Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C ” BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI. G. PAVAN KUMAR
आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The appeal filed by the assessee is directed against order of the Commissioner of Income-tax (Appeals)-7, Chennai in dated 29.10.2015 for the assessment year
ITA No.2135/Mds/2015 :- 2 -:
2012-2013 passed u/s.143(3) and 250 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’).
The assessee raised only substantive ground that the Commissioner of Income Tax (Appeals) erred in confirming the Addition of AO being advance received from clients without appreciating the submissions and explanations offered in the proceedings.
The Brief facts of the case that the assessee is an Advocate and filed e-return of income on 11.03.20.13 admitting total income of �20,56,706/-. Subsequently, under scrutiny norms notice was issued u/s 143(2) and 142(1) of the Act. In compliance to notices, the ld. Authorised Representative of the assessee appeared from time to time produced records and filed details. The Assessing Officer perused the Bank statements and disallowed unexplained deposits. The issue in dispute being assessee has received advance from various clients aggregating to �16,00,000/- through HDFC and Union Bank of India Account. The assessee identified the deposits in bank accounts received by cheques. The ld. Authorised Representative explained that the said advances are received from the clients and routed through bank accounts. The Assessing Officer alleged that explanations are not logical as the assessee could not establish the ITA No.2135/Mds/2015 :- 3 -:
support of deposits with name and address of the clients in the assessment proceedings. Since the advances are reflected in the books of accounts and no satisfactory explanation was offered, the Assessing Officer completed assessment u/s.143(3) of the Act by adding bank credits as unexplained deposits alongwith other disallowance and assessed total income. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals).
In the appellate proceedings, the ld.AR of the assessee reiterated his submissions made before the Assessing Officer and argued the grounds raised against the action of the Assessing Officer.
The ld. Commissioner of Income Tax (Appeals) perused the findings of the Assessing Officer and written submissions filed on 28.10.2015. The assessee has explained the aggregate advances of �16,00,000/- received from clients with cheque details. The assessee being an Advocate received advances amount from clients for services to be rendered in future. Such advance are shown as liability to be adjusted against services to be rendered. The ld. Authorised Representative relied on the decision of Delhi Bench Tribunal in the case of K.K. Khullar (2009) 116 ITD 301 and also Jurisdictional Tribunal decision in the case of R.S. Suriya vs. DCIT in & 597/Mds/2009 and substantiated his arguments that the Assessing
ITA No.2135/Mds/2015 :- 4 -:
Officer has made addition as the explanations furnished by the assessee are not satisfactory. The ld. Commissioner of Income Tax (Appeals) verified the Bank account credits and presumed that assessee has not explained or furnished details in the assessment proceedings or in the appellate proceedings and distinguished the judicial decision cited by the assessee. Further assessee could not furnish confirmation of primary details of name, address and pan numbers of the clients who have advanced the money. With these observations the Commissioner of Income Tax (Appeals) concurred with the findings of the Assessing Officer and confirmed the order of the Assessing Officer. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the assessee assailed an appeal before Tribunal.
Before us, the ld. Authorised Representative reiterated his submissions made before Assessing Officer and Commissioner of Income Tax (Appeals) and argued that the assessee being a Advocate received advance fees in respect of legal issues and such advance fees is offered to tax in subsequent assessment year. The assessee is regularly assessed to Income tax in filing income tax return and paying taxes which are accepted by the Department. The Assessing Officer not satisfied with the explanations of the advances received from the clients arbitrately brought to tax in financial year 2011-12 irrespective
ITA No.2135/Mds/2015 :- 5 -: of assessee supporting deposits with material evidence. In appellate proceedings, the ld. Authorised Representative explained the sources with written submission dated 28.10.2015 but ld. Commissioner of Income Tax (Appeals) has distinguished the facts and decisions relied by the assessee and concurred with the findings of the Assessing Officer. The ld. Authorised Representative submitted that there is no suppression of income as the amount was offered to the Income Tax in subsequent years and produced statement of schedule of advance fees with details of bank account, name of clients, bank branch and cheque no’s to substantiate the credit routed in bank account and establishment of identity with information of banks and prayed for deletion of addition by Assessing Officer in assessment proceedings.
Contra, ld. Departmental Representative relied on the orders of the lower authorities and opposed the grounds of the assessee.
We heard the rival submissions and perused the material on record and judicial decisions cited. The assessee being an Advocate in profession and it is common for the Advocates to collect advance fees in respect of cases to be represented in future and advance fees are received through bank account and assessee has offered to tax in succeeding assessment year. The ld. Authorised Representative drew our attention to the schedule of advance fee receipts with identity of ITA No.2135/Mds/2015 :- 6 -:
clients/party, fees amounts, Bank account details to substantiate the grounds of offering income in future. The advance fee received by the Advocate cannot be treated as income for the relevant assessment year, even if the assessee is maintaining his books of accounts under cash system of Accounting. Therefore, we herein direct the Assessing Officer to delete the addition of advance fee received by assessee from clients subject to verification that advance fee received is offered as income in subsequent years or returned or if still remain as advance.
In the result, the appeal of the assessee allowed as indicated hereinabove. Order pronounced on Thursday, the 17th day of March, 2016 at Chennai.