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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of CIT(A)-2, Aurangabad, dated 09.02.2016 relating to assessment year 2010-11 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
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The assessee has raised the following grounds of appeal:-
1) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in dismissing the appeal of the assessee confirming the addition of Rs.13,81,539/- made by the A.O. on the basis of cash flow statement drawn. The addition being not of real income be deleted. 2) On the facts and circumstances of the case and in law the appellant resultantly liability created by Citi Financial Consumer Finance Ltd. by wrongly deducting TDS of Rs.2,08,868/- which resulted into difference of receipts of Rs.18,12,803/-. On the basis of cash flow statement the excess expenditure was resulted in the sum of Rs.14,22,802/-. The appellant used this excess amount to defray the expenditure which was in fact a liability payable to the said CFCFL since TDS amount was recovered in the subsequent year. After utilization of liability there was no shortfall in cash flow statement. The addition was not justified. It be deleted. 3) On the facts and circumstances of the case and in law the whole confusion arose due to 26AS receipts wrongly credited to the account of the assessee by CFCFL. The amount was not the receipt of the assessee forming part of any income. The credit was to be returned and in fact and law was a liability like loan. In the circumstances addition of Rs.13,81,539/- as income is not justified. It be quashed giving relief to the appellant-assessee. 4) On the facts and circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified.
The issue raised in the present appeal is against the addition made of ₹ 13,81,539/- on account of difference in receipts declared by the assessee and 26AS receipts.
Briefly, in the facts of the case, the Assessing Officer during the course of assessment proceedings noted that as per Profit and Loss Account, receipts were shown at ₹ 39,01,483/-, on which the assessee had shown net profit of ₹ 6,74,223/-. The assessee had debited ₹ 30,76,104/- to the Profit and Loss Account towards expenditure. Since the expenses were made in cash, the Assessing Officer prepared Cash Flow Statement and found that there was
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total cash deficit of ₹ 14,22,802/-. Considering the opening cash and withdrawals made from the bank, the Assessing Officer found that the assessee had total cash of ₹ 17,56,535/- available with him and after reducing household expenses and other expenses, balance available cash was ₹ 28,12,350/-. The assessee had debited expenses to the Profit and Loss Account at ₹ 30,76,104/-. The Assessing Officer thereafter, in order to arrive at actual figure of expenses made adjustment on account of outstanding expenses and arrived at figure of ₹ 28,12,300/- as net expenses paid in cash during the year. The total cash deficit was confronted to the assessee and he was asked as to why the same should not be treated as unexplained expenditure under section 69C of the Act. In reply, the assessee pointed out that City Financial Consumer Finance India Ltd. (in short ‘CFCFIL’) had shown excess receipts of ₹ 20,88,680/- for the month of March, 2010 and deducted excess TDS of ₹ 2,08,868/-. The excess deduction of TDS was recovered in financial year 2010-11 by not granting credit of TDS to that extent. The assessee also explained that the return of income for assessment year 2011-12 was wrongly furnished and the same was being revised. The expenses shown in the Profit and Loss Account were claimed to be shown on estimate basis and he pointed out that the figure of correct receipts should be adopted at ₹ 18,12,803/- as against figure of ₹ 39,01,483/- and net profit be estimated at ₹ 6,74,223/- as shown in the return of income. The assessee also pointed out that it had not maintained any books of account and expenses were shown on estimate basis. The Assessing Officer noted that the assessee was unable to produce any documentary evidence in the form of clarification from CFCFIL that they had credited excess amount of ₹ 20,88,680/- in the month of March, 2010 and had deducted excess TDS of ₹ 2,08,868/-. The Assessing Officer also
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noted that the assessee had furnished third party confirmations in proof of its expenses and the assessee could not go back and argue against the proofs placed by him. Further, the assessee also claimed refund to the tune of ₹ 3,22,240/- on the basis of said documents. Since the assessee had failed to revised its return of income for assessment year 2010-11, the addition of ₹ 13,81,539/- was made after giving credit of ₹ 4,12,633/- being the amount of income tax.
The CIT(A) notes the fact that CFCFIL had already taken measures to reverse the effect of wrong credit of TDS made in financial year 2009-10 by November, 2010 itself. However, the assessee failed to file revised return of income and also claimed refund of ₹ 3,22,240/- was granted. Further, during the course of assessment proceedings, the assessee tried to justify the expenses claimed in Profit and Loss Account. In the above said facts, the CIT(A) was of the view that there was a presumption that all the claims made in respect of income shown in the return of income were correct and true. The plea of assessee was thus, rejected.
The assessee is in appeal against the aforesaid addition.
The learned Authorized Representative for the assessee pointed out that receipts shown in Form No.26AS were not correct and the difference has been reconciled by the payer and effect of the same may be allowed to the assessee.
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The learned Departmental Representative for the Revenue on the other hand, strongly objected and pointed out that the assessee has not made right claim and had received excess refund on account thereof.
On perusal of record and after hearing both the learned Authorized Representatives, the issue which is arising in the present appeal is on account of excess payment shown by the payer and reflected in Form No.26AS vis-à-vis assessee. The payer CFCFIL has in November, 2010 reversed the same. However, both the Assessing Officer and CIT(A) denied the benefit of the same on the ground that the assessee had not revised its claim of refund and also because the assessee tried to explain the expenses claimed in the Profit and Loss Account as being genuine. Undoubtedly, the stand of assessee in this regard is not correct. However, it is an established principle that only real income arising to the assessee is to be taxed in his hands. In case, any discrepancy has occurred in Form No.26AS by the payer which has been credited in the succeeding year, then the effect of such adjustment needs to be allowed to the assessee in the year under appeal. The assessee claims that reconciliation would result in deletion of addition. In view of settled principles of law, only the income belonging to the assessee is to be assessed in his hands and where the payer in Form No.26AS has incorrectly shown the receipts, which were rectified by him in the succeeding year, then effect of such rectification is to be allowed to the assessee. The onus is upon the assessee to prove its claim and furnish the revised information in this regard. Further, the excess refund claimed and received by assessee is to be reverted. Accordingly, the assessee is directed to furnish information within period of six months before the Assessing Officer, who in turn, is directed to decide the
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issue and compute the income of assessee after considering evidences filed and in accordance with law. The grounds of appeal raised by the assessee are thus, allowed for statistical purposes.
In the result, appeal of assessee is allowed for statistical purposes.
Order pronounced on this 28th day of February, 2018.
Sd/- (SUSHMA CHOWLA) न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 28th February, 2018. GCVSR आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : अऩीऱाथी / The Appellant; 1. प्रत्यथी / The Respondent; 2. आयकर आयुक्त(अऩीऱ) / The CIT(A)-2, Aurangabad; 3. 4. The Pr.CIT-2, Aurangabad; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-सदस्य 5. मामऱा / DR ‘SMC’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune