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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI GAGAN GOYAL
This appeal by assessee is directed against the order of National Faceless Appeal Centre (for short ‘NFAC’) dated 14.11.2022 u/s. 154 of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2017-18. The assessee has raised the following grounds of appeal:
ASHOK KUMAR GUPTA “1. The learned CIT(A) was not justified in confirming the addition of an amount of Rs.34,10,997/- on account of alleged commission, even though the same has not been received by the appellant even as of today. The reasons given by him in this regard are incorrect, unjustified and unwarranted. 2. the learned CIT (A) failed to appreciate the fact that since the appellant followed the cash system of accounting, the said commission not having been received by the appellant, was not included in the returned income. 3. the appellant craves leaves to add to, to alter or to amend the above grounds of appeal.”
Brief facts of the case are that the assessee filed its return of income declaring total income of Rs 87, 54,420/- on 01-08-2017. In this return of income assessee had shown Rs 1, 20,000/- as professional fee from Housing development & Infrastructure Ltd.
Assessee’s return was processed u/s. 143(1) dated 30.03.2019 in which CPC had made addition of Rs 34,10,997/- as commission to directors from Housing development & Infrastructure Limited on which TDS of Rs. 1,70,550/- was deducted u/s. 194H. The amount of TDS of Rs. 1, 70,550/- was not reflected in the Form No. 26AS when the return was filed by the assessee. The same TDS was deducted on 20-03-2018 and was reflected in 26AS after the filing of return by the assessee. The said income as claimed by the assessee has not received till date as the company is facing insolvency proceedings before NCLAT.
Aggrieved by the order of CPC assessee filed rectification with CPC but the CPC rejected the application u/s. 154 and made addition of Rs 34,10,997/- without even giving the credit of TDS of Rs 1,70,550/-.
Aggrieved with this order assessee filed an appeal with Ld. CIT (A), Mumbai. But the Ld.CIT (A) also confirmed the action of CPC but granted credit of TDS (Rs 1, 70,550/-) on the corresponding income.
ASHOK KUMAR GUPTA 5. Aggrieved with the order of the Ld.CIT (A) dated 14/11/2022 assessee is in appeal before us. We have gone through the order u/s. 143(1), order u/s.154, order of the Ld. CIT (A) and the submission and the case laws relied upon by the assessee.
It is claimed by the assessee that he is following cash system of accounting. We have gone through 1st 26AS on page no. 6 to 10 of the paper-book updated till 22-07-2017 in which the income of Rs 34,10,997/- from Housing development & Infrastructure Limited is not reflected, only income of Rs 1,20,000/- is reflected which is duly taken in the return of income. Further, we have also gone through 2nd 26AS updated on 28-05-2018 in which the amount of Rs. 34, 10,997/- from Housing development & Infrastructure Limited is reflected and the TDS was deducted on 20-03-2018. The appellant is following the cash system of accounting for his income of all kinds as and when received from Housing development & Infrastructure Limited which has been accepted by the department in previous years also, so there is no any confusion in accepting the same for the current year also.
Since, the Housing development & Infrastructure Limited is facing various proceedings before NCLT/NCLAT and solvency position is under clouds. In that situation, particularly when assessee is following Cash System of Accounting, he is not supposed to declare the same following the principle of consistency and prudent, merely because the T.D.S. has been deducted and deposited by M/s. Housing development & Infrastructure Limited.
We accept the contention of the assessee with a rider that the T.D.S. credit reflected in Form No. 26AS of the assessee should be treated as recovery of revenue to that extent and same is chargeable to tax accordingly. In view of the above jurisdictional AO is directed to delete the addition of Rs. 34, 10,997/- and recalculate the Statutory Total Income of the assessee again.