COMMISSIONER OF INCOME TAX-III vs. NEEDWISE ADVERTISING PVT LTD

TAXAP/954/2011 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 954 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF INCOME TAX-III - Appellant(s) Versus NEEDWISE ADVERTISING PVT LTD – Opponent(s) ========================================================= Appearance : MR.VARUN K.PATEL for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 29/08/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) The present appeal by the Revenue arise out of order dated 16.12.2010 of the Income Tax Appellate Tribunal, Ahmedabad Bench ‘A’,

TAXAP/954/2011 2/4 JUDGMENT passed in ITA No. 2119 of 2007 for the Assessment Years 2004-2005. 1.1 Following question is raised by the appellant proposing it to be a substantial question of law. “Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 41,42,905/- made on account of rejection of book results and estimation of gross profit?” 2. Heard Mr. Varun K. Patel, learned counsel for the appellant. 3. In course of the proceedings of assssement in respect of assessment year 2004-2005, while considering the return of income of the respondent-ssessee, the assessing officer observed that the assessee had taken credit of TDS amount to the extent of Rs. 84,46,135/- which was on the basis of TDS certificate received by it. However, on verification of those certificates, it was noticed that they represented for the amount of Rs. 44 crores. The assesee had disclosed sales of services of Rs. 42.83 crores only. There was, therefore, difference of Rs. 1.17 crores in the sales as disclosed in the profit & loss account and as per the TDS Certificates. 3.1 The explanation tendered by the assessee did not satisfy the Assessing Officer as a result of which, addition of Rs. 41,42,905/- was made. 3.2 The assessee preferred appeal before the Commissioner of Income Tax (Appeals), which was allowed. The CIT(A) observed that in course of the assessment proceedings the assessee had reconciled the amount of tax deducted at source with the total receipts. He therefore, held that making an estimation of sales figures as recorded in the books of account, who was not warranted. 3.3 Against the order of CITA(A) the department preferred an appeal wherein one of the grounds was in respect of above deletion of Rs. 41,42,905/-. The appeal of the revenue came to be dismissed bringing the department before this Court by way of present appeal.

TAXAP/954/2011 3/4 JUDGMENT 4. Upon considering the facts on record, the Tribunal was convinced that there was no discrepancy between the amount of tax deducted at source vis-a-vis the total receipts. The Assessing Officer erroneously proceeded to reject the books of accounts and erred in estimating the gross profit consequently making the addition in the income. It was observed by the Tribunal that the assessee had been able to reconcile the sales figures appearing in the TDS certificate with those records in the books of account. 5. In the course of proceedings before assessing officer himself assessee had in his explanation explained the discrepancy. It was stated that one of the party M/s Metro Publicity and another Titron Communication were used to deduct the tax at source on payment basis, whereas another party namely Mudra Communication deducted the tax at source on credit basis. Another reason for discrepancy was that the amount of sales mentioned in the profit and loss account was in excess than the amount of service tax on the customer which was levied by the broadcasters. The reconciliation explanation by the assessee could be seen from the following table : Name

the Customer Amount of Sales inclusive

of Service Tax passed on Amount

of payments received Mudra Communication 26,78,54,251 26,79,26,205 Metro Publicity 5,82,46,361 5,36,07,371 Triton Communication 12,54,92,185 11,94,92,185 TOTAL:- 45,15,92,797 44,00,25,761 Less :-Service tax suffered

and passed on 2,32,26,418 Net Sales as per P&L A/c 42,83,66,379 6. In view of the above, we are of the considered opinion that the confirming findings recorded by the Tribunal were based upon the facts and material relevant to the issue before it. They were eminently proper in the facts of the case. They were findings of facts and in the realm of

TAXAP/954/2011 4/4 JUDGMENT appreciation. When the findings are factual in nature and properly arrived at, no interference is called for in the present appeal. No substantial question of law arises for consideration. 7. Accordingly, the appeal is dismissed. [V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi