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Facts
The assessee received commission income from M/s Healthware Pvt. Ltd. The Assessing Officer (AO) made an addition of Rs. 22,84,999, alleging it was commission income not offered to tax. The assessee claimed this amount was either offered in AY 2017-18 or the total amount received was not reconciled.
Held
The Tribunal found that the commission income of Rs. 22,85,000 appearing in Form 26AS for AY 2017-18 was indeed declared by the assessee in their profit and loss account for that year. Therefore, the addition made by the AO was deleted, and ground No. 1 of the appeal was allowed.
Key Issues
Whether the commission income of Rs. 22,85,000 appearing in Form 26AS for AY 2017-18 was offered to tax by the assessee either in AY 2017-18 or AY 2018-19.
Sections Cited
148A, 148, 194H
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal by the assessee is directed against order dated 27.05.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, raising following grounds:
1. On the facts, and in circumstances of the case. and in law. learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing officer action of the Assessing officer in making addition of RS. 2,285, in making addition of RS. 2,285,000 (11,980,650 - 9,695,650) alleging the differential amount as 9,695,650) alleging the differential amount as commission income thereby, clubbing commission income of commission income thereby, clubbing commission income of commission income thereby, clubbing commission income of Assessment Year 2017 Assessment Year 2017-18 and 2018-19 without appreciating the 19 without appreciating the fact that, your appellant had already offered commission income of , your appellant had already offered commission income of , your appellant had already offered commission income of RS. 2,285,000 for Assessment Year 2017 RS. 2,285,000 for Assessment Year 2017-18 and therefore, making 18 and therefore, making addition of the same was not warranted since, the validity of addition of the same was not warranted since, the validity of addition of the same was not warranted since, the validity of income of preceding previous year was not questioned by the income of preceding previous year was not questioned by the income of preceding previous year was not questioned by the assessing officer during the course of proceedings for the year ficer during the course of proceedings for the year ficer during the course of proceedings for the year under consideration. under consideration.
2. On the facts, and in circumstances of the case, and in law, 2. On the facts, and in circumstances of the case, and in law, 2. On the facts, and in circumstances of the case, and in law, learned Commissioner of In learned Commissioner of Income-tax (Appeal) erred in uphol tax (Appeal) erred in upholding action of the Assessing officer while making addition of the Assessing officer while making addition of the Assessing officer while making addition of RS. 2,285,000 in treating the income as Income from other sources 2,285,000 in treating the income as Income from other sources 2,285,000 in treating the income as Income from other sources although the income was flowing; out of business sources. although the income was flowing; out of business sources.
2. Briefly stated facts of the case are that the assessee filed Briefly stated facts of the case are that the assessee filed Briefly stated facts of the case are that the assessee filed return of income for the year under consideration on 20.09.2018 return of income for the year under consideration on 20.09.2018 return of income for the year under consideration on 20.09.2018 declaring total income at Rs.68,58,280/ aring total income at Rs.68,58,280/-. Subsequently, . Subsequently, a specific information, was received by the Assessing , was received by the Assessing Officer, Officer, which was flagged under the risk management strategy formulated by the flagged under the risk management strategy formulated by the flagged under the risk management strategy formulated by the Central Board of Direct Taxes (CBDT) Central Board of Direct Taxes (CBDT) through Income through Income-tax Business Application (ITBA) software under the head ‘high risk CRI/VRU cation (ITBA) software under the head ‘high risk CRI/VRU cation (ITBA) software under the head ‘high risk CRI/VRU cases. In the case of the assessee, the information comprise that cases. In the case of the assessee, the information comprise that cases. In the case of the assessee, the information comprise that assessee received commission from M/s Healthw ived commission from M/s Healthware Pvt. Ltd. but are Pvt. Ltd. but same was not offered to tax. In view of the information an order same was not offered to tax. In view of the information an order same was not offered to tax. In view of the information an order under clause (d) of section 148A of the Income under clause (d) of section 148A of the Income-tax Act, 1961 (in tax Act, 1961 (in short ‘the Act’) was passed short ‘the Act’) was passed on 18.04.2022 and consequently notice on 18.04.2022 and consequently notice u/s 148 of the Act was issued u/s 148 of the Act was issued. In response, the assessee filed the assessee filed return of income on 17.06.2022 declaring income return of income on 17.06.2022 declaring income at Rs.68,58,280/- i.e. the same income which was declared in the original return of i.e. the same income which was declared in the original return of i.e. the same income which was declared in the original return of income filed. The Assessing Officer observed that as per Form 26AS income filed. The Assessing Officer observed that as per income filed. The Assessing Officer observed that as per for assessment year 2017 for assessment year 2017-18 and assessment year 2018 essment year 2018-19, the assessee received commission of Rs.92,30,650/ assessee received commission of Rs.92,30,650/- in assessment year in assessment year 2017-18 and commission of Rs.27,49,999/ 18 and commission of Rs.27,49,999/- during assessment during assessment year 2018-19 19 19 and and and thus thus thus total total total commission commission commission amount amount amount of of of Rs.1,19,80,649/- was recei was received by the assessee from Healt ved by the assessee from Healthware Pvt. Ltd. during the period from assessment year 2017-18 and Pvt. Ltd. during the period from assessment year 2017 Pvt. Ltd. during the period from assessment year 2017 assessment year 2018 assessment year 2018-19, but the assessee in the return of income but the assessee in the return of income only declared amount of Rs.96,95,650/ only declared amount of Rs.96,95,650/-. Thus, there is a short fall there is a short fall of Rs.22,84,999/- which which couldn’t be reconciled by the a be reconciled by the assessee. Accordingly, Accordingly, the the AO AO made made addition addition for for the the amount amount of of Rs.22,84,999/- to the returned income. to the returned income.
3. On further appeal, the Ld. CIT(A) also upheld the addition On further appeal, the Ld. CIT(A) also upheld the addition On further appeal, the Ld. CIT(A) also upheld the addition observing as under:
“4.4. From the detail and documents furnished by the appellant it 4.4. From the detail and documents furnished by the appellant it 4.4. From the detail and documents furnished by the appellant it appears the total commission receipt from Healthware Pvt. Ltd. for the AY the total commission receipt from Healthware Pvt. Ltd. for the AY the total commission receipt from Healthware Pvt. Ltd. for the AY 2017-18 & AY 2018 18 & AY 2018-19 at Rs. 96,95,650/- is shown by the appellant in is shown by the appellant in his reply. However, from the perusal of the 26AS for the AY 2017 his reply. However, from the perusal of the 26AS for the AY 2017 his reply. However, from the perusal of the 26AS for the AY 2017-18 and AY 2018-19, it is found that the Healthware Priva 19, it is found that the Healthware Private Limited (TAN: te Limited (TAN: HYDH00962D) has made total payment of commission of Rs. HYDH00962D) has made total payment of commission of Rs. HYDH00962D) has made total payment of commission of Rs. 92,30,650/- during the FY 2016 during the FY 2016-17 and Rs. 27,49,999/- during the FY during the FY 2017-18. Thus total commission amount received by the appellant is Rs.
Thus total commission amount received by the appellant is Rs.
18. Thus total commission amount received by the appellant is Rs. 1,19,80,649/-. But the assessee has only acc . But the assessee has only accounted for Rs. 96,95,650/ ounted for Rs. 96,95,650/- in his reply. As per appellants submission he has received Rs. in his reply. As per appellants submission he has received Rs. in his reply. As per appellants submission he has received Rs. 92,30,650/- and offered it to be taxed in AY 2017 and offered it to be taxed in AY 2017-18 and he has 18 and he has received and as per his claim and offered Rs. 27,49,999/ received and as per his claim and offered Rs. 27,49,999/- to be taxed in FY 2017-18 relevant to the as 18 relevant to the assessment year under reference. But Id. AO sessment year under reference. But Id. AO had categorically pointed out that the appellant has shown total had categorically pointed out that the appellant has shown total had categorically pointed out that the appellant has shown total commission income in these two assessment years at Rs. 96,95,650/ commission income in these two assessment years at Rs. 96,95,650/ commission income in these two assessment years at Rs. 96,95,650/- (i.e. Rs. 69,45,650 in AY 2017 (i.e. Rs. 69,45,650 in AY 2017-18 plus Rs. 27,49,999/- in AY 2018 in AY 2018-19) whereas total commission received as per Form l commission received as per Form 26AS in these two years 26AS in these two years is at Rs. 1,19,80,649/ is at Rs. 1,19,80,649/- (i.e. Rs. 92;30,650/- in AY 2017 in AY 2017-18 plus Rs. 27,49,999/- in AY 2018 in AY 2018-19). There is short fall of Rs. 22,84,999/ 19). There is short fall of Rs. 22,84,999/- and same has not been reconciled by the appellant during the a same has not been reconciled by the appellant during the a same has not been reconciled by the appellant during the assessment proceedings. Even during the appellate proceedings, the appellant did not proceedings. Even during the appellate proceedings, the appellant did not proceedings. Even during the appellate proceedings, the appellant did not furnish any documentary evidence demonstrating that he has offered furnish any documentary evidence demonstrating that he has offered furnish any documentary evidence demonstrating that he has offered entire commission income at Rs. 92,30,650/ entire commission income at Rs. 92,30,650/- in AY 2017 in AY 2017-18 and Rs. 27,49,999/- in AY 2018 in AY 2018-19. Therefore, in view of the facts of the case I n view of the facts of the case I am of the considered opinion that the commission received at am of the considered opinion that the commission received at am of the considered opinion that the commission received at Rs.22,84,999/- - was not shown by the appellant in his return of income/ was not shown by the appellant in his return of income/ books of account. Hence, the addition of Rs. 22,84,999/ books of account. Hence, the addition of Rs. 22,84,999/- made by the Id. made by the Id. AO deserves to be AO deserves to be upheld and sustained. Accordingly, ground no. 1 and upheld and sustained. Accordingly, ground no. 1 and 2 of the appeal are dismissed and not allowed. 2 of the appeal are dismissed and not allowed.”
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record including Paper Book containing pages relevant material on record including Paper Book containing pages relevant material on record including Paper Book containing pages 1 to 35 filed by the ass 1 to 35 filed by the assessee. The issue in dispute he issue in dispute before us is whether the commission income of Rs.22,85,000/ whether the commission income of Rs.22,85,000/- was declared by was declared by the assessee either in assessment year 2017 the assessee either in assessment year 2017-18 or in assessment 18 or in assessment year 2018-19. We find that We find that the commission income from Health the commission income from Health Ware Pvt. Ltd. received by the assessee Ware Pvt. Ltd. received by the assessee has been reported in Form reported in Form No. 26AS as well as in No. 26AS as well as in the return of income through the profit and the return of income through the profit and loss account.
4.1 Before us, the assessee has filed Before us, the assessee has filed a copy of the Form 26AS for copy of the Form 26AS for assessment year 2017 ent year 2017-18. According to the said Form 26AS the 18. According to the said Form 26AS the assessee received Rs.92,30,650/ ived Rs.92,30,650/- from Healthware Pvt. Ltd. The are Pvt. Ltd. The relevant details of tax deducted at source as per Form No. 26AS for relevant details of tax deducted at source as per Form No. 26AS for relevant details of tax deducted at source as per Form No. 26AS for AY 2017-18 is reproduced as under: 18 is reproduced as under:
Part A- Details of Tax Deducted at S Details of Tax Deducted at Source for AY 2017-18 Sr. No. Name of Deductor TAN of Deductor Total Amount Total Amount Total Tax Total TDS Paid/Credited Paid/Credited Deducted# Deposited 1. Healthware Private Limited HYDH00962 9230650.00 461533.00 461533.00 D Sr. No. Section 1 Transaction Status of Date of Remarks ** Amount Tax TDS Date Booking * Booking Paid/Credited Paid/Credited Deducted## Deposited 1. 194H 31-Mar- F 05-Jun-2017 - 6945650.00 347283.00 347283.00 2017 114250.00 114250.00 2. 194H 16-Feb- F 05-Jun-2017 - 2285000.00 2017 Sr. No. Name of Deductor Tax Of Deductor Total Amount Total Amount Total Tax Total TDS Paid/Credited Paid/Credited Deducted# Deposited 120943.00 120943.00 2. Bhushan Kamalnayan Vora MUMB09668B 2418860.00 1. 194H 23-Mar- F 18-May-2017 - 1770860.00 88543.00 88543.00 2017 2. 194H 31-Dec- F 05-Feb-2017 - 648000.00 32400.00 32400.00 2016 4.2 Further, the assessee has filed Further, the assessee has filed a copy of the return of income copy of the return of income for assessment year 2017 for assessment year 2017-18 along with profit and loss account 18 along with profit and loss account from page 13 to 15 of the Paper Book. In the profit and loss account from page 13 to 15 of the Paper Book. In the profit and loss account from page 13 to 15 of the Paper Book. In the profit and loss account available on Page 15, the assessee has shown net commission and available on Page 15, the assessee has shown net commission and available on Page 15, the assessee has shown net commission and brokerage amounting to Rs.61,44 brokerage amounting to Rs.61,44,947/- and the gross amount the gross amount corresponding to the said net profit has been reported at corresponding to the said net profit has been corresponding to the said net profit has been Rs.70,66,689/-. In the sales register for the assessment year 2017 n the sales register for the assessment year 2017 n the sales register for the assessment year 2017- 18 at page No. 11 of the Paper Book, page No. 11 of the Paper Book, the assessee has received the assessee has received commission amount from following parties commission amount from following parties:
Sales Register 1-Apr-2016 to 31-Mar-2017 Date Particulars Bill Gross Total Net Amount Net Amount Service tax @ No. 15% 06-Dec-2016 Shreeji International Shreeji International 01 745200.00 648000.00 648000.00 97200.00 14-Feb-2017 Healthware Pvt Ltd Healthware Pvt Ltd 02 2285000.00 1986957.00 1986957.00 298043.00 14-Feb-2017 Shree|l International Shree|l International 03 1268963.00 1103445.00 1103445.00 165518.00 14-Feb-2017 Shreejl International Shreejl International 04 600086.00 521814.00 521814.00 78272.00 14-Feb-2017 Shreejl International Shreejl International 05 167440.00 145600.00 145600.00 21840.00 260869.00 31-Mar-2017 Mohan Metals & Medical Mohan Metals & Medical 06 2000000.00 1739131.00 1739131.00 Equipn 7066689.00 6144947.00 6144947.00 921742.00 4.3 Similarly, in assessment year 2018 Similarly, in assessment year 2018-19 as per Form No. 26AS, 19 as per Form No. 26AS, the assessee has received commission from following parties the assessee has received commission from following parties the assessee has received commission from following parties including commission of Rs.27,49,999/ including commission of Rs.27,49,999/- from Health Ware Pvt. Ltd from Health Ware Pvt. Ltd available at Paper Book page 8. available at Paper Book page 8.
Part A- Details of Tax Deducted at Details of Tax Deducted at Source for AY 2018-19 Sr. No. Name of Deductor TAN of Deductor Total Amount Total Amount Total Tax Total TDS Paid/Credited Deducted# Deposited Paid/Credited 1. Healthware Private Limited HYDH00962 2749999.00 137500.00 137500.00 D Sr. No. Section 1 Transaction Status Date of Booking Remarks ** Amount Tax TDS Date of Paid/Credited Paid/Credited Deducted## Deposited Booking * 1. 194H 06-Jun- F 07-Aug-2017 - 2749999.00 137500.00 137500.00 2017 Sr. No. Name of Deductor Tax Of Deductor Total Amount Total Amount Total Tax Total TDS Paid/Credited Paid/Credited Deducted# Deposited 2. Medion Healthcare Pvt. Ltd. MUMM20770B 5000000.00 250000.00 250000.00 Sr. No. Section 1 Transaction Status Date of Booking Remarks ** Amount Tax TDS Date of Paid/Credited Paid/Credited Deducted## Deposited Booking * 1. 194H 15-May- F 07-Aug-2017 - 2000000.00 100000.00 100000.00 2017 2. 194H 21-Apr- F 07-Aug-2017 - 3000000.00 150000.00 150000.00 2017 4.4 Similarly, in the return of income filed for the assessment year Similarly, in the return of income filed for the assessment year Similarly, in the return of income filed for the assessment year 2018-19, the assessee has reported net commission and brokerage 19, the assessee has reported net commission and brokerage 19, the assessee has reported net commission and brokerage income of Rs.92,78,823/ income of Rs.92,78,823/- but no corresponding gross commission but no corresponding gross commission received has been shown in the details filed. The assessee has filed received has been shown in the details filed. The assessee has f received has been shown in the details filed. The assessee has f detail of gross and net commission received for assessment year detail of gross and net commission received for assessment year detail of gross and net commission received for assessment year 2018-19 from Health Ware Pvt. Ltd. 19 from Health Ware Pvt. Ltd. , which is reproduced as under: which is reproduced as under:
HEALTHWARE PVT LTD PERIOD 01.04.2017 TO 31.03.2018 PERIOD 01.04.2017 TO 31.03.2018 Date Particulars Amount Net Service Date Particulars Amount As As per AS per Service Tax tax 26AS 26AS Tds Net Tax Total 20.05.2017 Commission 538275 468065 468065 70210 01.04.2017 Payment 347283 2749999 2749999 8431000 1264650 9695650 Bill received - SCBank 20.05.2017 Commission 908000 789562 789562 118438 30.05.2017 Payment 691600 Bill received - SCBank 20.05.2017 Commission 3375000 2934783 2934783 440217 06.06.2017 Payment 3028861 Bill received - SCBank 20.05.2017 Commission 2750000 2391304 2391304 1358696 14.06.2017 Payment 3352906 Bill received - SCBank 03.06.2017 Commission 1659375 1442935 1442935 216440 30.06.2017 TDS 137500 Bill 30.06.2017 465000 404348 404348 60652 31.07.2017 Payment 2137500 received - SCBank 6945660 6945660 b/f b/f as as 26AS 26AS 9695650 5430997 5430997 1264653 9695650 6965659 6965659 8431000 1264650 9695650 4.5 On perusal of the above details for assessment year 2017 On perusal of the above details for assessment year 2017 On perusal of the above details for assessment year 2017-18, we find that tax has been deducted in respect of receipt from we find that tax has been deducted in respect of receipt we find that tax has been deducted in respect of receipt Bhushan Kamalnayan Vora on the receipt of Rs.24,18,860/- but Bhushan Kamalnayan Vora on the receipt of Rs.24,18,860/ Bhushan Kamalnayan Vora on the receipt of Rs.24,18,860/ same is not appearing in the receipt shown by the assessee in the same is not appearing in the receipt shown by the assessee in the same is not appearing in the receipt shown by the assessee in the profit and loss account for the assessment year 2017 and loss account for the assessment year 2017 and loss account for the assessment year 2017-18 and whether the TDS in respect of that party has been claimed by the whether the TDS in respect of that party has been claimed by the whether the TDS in respect of that party has been claimed by the assessee or not is also not clear, is also not clear, but, that issue in dispute that issue in dispute being not before us, we are not commenting o , we are not commenting on the same. As per Form 26AS As per Form 26AS for assessment year 2018 assessment year 2018-19 only receipt of Rs.27,49,000/ 19 only receipt of Rs.27,49,000/- is appearing but in the profit and loss account appearing but in the profit and loss account, the assessee has also the assessee has also included the commission income of Rs.69,45,650/- which though included the commission income of Rs.69,45,650/ included the commission income of Rs.69,45,650/ was appearing in 26AS Form for assessment year 2017-18. We also was appearing in 26AS Form for assessment year 2017 was appearing in 26AS Form for assessment year 2017 note that in assessment year 2018 assessment year 2018-19 though assessee has received 19 though assessee has received commission income from Medion Health Ware Pvt. Ltd. amounting commission income from Medion Health Ware Pvt. Ltd. amounting commission income from Medion Health Ware Pvt. Ltd. amounting to Rs.50,00,000/- as form no. 26AS as form no. 26AS but same has not been shown but same has not been shown in the profit and loss account for the assessment year 2018-19. in the profit and loss account for the assessment year 2018 in the profit and loss account for the assessment year 2018 Again, we are not commenting on this discrepancy being matter not ain, we are not commenting on this discrepancy being matter not ain, we are not commenting on this discrepancy being matter not before us.
4.6 But only issue before us is whether the commission income of ut only issue before us is whether the commission income of ut only issue before us is whether the commission income of Rs.22,85,000/- which was appearing in Form No. 26AS for which was appearing in Form No. 26AS for which was appearing in Form No. 26AS for assessment year 2017 assessment year 2017-18 has been offered by the assessee e 18 has been offered by the assessee either in the assessment year 2017 the assessment year 2017-18 or 2018-19. On perusal of the profit 19. On perusal of the profit and loss account for assessment year 2017 and loss account for assessment year 2017-18 it is evident that said 18 it is evident that said income has been declared by the assessee in the profit and loss income has been declared by the assessee in the profit and loss income has been declared by the assessee in the profit and loss account on the basis of which assessee has filed account on the basis of which assessee has filed return of income return of income and therefore, said income is part of the income declared in and therefore, said income is part of the income declared in and therefore, said income is part of the income declared in assessment year 2017 assessment year 2017-18. In view of the above verification, the 18. In view of the above verification, the finding of the lower authorities on the issue in dispute is set aside finding of the lower authorities on the issue in dispute is set aside finding of the lower authorities on the issue in dispute is set aside and the addition made by the AO is deleted. and the addition made by the AO is deleted. The ground No. 1 of the The ground No. 1 of the appeal of the assessee is accordingly allowed. appeal of the assessee is accordingly allowed.
4.7 Since we have already deleted the addition Since we have already deleted the addition in dispute, the issue raised in ground No. 2 whether the said income should be issue raised in ground No. 2 whether the said income should be issue raised in ground No. 2 whether the said income should be treated as part of the business income or under the head ‘income treated as part of the business income or under the head ‘ treated as part of the business income or under the head ‘ from other sources’ is from other sources’ is rendered academic and hence rendered academic and hence not required to be adjudicated. Accordingly, the said ground is dismissed as . Accordingly, the said ground is dismissed as . Accordingly, the said ground is dismissed as infructuous.
In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed.