2010 (4) TMI 50 - HC - Income Tax

High Court Upholds Tribunal Decision on Income Tax Appeals

The Delhi High Court dismissed the appeals (ITA Nos. 438/2010 & 460/2010) related to assessment years 2003-04 and 2004-05, upholding the Income-tax ... Addition - Discrepancy in books of accounts and TDS – addition on the basis of TDS certificate - The Assessing Officer had made an addition of Rs 36,06,749/- on account of the discrepancy in the books of accounts and the TDS certificate in relation to the assessment year 2003-04. For the year 2004-05, an addition of Rs 23,54,619/- was similarly made. The Income-tax Appellate Tribunal, however, deleted the said additions accepting the explanation given by the assessee. – held that - It was apparent that the error had happened due to the fact that though the tax was deducted at the rate of 2.20%, yet when the certificates were made, the rate of tax deduction was shown as 2.05%. Since the computer took the rate of deduction as 2.05% and applied the same to the amount of Rs 5,39,443/-, being the tax actually deducted, the amount shown as paid to the assessee by Fabritex Exports Pvt. Ltd was correspondingly increased. The certificate also indicated that as per the ledger account maintained by Fabritex Exports Pvt. Ltd., the amount payable and paid to the assessee for the fabrication charges was Rs 2.45 crores and not Rs 2.63 crores for the assessment year 2003-04. – addition was not justified - Decided in favor of assessee Issues:1. Whether Reporters of local papers may be allowed to see the judgmentRs.2. To be referred to the Reporter or notRs.3. Whether the judgment should be reported in DigestRs.Analysis:1. The appeals (ITA Nos. 438/2010 & 460/2010) before the Delhi High Court raised identical issues stemming from an order by the Income-tax Appellate Tribunal related to the assessment years 2003-04 and 2004-05. The Assessing Officer had made additions to the income of the assessee due to discrepancies between the revenue shown in the books of accounts and the TDS certificates. The Commissioner of Income-tax (Appeals) upheld these additions, but the Income-tax Appellate Tribunal later deleted them based on the explanation provided by the assessee.2. The additions were made concerning revenues from fabrication charges received by the assessee from Fabritex Exports Pvt. Ltd. The discrepancy arose from the computation error in the TDS certificate issued by Fabritex Exports Pvt. Ltd., leading to a mismatch between the figures in the books and the TDS certificate. The tribunal accepted the assessee's explanation supported by certificates from Fabritex Exports Pvt. Ltd., clarifying the correct amounts paid and attributing the error to a computer-programme mistake in tax deduction rates.3. Despite the Commissioner of Income-tax (Appeals) rejecting the assessee's explanation, the tribunal reevaluated the facts and sided with the assessee, emphasizing that the addition was solely based on the TDS certificate discrepancy and not on unaccounted charges. The tribunal found no justification for the addition when the issuer of the certificate confirmed the error and affirmed that no additional charges were paid to the assessee beyond what was recorded in their books.4. The High Court concurred with the tribunal's factual findings, observing no perversity in its decision. Consequently, the court dismissed the appeals, stating that no substantial question of law arose for consideration in this matter. The judgment was delivered by Hon'ble Mr Justice Badar Durrez Ahmed and Hon'ble Mr Justice V.K. Jain on April 15, 2010.