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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM
आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2017-18, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), Surat [in short “the ld. CIT(A)”], National Faceless Appeal Centre (in short ‘the NFAC’), dated 21.12.2022, which in turn arises out of an assessment order passed by the Central Processing Centre (CPC), Bengaluru, u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 15.04.2019.
2. The grounds of appeal raised by the Revenue are as follows: “i. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the CPC?” ii. “Whether on the facts and circumstances of the case and in law, the assessee has not shown true particulars his income.” iii. It is therefore, prayed that the order of Ld. CIT(A), be set aside and that of the assessing officer be restored.
/AY.2017-18 Jashmin Kantilal Patel iv. The appellant craves to add, modify or alter any grounds during the cour4se of appeal proceedings.”
Succinctly, the factual panorama of the case is that assessee before us is an Individual and filed his return of income on 28.09.2018, for assessment year 2017-18. The assessee is a partner in M/s Yogi Transport, a partnership firm, engaged in the business of logistics. Till financial year 2013-14, the assessee was carrying on transportation business as a proprietor in the name and style of M/s Yogi Transport. Thereafter, in financial year (F.Y.) 2014-15, there was a change in constitution and the proprietary concern of the assessee viz: Yogi Transport was converted in to a partnership firm. The name of the partnership firm was also titled as Yogi Transport. The assessee had filed his return for A.Y. 2017-18 on 29.03.2018 declaring total income to the tune of Rs. 12,25,050/- wherein he had shown business income and income from other sources. During the year under consideration, the partnership firm viz: Yogi Transport had carried out transportation work of the under mentioned parties and had shown all the income earned from such transportation contract in its return filed for assessment year (A.Y.) 2017-18. The said parties had also deducted tax as under.
Name Amount of TDS Deducted Contract ParshottamdasThobhanbhai Patel 51,864 519 Lupin Ltd 3,52,452 7,050 Bhageria Industries Ltd. 84,80,676 84,809 HDFC Bank Ltd. 11,434 1,143 Medidian Bond Pvt. Ltd. 1,05,14,379 47,344 Maher Cargo Carriers Pvt. Ltd. 7,65,474 0 Atul Ltd. 14,08,020 17,754 Sarna Chemicals Pvt. Ltd. 2,66,524 2665 /AY.2017-18 Jashmin Kantilal Patel Suvidha Industries 16,390 164 Sigma Elements Pvt. Ltd. 1,02,578 0 Total 2,19,67,791 1,61,448
4. However, the above said parties, mentioned in above chart, had deducted tax at source and deposited to the Government under the PAN of the assessee, who is a partner of the firm instead of depositing the same under the PAN of the firm M/s Yogi Transport. The said parties had also made payments to the partnership firm M/s. Yogi Transport and not to the assessee. Since, no TDS was reflected in Form 26AS of M/s Yogi Transport, the said partnership firm had not claimed the TDS in its return of income which were deducted by the above referred parties. However, M/s Yogi Transport had shown the turnover in the books of accounts of the firm itself which was carried out with the above referred firms. The assessee had claimed total TDS of Rs. 1,60,305/-, which actually was the tax deducted of the partnership firm M/s. Yogi Transport, in the original return of income filed by him, Therefore, assessing officer made addition under section 143(1) of the Act, to the tune of Rs.2,13,98,205/- (The said income / addition of Rs.2,13,98,205/- relates to total TDS of Rs.1,60,305/-).
On appeal by assessee, the ld CIT(A) deleted the addition observing as follows: “Facts of the case and appellant's submission were perused. Taxability of income comes from its accruing and arising in the hands of a person. Here through technical mistake/oversight income of the Firm is wrongly represented in the hands of the appellant. However, at no point of time that income has accrued or arisen in the hands of the appellant.”
6. Aggrieved by the order of ld CIT(A), the Revenue is in appeal before us.
/AY.2017-18 Jashmin Kantilal Patel 7. Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue stated that first of all order passed by the ld. CIT(A), is a very small order. Though, the assessee has submitted the relevant details and documents before the ld. CIT(A), however, the ld. CIT(A) did not discuss these documents and details in his order and passed the order in brief. Apart from this, the Ld. Sr. DR for the Revenue, relied on the statement of facts prepared by the Assessing Officer, which is reproduced below: “1. In this case, the assessee filed its ITR for AY 2017-18 declaring total income of Rs.14,35,018/- on 28.09.2018. Thereafter, CPC passed its order u/s 143(1) on 15.04.2019 making addition on account of business income of Rs.2,13,98,205/- based on the unclaimed TDS of Rs.1,60,302/- in the 26AS of the assessee.
Aggrieved by the order passed by CPC, the assessee filed appeal before the ld. CIT(A), NFAC. The contention of the assessee was as follows: On the facts and circumstances of the case as well as law on the subject, the learned AO has erred in making prima facie adjustment and making addition of Rs.2,13,98,205/- to the total income of the assessee by correlating the transportation income to TDS of Rs.1,60,302/- reflected in Form 26AS of the assessee and treating the same as income from other sources. The CIT(A) has allowed the appeal of the assessee based on the following findings:
1. 1. The assessee is a partner in M/s Yogi Transport, a partnership firm, engaged in the business of logistics. Till financial year 2013-14, the assessee was carrying on transportation business as a proprietor in the name and style of M/s Yogi Transport. Thereafter, in F.Y.2014-15, there was a change in constitution and the proprietary concern of the assessee viz. Yogi Transport was converted in to a partnership firm.
2. The assessee had filed his return for A.Y. 2017-18 on 29.03.2018 declaring income to the tune of Rs.12,25,050/- wherein he had shown business income and income from other sources.
3. During the year under consideration, the partnership firm viz. Yogi Transport had carried out transportation work and had shown all the income earned from Such transportation contract in its return filed for A.Y. 2017-18. The said parties had also deducted TDS of Rs.1,61,448/- on the contract amount of Rs.2,19,67,791/-. However, the TDS was deposited /AY.2017-18 Jashmin Kantilal Patel under the PAN of the Shri Jasmine K Patel and not on the PAN of the firm i.e. M/s Yogi Transport.
Since the assessee, Shri Jasmine K Patel did not accrue this income and it did not arise in the hands of the Shri Jasmine K Patel, the same cannot be taxed in the hands of the Shri Jasmine K Patel.
3. The order of the CIT(A) is not acceptable on this issue since, it cannot be categorically stated that M/s Yogi Transport has shown this sales of Rs.2,13,98,205/- in its ITR. Prima facie, it is found that neither the assessee nor M/s Yogi Transport has claimed the TDS of Rs.1,60,302/-, in view of this, then how the Balance sheet of M/s Yogi Transport is tallied. Thus, it is clear that the assessee has not shown this income in his own ROI as well and as such Ld CIT(A) decision is not acceptable.
4. Keeping in view of the above narrated facts, it is therefore most humbly prayed that your honour be pleased to recall the records and modify and rectify the Order No. CIT(A), ITBA/NFAC/S/250/2022-23/1048140357 (i) dated 21.12.2022 in light of the above discussed facts in pursuance of CIT(A) order u/s 250 of the I.T. Act to the above extent on merits.”
On the other hand, Shri Mehul Shah, Learned Counsel for the assessee, argued that the Partnership firm (M/s Yogi Transport) had intimated all the customers about the change in constitution of M/s Yogi Transport and requested them to deduct tax at sources in the capacity of a partnership firm and not in the capacity of an individual proprietor i.e. the assessee. However, some customers had deducted tax at source in the assessee’s name by quoting the PAN of the assessee in their respective TDS returns filed by them during the year under consideration. Therefore, total TDS of Rs. 1,61,448/- which was actually the tax deducted (TDS) of the partnership firm, was reflected in Form 26AS of the assessee. Hence, the assessee had claimed total TDS of Rs.1,60,305/-, which actually was the tax deducted of the partnership firm M/s Yogi Transport, in the original return of income filed by him. The assessee had filed his original return of income on 28.03.2018 in which, due to over sight, had taken the credit of TDS which was deducted on the transport income of the partnership firm. However, upon realizing the fact that the corresponding income of /AY.2017-18 Jashmin Kantilal Patel TDS was accounted for in the partnership firm and therefore, he filed a revised return of income on 28.09.2018, wherein he did not claim the said TDS and paid the additional tax by way of self-assessment tax. Thus, the assessee had not claimed total TDS of Rs. 1,60,305/- in his revised return of income, therefore ld CIT(A) deleted the addition. Therefore, ld Counsel contended that order passed by ld CIT(A) may be upheld.
We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that assessee has submitted before us the following documents and evidences, viz: (i) Relevant Extracted of Return of Income for AY 2014-15 (vide Pb. 1 to 10), (ii) Letter filed before Assessing Officer (vide Pb. 11 to 14), (iii) Relevant Extract of Return of Income for AY 2014-15 (vide Pb. 15), (iv) Acknowledgement of Original Return of income along with Computation of Total Income for AY 2017-18 (vide Pb. 16 to 19), (v) Communication letter from CPC (vide Pb. 20 to 25), (vi) Response to proposed adjustment u/s 143(1)(a) (vide Pb. 27 to 28), (vii) Acknowledgement of Revised Return of Income along with computation of total income for AY 2017-18 (vide Pb. 29 to 33), (viii) Communication of proposed adjustment u/s 143(1)(a) (vide Pb. 34 to 35), (ix) Objections raised against proposed adjustment (vide Pb. 36), (x) E-Grievance raised on e-Nivaran along with confirmation mail (vide Pb. 37 to 39), (xi) Intimation u/s 143(1) for AY 2017-18 (vide Pb.40 to 54), (xii) Form 26AS for AY 2017-18, 2019-20, 2020-21 (vide Pb. 55 to 61).
/AY.2017-18 Jashmin Kantilal Patel 10. We note that assessee has also submitted the following documents for M/s Yogi Transport, ( Partnership firm): (i) Partnership Deed (vide Pb.62 to 69), (ii) Tax Audit Report along with Audited Financial Statements (vide Pb. 70 to 78), (iii) Acknowledgment of Return of Income along with Computation of Total Income for AY 2017-18 (vide Pb. 79 to 83), (iv) Form 26AS for AY 2017-18, 2018- 19, 2019-20, 2020-21 (vide Pb. 84 to 93), (v) Ledger A/c of various debtor parties (vide Pb.94 to 104).
From the above documents and evidences, it is vivid that in the original return of income, (which is placed at paper book page No.20), the assessee has claimed impugned TDS of Rs.1,61,448/-. However, upon realizing the fact that the corresponding income of TDS was accounted for in the partnership firm and therefore, assessee had filed a revised return of income on 28.09.2018, (which is placed at paper book page No.29) wherein the assessee did not claim the said TDS and he paid the additional tax by way of self-assessment tax. Thus, the assessee had not claimed total TDS of Rs.1,60,305/- in his revised return of income, therefore ld CIT(A) has rightly deleted the addition in the hands of the assessee.
Therefore, we note that there was no fault of the assessee when some other party had wrongly deducted tax at source on any transaction by quoting the PAN of the assessee by mistake. The assessee had already informed to the customers that the proprietary business in the name of M/s Yogi Transport was closed and a new partnership was formed from assessment year (A.Y.) 2014-15 onwards. The assessee had also informed the PAN of the partnership firm of M/s Yogi Transport but customers wrongly deducted TDS by /AY.2017-18 Jashmin Kantilal Patel quoting assessee’s PAN. Even after this fact was pointed out to these companies personally by the assessee, the said parties did not care to revise their TDS returns. Thus, there was no fault on the part of the assessee, as the assessee has also subsequently filed revised return of income on 28.09.2018, wherein the assessee did not claim the said TDS of Rs. 1,60,305/- and the assessee paid the additional tax by way of self-assessment tax. Therefore, we note that in these circumstances, the assessee should not be penalized. We note that Coordinate Bench of ITAT Surat in the case of Dr. Swati Mahesh Vinchurkar Vs. DCIT, CPC, Bangalore [ITA No 43/SRT/2021] wherein the Bench has, after considering the decision of Honourable Jabalpur Bench in the case of Ravindra PratapThareja V/s. ITO [(2015) 60 taxmann.com 304] held as under.
“5. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. There is no dispute that the assessee is resident of Surat. The assessee is qualified Doctor being Pediatric (Child Specialist). While filing her return of income the assessee has shown income from profession and other sources. During the process by CPC, the additions were made in the hand of assessee on the basis of TDS shown in Form-26AS. We find that in response to the notice of CPC, the assessee denied of having such income and that her response was ignored. Before ld CIT(A) the assessee again specifically contended that she has not earned such income nor any work was performed by her. We find that despite specific contention of the assessee, the ld CIT(A) instead of verifying the facts confirmed the additions by taking view that it seems that CPC had considered the appellant explanation before making disallowance and that there is prima facie evidence. We find that both the authorities below acted in a mechanical way. There is no consideration of the contentions raised by the assessee that she has not worked or earned any income from such deductor. In our view once the assessee denied that she has not earned such income as reflected in her Form-26AS, the onus shift on the revenue authorities to prove such income of the assessee. The addition is based solely on the basis of TDS shown in Form-26AS, ignoring the submissions of the assessee. The ld. AR for the assessee vehemently argued before us that the deductor if more than 1000 KM away from the place of practice of assessee. Considering the peculiar facts /AY.2017-18 Jashmin Kantilal Patel of the present case, we find merit in the submissions of the ld AR for the assessee that the assessee had entered into any such transactions and the lower authorities have not made any verification or effort to verify such transactions and there is certain mistake of entering the wrong PAN, which belongs to the assessee and the addition made in the income is uncalled for.
We further find that the coordinate bench of Tribunal in Ravindra Pratap Thareja (supra) held that merely because a payment was reflected in Form-26AS and was shown to have been made to the assessee, it could not be brought to tax as it could not be established that the assessee was actual beneficiary of said payments and the additions was liable to be deleted. Considering the above said factual and legal discussions, and keeping in view of the peculiar facts of the case, no purpose would serve to restore the matter back to the file of assessing officer or to Income-tax Officer (TDS), as prayed by ld Sr.DR for the revenue. In the result, the grounds of appeal
raised by the assessee are allowed.”
13. Based on the above factual position, we note that action of assessing officer, in making prima facie adjustment by adding the turnover to the tune of Rs. 2,13,98,205/-, in the hands of the assessee, is quite illogical and unjustifiable in as much as it has resulted into double taxation. The partnership firm, M/s Yogi Transport had already accounted for this turnover in its books of accounts and shown profit thereon and also paid due tax thereon and now, the said entire turnover was again added to the income of the assessee and hence, it is a clear case of double taxation. Moreover, the assessee has not claimed TDS of Rs. 1,60,305/-, in the revised return of income filed by him, and partnership firm of assessee has shown turnover of Rs. 2,13,98,205/-, which belongs to TDS of Rs. 1,60,305/-, hence there is no loss to the revenue. Although, the order of ld CIT(A) is in brief, however, on a careful reading of the Ld.CIT(A) order and the findings thereon, we do not find any valid reason to interfere with the decision and findings of the Ld.CIT(A). Hence, we dismiss the appeal of Revenue.
/AY.2017-18 Jashmin Kantilal Patel 14. In the result, appeal filed by the Revenue is dismissed.
Order is pronounced on 28/08/2023 in the open court.