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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RAJESH KUMAR
आदेश ORDER अिमत शु�ला : �या. स.: PER AMIT SHUKLA, JM:
The aforesaid appeal has been filed by the assessee against impugned order dated 01.03.2012 passed by CIT(A)-5, Mumbai for the quantum of assessment passed under section 143(3) for the assessment year 2007-08 on the following grounds:- “
1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the salary income of Rs.5,40,000/- as considered differently by the assessing officer as against actually salary due, earned and shown in the return i.e. Rs.4,06,266/- for the year under consideration without considering the facts and merits of the case.
2. The learned commissioner of Income Tax (Appeals) has also erred in confirming the addition under section 68 of the Act, of 2 भूपेश कुमार एम राठोड Bhupesh Kumar M Rathod Rs.9,56,352/- which was recovered by the appellant for and on behalf of Bell Marshal Telesystem Ltd., as custodian and transferred the said amount to the said company, without considering the facts and merits of the case”.
2. The brief facts qua the first ground are that, the assessee is a Director of M/s Bell Marshal Telesystem Ltd. The AO on going through the computation of total income noted that, assessee had shown gross salary of Rs.4,06,266/- and has claimed conveyance and medical expenses of Rs.9,600/- and Rs.15,000/- respectively. However, on perusal of salary certificate issued by the company, he noticed that, the gross salary received from M/s Bell Marshal Telesystem Ltd. is only Rs.2,40,000/-. In response to the show cause notice, to reconcile the said figure, it was submitted that assessee has also received salary from M/s Exatt Technology Ltd for Rs.1,66,266/- and also gave the details of cheques issued by the said company. The assessee also furnished a copy of certificate issued by the said company. All these details have been incorporated by the AO at page 1 of the assessment order, which for sake of ready reference are reproduced hereunder: “Further it is submitted by the assessee that, “the Company at Sr. No.2, issued 3 cheques of Rs.83133/- each vide cheque Nos.729337, 729338 & 729339 drawn on UTI Bank for the months from Oct.2006 to Dec.2006, towards the salary/remuneration for the respective months of Rs.1,00,000/- after deducting Rs.16,867/- towards TDS. Out of the above cheques, cheque No.729337 was cleared while cheque No. 729338 was returned unpaid. Against this cheque M/s Exatt Technology Ltd, issued another cheque bearing No.729257, which got cleared. Hence salary income received from M/s Exatt Technology Ltd is shown at Rs.1,66,266/- that is for 2 months only. The 3rd cheque was not cleared.” The assessee has also furnished a copy of certificate issued by M/s Exatt Technology Ltd., which reads as under: “This is to certify that, Mr. Bhupesh Rathod was working with our organization as Finance Advisor, from Oct.2006 to Dec.2006, and his monthly remuneration was Rs.1,00,000/- p.m.”.
The AO from the details submitted noted that, assessee had shown gross salary of Rs.1,66,266/- from M/s Exatt Technology Ltd. which is excluding the TDS deduction but the amount shown
3 भूपेश कुमार एम राठोड Bhupesh Kumar M Rathod is incorrect. The assessee should have shown the salary received at Rs.3 lakhs which was due to him from the company. Thus, the AO held that, the gross salary should be taken at Rs.3,00,000/- and accordingly added the difference.
Before the Ld. CIT(A), the assessee reiterated that the third cheque amounting to Rs.83,133/- after deduction of TDS i.e. 3rd month salary remained unpaid to the assessee and same has not been paid to the assessee till date due to some litigation with the said company regarding employment, overtime and performance. Thus, the said salary which has not been received at all cannot be taxed as an “income”. The salary is chargeable to tax on actual received or receipt basis. The Ld. CIT(A) held that, as per the provisions of section 15, salary income has to be assessed on the “due basis” or “receipt basis”. The assessee has worked for 3 months in lieu of salary @ Rs.1 lakh per month. Thus, salary of Rs.3 lakhs was due to him which is taxable during the year under consideration. Further, the salary shown excluding TDS, has already been shown, that is TDS has already been deducted, therefore, the entire salary has to be taxed in this year. Accordingly, he confirms the addition made by the AO.
Before us, the ld. Counsel for the assessee, submitted that, assessee before the Tribunal had filed petition for admission of additional evidences, which shows that, the said amount or salary has not been paid at all till date, which is further corroborated by copy of ledger account and other records. The list of such additional evidences filed are as under:
S.No. Particulars 1 Copy of certificate from Exatt Technologies P Ltd. confirming payment of salary 2 Copy of certified True Copy of Resolution passed by BMT Ltd. On 01.12.2013 3 Copy of Ledger account of Client Recovery (BMT) in books of Appellant for period 1.4.2004 to 31.03.2008 4 Copy of return acknowledgement, computation of total income, Balance sheet, etc. for the Assessment year AY 2005-06 AY 2006-07
4 भूपेश कुमार एम राठोड Bhupesh Kumar M Rathod 5 Copy of bank statement of appellant for period- a) 31/05/2004 to 16/09/2004 b) 17/02/2005 to 13/01/2006 c) 01/10/2007 to 26/10/2007 6 Copy of return acknowledgement, computation of total income And annual report of BMT Ltd. for AY 2005-06 AY 2006-07 Thus, he submitted that, these additional evidences goes to the root of the issue and may kindly be admitted in view of substantial justice, as he further submitted that, AO may be directed to verify the same and grant appropriate relief.
On the other hand, Ld. DR strongly relied upon the order of the CIT(A), however submitted that, in case additional evidences are being admitted, then the matter should be restored back to the file of the AO.
After considering the rival submissions and on perusal of the impugned orders, we find that, the main dispute is whether the salary of Rs.1,66,266/- (net of TDS) actually received by the assessee is to be taxed or the entire gross salary of Rs.3 lakhs. The Ld. CIT(A) has confirmed the addition on the ground that, the “salary due” from the employment in the previous year whether paid or not shall be chargeable to income-tax. To rebut this finding that no salary at all has been due or received, now before us, various additional evidences have been filed by the assessee. On perusal of the same, we find that these go to the very root of the issue and support the contention of the assessee that the said amount of salary has not been received at all till date from M/s Exatt Technology Ltd. Once that is so, then needless to say that, the same cannot be added to the income of the assessee. Accordingly, in the interest of justice we are admitting the additional evidence and remit the matter back to the file of the AO to consider these additional evidences and decide this issue afresh and in accordance with the law. Thus, ground No.1 is allowed for statistical purposes.
5 भूपेश कुमार एम राठोड Bhupesh Kumar M Rathod
In ground No. 2, the assessee has challenged the addition on account of Rs.9,56,352/- made under section 68. The brief fact are that, assessee had shown loan amount of Rs.98,31,440/- from various parties. Out of the said loan, an amount of Rs.9,56,352/- was shown under the head “client recovery (BMT)” by the assessee in his books. The assessee in response to the show cause notice to prove the genuineness of the loan, submitted the copy of loan confirmation and their pass-books in respect of major loan amounts, however, with regard to the loan amount of Rs.9,56,352/-, no confirmation was filed as noted by the AO. In respect of the said loan, it was submitted that the amount represents a loan by M/s BMT Ltd to ITA & C Ltd. who had pledged its shares of JIK Industries with the assessee in his DMAT account. Therefore, the assessee was custodian and Bell Marshal Telesystem Ltd. is lender and JA&C (P) Ltd. is borrower, hence no addition should be made in the hands of the assessee. Various other explanations were filed which has been dealt by the AO as well as CIT(A). However, both the authorities have confirmed the additions after detailed discussion.
Before us, a preliminary ground has been raised by the Ld. Counsel contending that, the said loan amount was not received during the year and it is appearing as an opening balance as on 01.04.2007, thus, it cannot be added under section 68 in this year.
On the other hand, Ld. DR strongly relied upon the orders of the authorities below.
After considering the relevant finding given in the relevant order and material placed on record, we find that the amount of Rs.9,56,352/- which is appearing in the “client recovery BMT” account in the books of the assessee, is actually an opening balance as on 01.04.2007, that is, it is coming from the earlier
6 भूपेश कुमार एम राठोड Bhupesh Kumar M Rathod years. To invoke the provisions of section 68, it is sine qua non that, the same should be credited in the books of accounts for the previous year and for which the assessee does not offer any explanation about the nature and source thereof, then in that case the same may be charged to income-tax as income of the assessee for that previous year. Thus, for invoking the deeming provision of section 68, the amount should appear as a credit in the relevant previous year only. If the amount is coming from the earlier year and is the opening balance on the first day of the relevant previous year, then needless to say that addition cannot be made under the provisions of section 68. Accordingly, the said addition is deleted on the preliminary ground itself. Accordingly, ground No.2 is treated as allowed.
In the result, appeal of assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 7th April, 2016.
Sd/- Sd/- (राजेश कुमार) (अिमत शु�ला) लेखा सद�य �याईक सद�य (RAJESH KUMAR) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 7th April, 2016 ��त/Copy to:- 1) अपीलाथ� /The Appellant. 2) ��यथ� /The Respondent. 3) The CIT(A) –5, Mumbai. 4) The Commissioner of Income Tax- 3, Mumbai. 5) िवभागीय �ितिनिध “बी”, आयकर अपीलीय अिधकरण, मुंबई/ The D.R. “B” Bench, Mumbai. 6) गाड� फाईल \ Copy to Guard File.