ld. CIT(A) erred in levying the Demand of Rs.19,28,660 u/s. 40A(3) of Income Tax Act, 1961 holding that the cash payments exceeding Rs.20,000/- per day are come within the meaning of income, hence liable to pay tax. Though the Assessing Officer verified books of account and accepted the said expenditure and held that transaction is not come under the income.”
As regards the admission of additional grounds, we find that no disallowance was made by the Assessing Officer u/s.40A(3) of the Act and by making such disallowance the CIT(Appeals) has enhanced the income of the assessee. Since this issue has arisen from the order of the CIT(A), we deem it fit and assessee that the payments made by the assessee to each individual did not exceed the limit prescribed under section 40A(3) of the Act, but the CIT(Appeals) has only considered the total of payments made to several persons under each voucher.
It is submitted that the payment to each person has to be taken into consideration for the purpose of invoking Section 40A(3) of the Act. He therefore prayed that the disallowance made u/s. 40A(3) of the Act be deleted.
The ld. DR submitted that these details submitted by the assessee along with the additional ground, were not submitted before the lower authorities. Therefore, according to him, the disallowance made by the CIT(Appeals) has to be confirmed.
Having regard to the rival submissions, I find that the CIT(Appeals) has enhanced the assessment by making the disallowance u/s. 40A(3) of the Act. The assessee has now filed the details of the payments to each of the persons and such evidence needs verification by the Assessing Officer. Therefore, I deem it appropriate to admit the additional grounds and remit whether the cash payments to each person on any day exceed Rs.20,000 and if no such payments are made, then no disallowance u/s. 40A(3) of the Act shall be made.
As regards the other two grounds, the learned counsel for the assessee submitted that the assessee has never claimed such expenditure nor has debited it to its profit and loss account and therefore no disallowance is called for. However, since this contention needs factual verification , I deem it fit and proper to remit them also to the file of the Assessing Officer de novo verification/consideration.
In the result, the appeal of the assessee is treated as partly allowed for statistical purposes.