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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI RAHUL CHAUDHARY & SHRI GAGAN GOYAL
O R D E R Per: Gagan Goyal (AM): This appeal has been filed by the assessee against the order dated 10/12/2019 passed by the Commissioner of Income-tax (Appeals)-40, Mumbai for the assessment year 2015-16. The assessee has raised the following effective grounds of appeal:
“1) The Comm. of Income Tax (A)-40, erred in passing the order confirming addition of Rs.98251/- made by the Assessing Officer u/s.69C of the Act,1961
2 ITA 1401/Mum/2020 on the ground that your Appellant had made the excess payment of interest of Rs.98251/- which was not recorded in his Books.
2) The Comm. of Income Tax (A)-40, erred in passing the order confirming levy of interest of Rs.46,188/- u/s.234B of the Income Tax Act,1961 as against Rs.26.058/- as' computed by your Appellant in his Return of Income for the A.Y.20J5-2016.”
The assessee individual is a sub broker in securities and commodities and filed his return of income for assessment year 2015-16 on 25/09/2015 declaring total income of Rs.46,38,380/-. After processing the return of income, the case was selected for scrutiny. In the course of scrutiny, the assessing officer noticing interest expenditure claimed by the assessee, called for information under section 133(6) from the concerned parties, and found an excess payment of Rs.98,251/- in the account of M/s All India Hing Supply Co. Ltd. On a query from the assessing officer, the assessee explained that assessee paid interest of Rs13, 39,180/-. Tax of Rs.133, 918/- was also deducted. Further, on 28/04/2015 assessee erroneously made payment of Rs.4, 95,732/- which was in excess by Rs.98, 251/-. As per the books of M/s All India Hing Supply Co. Ltd, interest of Rs.3, 97,481/- was payable to them up to 31/03/2015 and that the assessee had recovered the excess interest paid of Rs.98, 251/- on 19/07/2017 from M/s All India Hing Supply Co. Ltd. The assessing officer, therefore, disallowed the amount of Rs.98, 251/- and added the same to the total income. On appeal, the Ld.CIT (A) confirmed the disallowance / addition.
3 ITA 1401/Mum/2020
We have considered the rival submissions and perused the materials on record.
Upon hearing the parties, we are of the considered opinion that as the facts speak for themselves, the assessee, during the year under consideration made an excess payment of Rs.98, 251/- to M/s All India Hing Supply Co. Ltd erroneously and on realizing the mistake the assessee reclaimed the excess amount which was only received on 19/07/2017, which undisputedly falls in the subsequent assessment year to the assessment year under consideration. The assessee has not brought anything to controvert the finding of the assessing officer that ledger entries of the assessee should speak for itself.
In this view of the matter, we reasonably conclude that assessee has committed a mistake in terms of reconciliation of account with its party M/s. All India Hing Supply Co. Ltd. This transaction is neutral in nature, in the year under consideration assessee claimed interest at higher side by Rs. 98,251/-, but in the next year he received this amount back from M/s. All India Hing Supply Co. Ltd. and treated the same as income for that year. Moreover a reference of section 69C is also pertinent to mention here as under:
“Unexplained expenditure, etc. 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year
4 ITA 1401/Mum/2020
Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.”
Section 69C can be applied only in a case where in a financial year assessee has incurred some expenditure but he is not able to prove the source of the expenditure. In this case source is very well established as routed through regular books of accounts after deduction of T.D.S. thereon. The only issue is that the same has been made excessively out of inadvertent intentions and lack of reconciliation amongst the parties.
Source of payment and identification of parties not challenged by department, the only issue department has is about excess payment. This excess payment assessee done after deducting T.D.S. and received the same back in very next financial year. We don’t see anything wrong in assessee’s claim and allowed assessee’s appeal on this ground.
With regard to the second ground, levy of interest is consequential to the assessment, hence not required any adjudication.
In the result, appeal filed by the assessee is partly allowed.