M SULOCHANA,MADURAI vs. ITO WARD II(5), MADURAI

This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-1 (i/c), Madurai dated 06.02.2018 in for the assessment year 2010-11 passed U/s.250(6) r.w.s. 143(3) of the Act.

The assessee has raised several grounds in her appeal however the cruxes of the issues are as follows:-

The brief facts of the case are that the assessee is an individual engaged in the business of civil contract, filed her return of income for the assessment year 2010-11 on 22.10.2010 admitting total income of Rs.6,40,850/-. Initially the return was processed U/s.143(1) of the Act on 29.11.2011 wherein demand of Rs.55,260/- was raised and subsequently it was revised U/s.154 of the Act on 12.12.2011 granting refund of Rs.3,63,450/- for the excess deduction of TDS. Subsequently the case was selected for scrutiny under CASS and finally assessment order was passed U/s.143(3) of the Act on 18.01.2013 wherein the Ld.AO made addition of Rs.18,25,755/- under the head undisclosed asset.

During the course of scrutiny assessment proceedings, it was observed by the Ld.AO that Form 26AS reveal that the total contract receipt of the assessee during the relevant assessment year was Rs.2,58,04,142/-. However the assessee has declared only Rs.2,33,19,737/- as her contract receipts in her return of income. Therefore the Ld.AO opined that the assessee has suppressed her contract receipt to the extent of the difference amount of Rs.24,84,405/- (Rs.2,58,04,142 – Rs.2,33,19,737). Since it was further revealed that the assessee had disclosed in her balance sheet bills receivable as on 31.03.2010 Rs.6,58,650/-, the Ld.AO worked out the difference amount of Rs.18,25,755/- (Rs.24,84,405 - Rs.6,58,650) as the undisclosed income of the assessee because the assessee had not offered any explanation even though sufficient opportunity was provided. Further while doing so, the Ld.AO opined that there may be delay in submitting TDS certificates, however issuance of TDS certificate U/s.203 of the Act, is only to enable the assessee to get credit against tax payable and to get excess deduction of TDS as refund from the Income Tax Department. Hence, obtaining the TDS certificate has nothing to do with the method of accounting followed by the assessee.

On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO because the assessee had not objected to the addition made by the Ld.AO though sufficient opportunity was given to her.

Before us the Ld.AR submitted that the assessee had already accounted the difference amount of Rs.18,25,755/- as her income for the assessment year 2009-10 itself and therefore addition of the same amount for the assessment year 2010-11 would amount to double taxation. Hence it was pleaded that the matter may be remitted back to the file of Ld.AO in order to verify her claim and thereafter decide the matter in accordance with merit and law. The Ld.DR could not confront to the submission of the Ld.AR.

We have heard the rival submissions and carefully perused the materials on record. It is obvious that if the assessee had disclosed the amount of Rs.18,25,755/- as her contract receipt for the assessment year 2009-10, then addition of the same amount as undisclosed income of the assessee for the relevant assessment year 2010-11 will amount to double taxation. Therefore in the interest of justice, we hereby remit the matter back to the file of Ld.AO to verify whether the assessee had declared the amount of Rs.18,25,755/- as her contract receipt for the assessment year 2009-10 and if found so, delete the addition made in the relevant assessment year 2010-11 for Rs.18,25,755/-. If found otherwise the Ld.AO is at liberty to pass appropriate order in accordance with merit and law after affording sufficient opportunity to the assessee of being heard. Needless to mention that, the assessee being individual, the method of accounting regularly followed by her will determine the year in which the income of the assessee has to be recognized and not the year in which the income is reflected in form 26AS.

The other ground raised by the assessee is with respect to denial of depreciation on the estimated income. On this issue we do not find any infirmity in the order of the Ld.Revenue Authorities. Once the income is estimated taking into consideration of the entire business, then the question of granting deduction towards depreciation does not arise because that has also been taken into consideration while estimating the income. Therefore this ground raised by the assessee is devoid of merits.

In the result, the appeal of the assessee is partly allowed for statistical purposes as indicated herein above.