GARDEN REACH SHIPBUILDERS & ENGINEERS LTD.,KOLKATA vs. CIT, KOLKATA-1, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “B”, BENCH KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAINI, AM आयकर अपील सं./ITA No.710/Kol/2014 (�नधा�रण वष� /Assessment Year:2009-2010) Garden Reach Shipbuilders & Vs. CIT, Kolkata-1, Engineers Ltd. Aayakar Bhawan, 43/46, Garden Reach Road, P-7, Chowringhee Square, Kolkata-700024 Kolkata-700069 �थायी लेखा सं./जीआइआर सं./PAN/GIR No.: AAACG 9371 K .. (अपीलाथ� /Appellant) (��यथ� / Respondent) Assessee by : Shri Sanjay Bhattacharya, FCA Revenue by : Shri Niraj Kumar, CIT DR सुनवाई क� तार�ख / Date of Hearing : 09/01/2017 घोषणा क� तार�ख/Date of Pronouncement 22/03/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, AM: The captioned appeal filed by the Assessee, pertaining to Assessment Year 2009-10, is directed against the order passed by ld. Commissioner of Income Tax, Kolkata under Section 263 of the Income Tax Act, 1961 ( hereinafter referred to as the “Act”), dated 21.02.2014. 2. Brief facts of the case qua the assessee are that the assessee filed its return of income for assessment year 2009-10 on dated 23.09.2009 declaring total income of Rs.85,39,43,105/-. Subsequently, the assessee`s case was selected for scrutiny U/s 143(3) of the Act and AO has assessed the income of the assessee at Rs.90,01,69,060/-. Later on the ld CIT has exercised the jurisdiction U/s 263 observing that there is difference in the income reported by the assessee and the income accrued as per TDS certificates. The ld CIT observed that during the year under consideration an amount of Rs. 7188898209 ( Rs.7181369792 + Rs.7528417) as per TDS certificates was the accrued income from sales

2 ITA No.710/14 Garden Reach Shipbuilders & Engg. Ltd. during the year on which TDS of Rs.87854016 ( Rs.87680873

+Rs.173143) was deducted by the deductee, Viz, Indian Navy/Coast

Guards. The assessee was following the mercantile system of accounting

and whole of the TDS of Rs.87854016 was claimed. Corresponding

income of Rs.7188898209 paid/payable to the assessee was also

required to be treated as income U/s 199 of the I.T. Act,1961 in the year

2008-09 relevant to the A.Y. 2009-10. This has seemingly resulted in

underassessment of income of Rs. 46,20,02,209/- ( Rs.7,18,88,98,209

–Rs.67,68,96,000).

section 263 of the Act observing that sales shown by the assessee did not

match with the TDS certificates of the assessee and he also noted that

there was underassessment of income. Therefore, Commissioner of

Income Tax has exercised jurisdiction under section 263 of the Act

observing the followings:-

“During the year an amount of Rs.7188898209 (Rs.7181369792+Rs.7528417) as per TDS certificates was the accrued income from sales during the year on which TDS of Rs.87854016 (Rs.87680873 +Rs.173143 ) was deducted by the deductee, viz, Indian Navy/ Coast Guards. The assessee was following the mercantile system of accounting and whole of the TDS of Rs.87854016 was claimed. Corresponding income of Rs.7188898209 paid/payable to the assessee was also required to be treated as income U/s 199 of the I.T.Act,1961 in the year 2008-09 relevant to the A.Y.2009-10. This has seemingly resulted in underassessment of income of Rs.46,20,02,209/- ( Rs.7188898209 –Rs.676896000). As per schedule 22, a total Rs.9359.36 lakhs was credited to P & L A/c which included Rs.8218.54 lakhs as interest income from banks etc. It was further observed that during the year TDS of Rs.24333425 which included TDS of Rs.172609586 deducted by different banks on payment/credit of Rs.837810542/- ( as per TDS certificates) was allowed. The difference amount of Rs.15956542 ( Rs.837810542 – Rs.821854000) was required to be treated as income during the year.

3 ITA No.710/14 Garden Reach Shipbuilders & Engg. Ltd. However, on perusal of scrutiny assessment proceedings, it is found that the A.O. has not examined these two issues properly and in the right perspective/detail to examine and to come to a correct conclusion in regard to the facts on these aspects and etc. In fact, the A.O. did not take cognizance of the inconsistencies spelt out in the notice u/s.263 of the I.T.Act, 1961 and even the Tax Audit Report and the audited accounts did not reflect these inconsistencies correctly and specifically. 6. In the Supreme Court case [243 ITR 83, 88-89 (SC)], the CIT noted that the ITO passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the ITO failed to apply his mind to the case in all perspective and the order passed by him was erroneous. The ITO accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts, the conclusion that the order of the ITO was erroneous is irresistible. Therefore, the Supreme Court was of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under section 263(1) was justified. ********************************************************* 14. The assessment order passed by the A.O. is, therefore, found to be erroneous in so far as it is prejudicial to the interests of revenue. The assessment order passed by the A.O. u/s.144 of the I.T.Act, 1961 for the assessment year 2009-10 is, therefore, set-aside to be framed de-novo in total. The books of accounts and supporting evidences would need to be examined to see firstly the Tax Audit Report and the audited accounts submitted are based on proper facts and supporting evidences. The Assessing Officer should verify the under lying financial transactions and do complete reconciliation vis-a- vis the TDS certificates and the amounts mentioned therein. 4. Not being satisfied with the order of ld. CIT(A), the assessee is in

appeal before us and has taken the following grounds of appeal :-

1) That the Order of Revision U/S 263 passed by the Commissioner of Income-tax is bad in law and not based on the facts of the circumstances of the case.

2) That without prejudice to the contention raised in Ground No.1 above, the Commissioner of Income-tax was wrong in holding that the Assessment Order passed U/S 143(3) by the Assessing Officer, was found by him to be allegedly erroneous in so far as it was allegedly prejudicial to the interest of revenue.

3) That without prejudice to the contentions raised in Ground Nos. 1 and 2 above, the Commissioner of Income-tax was wrong in setting aside the Assessment Order for being framed De-novo in total.

4) That without prejudice to the contentions raised in Ground Nos. 1,2 and 3 above, the Commissioner of Income-tax was wrong in observing that the Assessing Officer had allegedly not

4 ITA No.710/14 Garden Reach Shipbuilders & Engg. Ltd. examined the issues relating to the appellant's income from business and interest properly and in the right perspective / detail to examine and to come to a correct conclusion in regard to the facts on those aspects. 5. Ld. AR for the assessee has submitted before us that it is not

possible to show the income as per Form 26AS-TDS details. The amount of TDS received by the assessee includes the TDS on advances therefore naturally there will be mismatch. Therefore the TDS amount claimed by the assessee would not match with the income declared by the assessee. There is no provision in the I.T Act, where the assessee can claim TDS pertaining to one assessment year in another assessment year. The assessing officer also shown the TDS figure in the computation sheet attached with the assessment order therefore, the order passed by the Assessing Officer is not erroneous and prejudicial to the interest of revenue.

the findings of the Commissioner of Income Tax and stated that ld CIT

has rightly exercised the jurisdiction U/s 263 of the Act. The ld DR for the

Revenue also submitted that as per section 199 read with Rule 37BA (3)

(i), the TDS claimed by the asessee should not be allowed, that is, only

those TDS should be allowed which pertain to the income declared by the

assessee for the assessment year under consideration.

we are of the view that there is merit in the submissions of ld DR for the

Revenue, as his propositions are supported by the provisions of section

199 of the I.T. Act, read with Rule 37BA (3) of the Income Tax Rules,1962

which read as under:

5 ITA No.710/14 Garden Reach Shipbuilders & Engg. Ltd. RULE 37BA: Credit for tax deducted at source for the purposes of section 199.

(1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.

(2)(i) where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee:

Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).]

(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.

(iii) The deductor shall issue the certificate for decuction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.

(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.

The TDS of Rs.8,78,54,016/- was deducted from the amount of

Rs.718,88,98,209/- paid/payable to the assessee. Only

Rs.672,68,96,000/- was shown by the assessee in the computation of

income. Therefore, Rule 37BA(3) (i) applies to it.

Assesee was allowed TDS of Rs.17,26,09,586/- deducted by different

bank on payment/credit of Rs.83,78,10,542/-, but the assessee only

showed Rs.82,18,54000/- in respect of “interest on loans, advances,

6 ITA No.710/14 Garden Reach Shipbuilders & Engg. Ltd. investment and deposit” in the “Other Revenue” as per schedule-22.

Therefore, Rule 37BA(3) (i) applies to it.

Therefore, as per Rule 37BA(3) (i) the Credit for tax deducted at

source(TDS) and paid to the Central Government, shall be given for

the assessment year for which such income is assessable. The TDS

pertains to advances should not be claimed by the assessee or may

be claimed by the assessee in the assessment year in which said

advances get converted into income.

Considering the factual position explained above, we are of the view

that order passed by the ld CIT U/s 263 does not contain any infirmity

and accordingly, we confirm the order passed by the ld CIT U/s 263 of the Act. 8. In the result, the appeal filed by the Assessee on all the grounds, is dismissed. Order pronounced in the open court on this 22/03/2017.

Sd/- Sd/- (S.S.VISWANETHRA RAVI) (DR. A.L.SAINI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक Dated 22/03/2017 �काश �म�ा/Prakash Mishra,�न.स/ PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant- Garden Reach Shipbuilders & Engg. Ltd.. 2. ��यथ� / The Respondent.- CIT, Kolkata-I, Kolkata 3. आयकर आयु�त(अपील) / The CIT(A), Kolkata. 4. आयकर आयु�त / CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. आदेशानुसार/ BY 6. गाड� फाईल / Guard file. ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ�धकरण, कोलकाता / ITAT, कोलकाता