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Income Tax Appellate Tribunal, B/“SMC” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-2, Coimbatore dated 30.05.2017 pertaining to assessment year 2013-14.
The assessee has raised the following grounds for consideration.
(i) The learned CIT(A) ought to have held that the AO was not right in not considering the regular method of accounting followed continuously, without rejecting the same as defective, by the appellant, to include the amount of `1,26,283/-, which was accounted in the year of receipt by the appellant, and included in the total income of the appellant, in the facts and the circumstances of the case and in law.
(2) The learned CIT(A) ought to have held that the AO should not have included the amount of `1,26,283/- as per Form 26AS details, in question, as income of the previous year of the appellant, in the facts and the circumstances of the case and in law.
(3) For these and other additional grounds of appeal that may be adduced at the time of hearing, the order of the learned CIT(A)-2, Coimbatore, upholding the addition of `1,26,283/- is opposed to law and unsustainable in the facts and the circumstances of the case.
The brief facts of the case are that the assessee firm is a commission agent and has filed its return of income for assessment year 2013-14 on 10.09.2013 declaring total income of `42,07,650/-.
In this case, the issue in dispute is regarding addition of commission income of `1,26,283/- reported in 26AS but has not been offered to tax. During scrutiny, the AO verified 26AS details and found that the appellant had not admitted commission income of `1,26,283/- received from M/s.Winsome Yarns Ltd., to tax and added the above sum to the returned income. Aggrieved by this addition, the assessee carried the appeal before the Ld.CIT(A).
3.1 Before the Ld.CIT(A), the appellant’s Authorized Representative Shri B. Krishnamoorthi, CA (herein after referred to as “AR”) appeared and explained that the above sum of `1,26,2831- was actually not received during the year but M/s.Winsome Yarns Ltd., following their method of accounting, provided the commission in their books and deducted tax although they were disputing the payment of this sum to the appellant. It was under these circumstances the appellant did not account this income. Further, the appellant was following cash basis of accounting upto FY.2012-13. It was the practice of the appellant in the past that as and when commission payments are received, it is offered as income of that year and claim credit for TDS on such income though TDS would have been made by the payer in the previous years on accrual basis. Following this method, the above sum was offered to tax in A.Y.2016-17 as it was received from M!s.Winsome Yarns Ltd., during the F.Y.2015-16 and corresponding TDS was also claimed in A.Y.2016-17. The AR filed a chart showing the commission incomes received from different parties in different years and offer of such income in different assessment years to tax though the commission was appearing in Form No.26AS of the previous years. The AR submitted that since the income had suffered tax in subsequent year, the AO ought not to have made the addition and pleaded for deletion of the same.
3.2 The Ld.CIT(A) observed that assessee, besides earning commission income on sale of yarn etc., was also engaged in trading and the regular system of accounting followed was Mercantile system. When pointed about the same, the AR admitted that mercantile system was being followed in respect of trading business whereas cash system was followed for accounting commission till F.Y 2012-13. The Ld.CIT(A) declined to accept the argument of A.R that appellant can follow different methods of accounting for different heads of business income in the same year. It has to follow a uniform system of accounting for all incomes falling under the head “Business Income”. The earning of commission was also a part of the appellant’s business as it is in the same line that the appellant is doing trade. Therefore, the Ld.CIT(A) observed that the AO has rightly brought the above commission income to tax in this year following the mercantile system of accounting as has been followed by the assessee for other business incomes. According to Ld.CIT(A), the party, after having credited the appellant’s account and deducting tax, could not have disputed the payment as such and also the appellant did not produce any proof of such dispute. Hence, Ld.CIT(A) dismissed the appeal of assessee. Against the order of Ld.CIT(A), now the assessee is in appeal before us.
At the time of hearing, none appeared on behalf of the assessee. I took up the case for adjudication after hearing the ld.D.R. and perusing the materials on record. In this case, the main plea of assessee before the lower authorities is that the impugned amount , though it was reflected in the 26AS, it was not actually received and was offered for taxation in the next assessment year and TDS also not considered for the assessment year under consideration. In my opinion, if the amount of income as well as corresponding TDS was considered in the next assessment year, there cannot be addition in the assessment year under consideration. Otherwise it amount to double taxation, it shall be avoided. Accordingly, I remit the isuse to the file of ld. Assessing Officer to examine whether the assessee has offered the same income for the next assessment year and decide in accordance with law.
In the result, the appeal of assessee is partly allowed for statistical purposes. Order pronounced on 05th December, 2017.