What did the Tribunal hold?

The Tribunal held that if the assessee has accounted for the entire interest income in their books according to their regular accounting method, additions based solely on Form 26AS, which might reflect income in a different assessment year, would lead to double taxation.

The assessee, engaged in money lending, filed his return of income for AY 2015-16. The Assessing Officer made additions based on discrepancies between the declared interest income and Form 26AS.

What were the issues?

Whether additions can be made based on Form 26AS when the income is already accounted for in the assessee's books for the relevant assessment year as per their accounting method, potentially leading to double taxation.

Jayantilal Jain vs ITO | ITAT Chennai 2018

Income Tax Appellate Tribunal, ‘SMC’ ‘C’ BENCH, CHENNAI

Before: Shri A. Mohan Alankamony

Hearing: 04.10.2018

आदेश / O R D E R

This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-5, Chennai dated 17.01.2018 in for the assessment year 2015-16 passed u/s.250(6) r.w.s.143(3) of the Act.

The assessee has raised four grounds in his appeal however the crux of the issue is that the Ld.CIT(A) has erred in sustaining the order of the ld. Assessing Officer who had made additions based on the discrepancy reflected in Form 26AS.

The brief facts of the case are that the assessee is an individual engaged in money lending business, filed his return of income for the assessment year 2015-16 on 27.03.2016 declaring total income of Rs.5,70,260/-. Subsequently, the case was taken up for scrutiny through CASS and finally assessment order was passed on 28.06.2017, wherein, the ld. Assessing Officer made additions with respect to interest income stated in the Form 26AS which was not disclosed in the return of income on the following entities:- i) Bhoomi & Building Pvt. Ltd. : Rs. 5,000 ii) Aachi Special Foods Private Ltd. : Rs. 90,000 iii) Jumbo Bag Limited : Rs. 2,62,500 iv) Indian Bartys and Chemicals Ltd. : Rs. 68,627 v) MD Sathak Trust : Rs. 12,00,000 vi) SPR Construction Pvt. Ltd. : Rs. 3,00,000 Total : Rs. 19,26,127

Before me, the ld. AR submitted that the tax deductor had erroneously deducted tax in the relevant assessment year with respect to the interest paid/accrued not pertaining to the relevant assessment years and hence there was discrepancy in regard to the interest income declared by the assessee in the return of Form 26AS.

The ld. AR further submitted that the entire interest income was accounted in the books of assessee for the relevant assessment years and tax was paid. It was therefore, pleaded that the addition made by the ld. Assessing Officer, which was subsequently confirmed by the ld. CIT(A) may be deleted. On the other hand, the ld. DR relied on the orders of Revenue authorities and argued in support of the same.

I have heard the rival submissions and carefully perused the materials on record. It is an accepted legal proposition that if the assessee being an individual has declared his entire interest income in his books of accounts for the relevant assessment years according to the method regularly adopted by him, which may be cash or mercantile system, then there will be no scope for the Revenue to make addition based on Form 26AS. If the Revenue makes addition towards interest income for the relevant assessment year even when the same is declared in another assessment year in accordance with the accounting system regularly followed by the assessee (being an individual) and paid tax accordingly then it would amount to double taxation. Therefore,

I hereby remit the matter back to the file of the Assessing Officer to verify whether the assessee has accounted the entire interest stated in Form 26AS in his books of account for the relevant assessment years in accordance with the accounting method regularly followed by him and if found so, delete the addition, otherwise, pass appropriate order in accordance with merit and law.

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

Order pronounced on the 4th October, 2018 at Chennai.

JAYANTILAL JAIN,CHENNAI vs. ITO NON CORPORATE WARD 4(2), CHENNAI

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Recent GST High Court judgments