COMMISSIONER OF INCOME TAX-I, LUDHIANA vs. M/S ABBOTT AGENCY, LUDHIANA

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No.206 of 2012 (O&M).

Date of Decision:-27.09.2013. Commissioner of Income Tax-I, Ludhiana. .........Petitioner.

Versus M/s Abbott Agency, Ludhiana.

.........Respondent. CORAM: Hon'ble Mr. Justice Rajive Bhalla Hon'ble Mr. Justice Dr. Bharat Bhushan Parsoon.

***** Present:- Mr. Rajesh Katoch, Advocate

for the appellant.

Mr. Pankaj Gupta, Advocate for the respondent. Rajive Bhalla, J (Oral)

The revenue challenges orders passed by the Income Tax Appellate Tribunal, Chandigarh (for short, the Tribunal) and the Commissioner of Income Tax (Appeals) reversing the order passed by the Assessing Officer pertaining to assessment year 2008-09. The revenue has framed the following substantial questions of law: “(i) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal is justified in deleting the addition of `91,84,558/- by observing that income pertaining to TDS certificates receiving during the financial year 2007- 08 had been accounted for in the earlier years without verifying as to whether the said receipts are shown in the earlier years or not? Yag Dutt 2013.10.22 15:33 integrity of this document -2- (ii) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified for accepting the claim of the assessee that the entire amount of `91,84,558/- has been disclosed in the earlier years but there is nothing on record except a sum of `16,02,300/- to suggest that the respective receipts have been shown in earlier years?”

Counsel for the appellant submits that the Commissioner of Income Tax (Appeals) as well as the Tribunal have committed serious errors of law as they have ignored that explanation furnished by the assessee pertains to an amount of `16,02,300/- only. In the absence of any explanation with respect to the other receipts, detected by the Assessing Officer, the impugned orders are illegal and, therefore, liable to be set aside.

Counsel for the respondent submits by reference to the orders passed by the Tribunal and the Commissioner of Income Tax (Appeals) that tabulated receipts, reproduced in the order passed by the Commissioner of Income Tax (Appeals) clearly reveal that the receipts are shown in the account books, for the financial year 2005-06. The Assessing Officer proceeded to raise an inference against the assessee as TDS certificates were received in the financial year 2007-08. We have heard counsel for the parties, perused the impugned orders and find no reason to interfere much less to hold that substantial questions framed by the revenue arise for adjudication. The Assessing Officer, issued a notice under Section 143 (2) of Yag Dutt 2013.10.22 15:33 integrity of this document -3- the Income Tax Act, 1961 and held that as the assessee has received TDS certificates in the financial year 2007-08, but has not disclosed money receipts in respect thereof, the assessee is liable to pay tax, penalty and interest. Aggrieved by this order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The assessee placed his account books before the Commissioner of Income Tax (Appeals) and pleaded that TDS certificates received in financial year 2007-08 relate to amounts received and shown in its account books for financial year 2005-06. Taking cognizance of these facts and after examining the accounts in detail, the Commissioner of Income Tax (Appeals) accepted this plea, allowed the appeal and set aside the order passed by the Assessing Officer, by holding as follows:

“6. The perusal of submissions made by the appellant shows that it has been basically claimed that the amounts recorded as sanctioned and credited in assessee's account for F.Y. 2007-08 as per the letter of Director, Punjab State Lotteries pertain to the schemes operated by the assessee in earlier year and the same had been reflected in the receipts for the appropriate year. Further the amounts due to the assessee in respect of such scheme had been realized by the assessee from the running account with Director, Punjab State Lotteries and since the said amounts were sanctioned only later the TDS pertaining to such amount was also deducted accordingly in F.Y. 2007-08. It was thus claimed that the receipts pertaining to this TDS `1,22,384/- had been reflected in assessee's profit and loss account in earlier years, but since no TDS was deducted Yag Dutt 2013.10.22 15:33 integrity of this document -4- because of delay in sanctioning the said amounts by Director, Punjab State Lotteries, the same was claimed later on receipt of the TDS certificate. It was thus pointed out the entire confusion has arisen because of unusual delay in sanctioning the amounts due to the assessee on account of bumper prizes etc. pertaining to lottery schemes run in F.Y. 2005-06. The AR also highlighted the column two of the letter of Director, Punjab State Lotteries referred to by the AO which records the year in which the said amount has been sanctioned. For instance an amount of `16,023,00/- as prize winning ticket (PWT) was sanctioned in F.Y. 2007-08 but it pertain to Baisakhi Bumper 2005 and the said amount of `16,023,00/- had been recorded in the assessee's books in F.Y. 2005-06 as the claimed for Baisakhi day bumper was due on 14.4.2005. 7. In order to verify the claim of the appellant that income pertaining to TDS certificate received during the F.Y. 2007-08 had been accounted for in the earlier years, the AR was directed to file evidence in support of the same. The AR with reference to this filed the following reply:

“In reference to above said appeal, your honour has asked us to submit the details of evidence showing that TDS amount of `1,22,384/- has been claimed in the F.Y. 2005-06. We are filing the copy of computation of income along with the copy of assessment order passed by the then Income Tax Officer u/s 143(3) for the A.Y. 2006-07. In the Income Tax Return for the A.Y. 2006-07 the assessee has claimed TDS of `1,53,322/-. Total amount of TDS of `1,53,322/- includes TDS of `1,22,384/- and TDS deducted by bank against interest. As per demand notice u/s 156 of the Act, the Ld. Assessing Officer has raised additional demand of `22,870/- after adjusting the total TDS of Yag Dutt 2013.10.22 15:33 integrity of this document -5- `1,53,322/-. This additional demand was against disallowances of expenditure of `50,000/-. It is therefore very clear that the credit for the TDS amount of `1,22,384/- is given in the A.Y. 2006-07.”

The assessment record for assessment year 2006-07 was called for and perused with reference to the claim of the appellant as detailed above. It is seen that the TDS of `1,22,384/- has been duly claimed for assessment year 2006-07 though the same has been allowed at the time of final assessment u/s 143(3). In view of the above the action of the AO in concluding that the assessee had not shown the income pertaining to the TDS deducted is erroneous in the facts of the case. As such the addition made is directed to be deleted.” The revenue thereafter filed an appeal before the Tribunal which was dismissed, thereby affirming findings recorded by the Commissioner of Income Tax (Appeals).

A perusal of the above extracts reveals that amounts received are duly reflected in account books for the relevant assessment years. The assessee having proved that TDS certificates, issued late, pertain to receipts reflected in the account books for assessment year 2006-07, the impugned orders, based upon a detailed appraisal of the account books are legal and valid. An argument raised by counsel for the revenue that the matter be remitted to enable the Assessing Officer to verify receipts recorded in account books for the financial year 2005-06, cannot be accepted as the Yag Dutt 2013.10.22 15:33 integrity of this document -6- matter has been considered in great detail. The Commissioner of Income Tax (Appeals) has only after appraising the account books and referring to each receipt and TDS certificate, set out facts in a tabulated form and only after satisfying himself as to the bonafides of the assessee's plea held that there was no fault on the part of the assessee.

We find no reason to hold that findings of fact recorded by the Commissioner of Income Tax (Appeals), affirmed by the Tribunal are erroneous whether in fact or in law or that the substantial questions of law framed arise for adjudication. As a consequence, the appeal is dismissed.

(Rajive Bhalla)

Judge (Dr. Bharat Bhushan Parsoon)

Judge September 27, 2013

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