SHREE KUBERJI DEVELOPERS,SURAT vs. ACIT CICLE-3(2), NEW CIRCLE -1(1)(1), SURAT

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ITA 1075/SRT/2024Status: DisposedITAT Surat16 January 2025AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted the assessee's contention that the total rent of Rs. 17,20,000 was paid by M/s. Ashish Publicity for FY 2015-16 and 2016-17, corresponding to AY 2016-17 (Rs. 8,00,000) and AY 2017-18 (Rs. 9,20,000). The assessee claimed these amounts were offered in the respective assessment years. The Tribunal found it appropriate to set aside the matter to the AO for verification of the assessee's claim that Rs. 8,00,000 was offered in AY 2016-17. If confirmed, the AO was directed to reduce the rental income from AY 2017-18. The Tribunal also referenced Rule 37BA(3) of the IT Rules, 1962, regarding the assessment year for which TDS credit is given, and directed the AO to withdraw the TDS credit claimed on the total rent of Rs. 17,20,000 in the current AY after verification. The assessee was directed to furnish supporting details. For statistical purposes, the appeal was treated as allowed.

What were the facts?

The assessee, Shree Kuberji Developers, filed its return for Assessment Year (AY) 2017-18, declaring a total income of Rs. 24,22,280, later revised to Rs. 1,09,93,760. The Assessing Officer (AO) noted a discrepancy between the rent income declared by the assessee (Rs. 9,41,930) and the amount reflected in Form 26AS (Rs. 17,20,000) from M/s. Ashish Publicity. The AO added the difference of Rs. 7,78,070 as undisclosed rent. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that the Form 26AS figure included rent for AY 2016-17 (Rs. 8,00,000) and AY 2017-18 (Rs. 9,20,000). The CIT(A) dismissed the appeal for lack of supporting documentation like a lease agreement.

What were the issues?

1. Whether the addition of Rs. 7,78,070 on account of undisclosed rent received, as reflected in Form 26AS, is justified, when the assessee claims the figure is erroneous and includes rent from a prior assessment year. Assessee's Contention: The assessee argued that the rent of Rs. 17,20,000 reflected in Form 26AS pertains to two assessment years: Rs. 8,00,000 for AY 2016-17 and Rs. 9,20,000 for AY 2017-18. The assessee stated it had offered Rs. 8,00,000 in AY 2016-17 and Rs. 9,20,000 in AY 2017-18. The assessee requested the matter be remitted to the AO for verification. Revenue's Contention: The revenue relied on the orders of the lower authorities, implying agreement with the addition made by the AO and upheld by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 37BA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI PAWAN SINGH & SHRI BIAYANANDA PRUSETH

For Appellant: Shri Ramesh Malpani, CA
For Respondent: Shri Mukesh Jain, Sr. DR
Hearing: 13/01/2025Pronounced: 16/01/2025

आदेश / O R D E R

PER BIJAYANANDA PRUSETH, AM:

1.

This appeal by assessee emanates from the order dated 30.08.2024 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, “the ld. CIT(A)”] for the assessment year (AY) 2017-18.

2.

The grounds of appeal

raised by the assessee are as follows: “1. That on the facts and in the circumstances of the case as well as in law, the ld. CIT(A) has erred in upholding the addition of Rs.7,78,070/- on account of undisclosed rent received as per Form 26AS, whereas it was explained that the figure of rent in Form 26As was wrong and erroneous.”

3. The facts of the case in brief are that assessee filed original return on 27.10.2017, declaring total income at Rs.24,22,280/-. Subsequently, /AY.2017-18 Shree Kuberji Developers assessee filed revised return on 31.03.2018, declaring total income at Rs.1,09,93,760/-. The case was selected for scrutiny under CASS. On perusal of 26AS and details filed by assessee, it was found by Assessing Officer (in short, ‘AO’) that there is a mismatch between the receipts as per 26AS and the return of income filed by assessee. The assessee had shown rent of Rs.9,41,930/- but as per 26AS the rent received from M/s. Ashish Publicity was Rs.17,20,000/- on which TDS was also deducted. The assessee was issued show cause notice which was not replied to. Hence, AO added the difference of Rs.7,78,070/- [17,20,000 – 9,41,930] to the total income. He also added undisclosed interest income of Rs.15,902/-.

4. Aggrieved, the assessee filed appeal before the CIT(A). The assessee submitted that the prayer of the rent i.e., M/s Ashish Publicity filed TDS return containing details of two years rent at a time and therefore, amount of Rs.17,20,000/- is reflected in Form 26AS. This amount includes rent of Rs.8,00,000/- for AY.2016-17 and Rs.9,20,000/- for AY.2017-18. The assessee had shown Rs.8,00,000/- in AY.2015-16 and Rs.9,20,000/- in AY.2017-18. The CIT(A) did not accept contention of the assessee because it failed to furnish any lease agreement with M/s Ashish Publicity to support its claim. The CIT(A) dismissed the appeal of the assessee.

5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. At the outset, learned Authorized Representative (ld. AR) of /AY.2017-18 Shree Kuberji Developers the assessee submitted that rent of two years were paid by M/s Ashish Publicity and the same was offered in AY.2016-17 (Rs.8,00,000/-) and 2017-18 (Rs.9,20,000/-). He submitted that the matter may be remitted to the AO for verification of assessee’s claim.

6.

On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue relied on the orders of the lower authorities.

7.

We have heard both the parties and perused the materials available on record. The ld. AR contended that total rent of Rs.17,20,000/- was paid by M/s Ashish Developers for FY.2015-16 and 2016-17 (AY.2016-17 and 2017-18). Rent of Rs.8,00,000/- pertains to AY.2016-17 and Rs.9,20,000/- pertains to the year under consideration (AY.2017-18). He submitted that assessee has shown the above rents in the respective assessment years. After considering the facts of the case and claim of the assessee before us, we deem it proper to set aside the matter to the file of AO to verify claim of the assessee that rent of Rs.8,00,000/- was shown by assessee in AY.2016-17. If it is offered for taxation in AY.2016-17, the AO should reduce the said rental income from the income of AY.2017-18. As per Rule 37BA(3) of IT Rules, 1962, credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. The AO should, therefore, withdraw the credit of TDS claimed on total rent of Rs.17,20,000/- in the current assessment year after

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