TaxTMI 
TaxTMI 
2023 (12) TMI 761
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.... different dates ignoring the facts available on record and the detailed submissions made. The impugned addition so made being contrary to the provisions of law and facts of the case and contrary hence, the same kindly be deleted in full. 3.1 Rs. 80,85,610/-: the ld. CIT(A) erred in law as well as on the facts of the case in setting aside the issue in hand to the file of the AO for reconciliation of the receipts based on the receipts shown in the books of accounts and those shown in the TDS form 26AS in as much as the ld. First appellate authority was having no jurisdiction to set aside an issue and was supposed to have finally adjudicated upon the issue in hand after obtaining remand report before passing the final appellate order. Thus, the due and prescribed process of law has not been followed. Hence, the impugned order to this extent deserves to be quashed. The impugned addition of Rs. 80 85,610- deserves to be completely deleted on this ground alone. 3.2 The Id. CIT(A) erred in law as well as on the facts of the case in considering that the difference shown in the regularly maintained books of accounts which were not even rejected and those shown in TDS form....
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....y, when no deduction was claimed there is no question of making any disallowance u/s. 43 B of the Act. The P&L Account and other supporting evidences were available on the record of the CIT(A) The very invoking of s.43B of the Act must have been deleted here by itself." 2.2. To this effect, the ld. AR took support of Hon'ble Supreme Court decision in the case of NTPC Ltd. VS. CIT 229 ITR 383 (SC) to admit the above ground purely as legal ground and it does not require any investigation for which the Bench consider it as being purely a legal ground in the interest of equity and justice. 3. At the time of hearing of the appeal, the Bench observed that Ground No. 1 raised by the ld.AR of the assessee appears to be a general nature which does not require any adjudication and the same is disposed off without any adjudication in the absence of the specific arguments. 4. Apropos Ground No. 2 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- 5.2.1 Ground No. 2: Addition on account of cash deposit during demonetization period: The appellant had deposited cash of Rs. 24 lakh in Punjab National Bank, Beawar Branch in specified Ban....
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....contention is fully supported from the entire cashbook. Continued with the same practice, there has been a closing balance of cash in hand on 31.03.2017 of Rs. 11,67,820.96. Thus, it is not that immediately after cash deposit, the cash balance went down. 1.2.1 Regular Accounts-Binding Evidence: The Assessee is a Pvt. Ltd. Company and hence has been maintaining regular books of accounts including both financial and quantitative records, (wherever required), under the provisions of the Companies Act ,2013. The same were subject to the statutory audit under the Companies Act, 2013. Notably, there is no adverse remark made by the statutory auditors (PB 3-15). Moreover, the accounts of the Assessee was also audited under sec. 44AB of the Act and in the Tax Audit Report (TAR)(PB16), no adverse remark was made by the ld. Tax Auditor. Closing cash in hand of Rs. 11,67,820.96 is duly reflected in the audited Balance Sheet (PB 3-15), as on 31.03.2017. These audited financial statement and also the Tax Audit Report, were duly uploaded along with the Income Tax Return and were available before the AO. The cashbook so maintained, was also admittedly produced before the ld. AO as stated....
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...., the assessee was not even supposed to legally keep it. Because keeping an illegal tender is also an offence under RBI Act. 2.2 During the period of demonetization, it was a matter of common knowledge that in comparatively big cities like Kota it was quite difficult to make deposits or withdraw cash from bank branch due to heavy rush and chaos. Accordingly, the Assessee decided to take cash available at Kota Head Office and part of the cash from Ras Babra site. Thus, taking together the total amount of Rs. 24 lakhs was deposited at PNB, Beawar. In his view this was the best decision by a businessman in those circumstances. The AO can't interfere. 2.3 He could not be expected to establish the fact of physical movement of cash from Kota to Beawar, in a microscopic manner showing the exact date, time and place as to when it was done. Otherwise also it was not practically possible to prove. 3. Onus on the AO- not discharged: 3.1. Unless the availability of the cash is proved to have been utilized elsewhere or is proved to be non-existent prior to the deposits in bank, the AO was not legally justified to suspect and make addition. Pertinently, the AO....
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....riod of demonetization no one was agreeable to accept cash particularly of old currency notes of Rs. 1000/- & Rs. 500/-. His further objection is that the cash deposited was immediately withdrawn and utilized towards the payment of Service tax, doesn't lead anywhere since the Service Tax could not have been paid through the currency declared as illegal tender and therefore the assessee was bound to have deposited the cash in bank account and after withdrawing the same in the permissible currency note / legal tender, the same was deposited with the Central Excise Department. 5. Further S. 69/ 69A requires an explanation from the assessee and once given, it has to be objectively tested. A good proof cannot be converted into no proof. Moreover, discretion conferred upon the AO has to be exercised judiciously as held in CIT vs Smt. P.K. Noorjahan (1999) 237 ITR 0570 (SC): "As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clear....
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....k account - On being enquired about source of said deposit, assessee explained that it represented amount received from various purchasers against sale of goods i.e., tractors and accessories thereof - Assessing Officer accepted assessee's explanation and completed assessment - Commissioner taking a view that cash deposits not being satisfactorily explained, passed a revisional order setting aside assessment - Tribunal, however, set aside revisional order so passed - It was noted that order passed by Assessing Officer that deposits stood reconciled was preceded by a proper inquiry - It was also found that assessee had produced statement of bank account, copies of bills issued to purchasers of tractors as also books of account showing entries of deposits made in bank - Moreover, Assessing Officer had recorded a categorical finding that entries in bank account were verifiable from cash book and also bills produced by assessee - Whether in view of aforesaid, Tribunal was justified in setting aside revisional order passed by Commissioner - Held, yes". The principal propounded in the above case directly applies in the present case. 6.2. Apex court decision in the case ....
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....xxxxxx------- To put the matter in a nut-shell, the accounts of the appellant have been accepted by the Tribunal as genuine, and it is impossible to say, having regard to the cash balance as shown therein, that the notes in question could not have been included therein. The Tribunal observes that it is unlikely that so many high denomination notes would have been held as part of the cash on hand for a such a large number of days. That, no doubt, is highly suspicious; but the decision of the Tribunal must rest not on suspicion but on legal testimony". In the present case also, the AO has raised a similar allegation in Para.4.3 V 6.3. Kindly refer CIT v/s P.V. Bhoopathy (2006) 205 CTR 495 (Mad) (DPB 11-13) held: "Appeal (High Court)-Substantial question of law-Income from undisclosed sources-AO did not accept various sources of income explained by the assessee and made additions under ss. 68 and 69 in respect of difference between the investments and the sources accepted by him-Tribunal accepted the explanation of the assessee vis-a-vis availability of funds with the assessee from the sale proceeds of jewellery belonging to his mother- in-law, rece....
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.... 4.2 On the other hand, the ld. DR supported the order of the lower authorities. 4.3 We have heard both the parties and perused the materials available on record. In this case, it is noted that the AO made an addition of Rs. 24.00 lacs because there was no sufficient evidence whatsoever on record which according to him proves that the assessee was having cash in hand at ''Beawar'' as against at Kota Head Office. The assessee was not maintaining any separate set of books account at different locations and the argument made by the assessee that the cash in hand was available at ''Beawar'' was not accepted by the AO being no evidence on record. The ld. AO in the absence of required details and documents that the cash was deposited out of the cash in hand available with the assessee was not accepted for want of proper supporting documents/proof. The AO on verification of bank statement of Beawar PNB Branch, submitted by the assessee, noted that there is no cash transaction in the said bank account which is further evidence that the assessee was not having any cash in hand in ''Beawar'' PNB Branch. Thus the AO considering the facts and circumstances of the case, in totality noted ....
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.... turnover as per financials and Form 26AS: The AO analyzed in detail the receipts of the appellant as shown in the financials as against the receipts as per Form 26AS and noted that in respect of receipts from M/s Sanghi Industries, there is substantial difference in the receipts shown and as per Form 26AS. The AO held that the appellant had not shown turnover to the extent of Rs. 80,85,610/- and added this amount. On the other hand, the appellant has claimed that the difference was due to calculation method in the financials, the appellant had taken the receipts on the basis of bills raised, whereas in Form 26 AS the receipt is on the basis of TDS deducted. Further, it has been claimed that in Form 26 AS, TDS is deducted on Gross amount inclusive of Service Tax @ 15% whereas in the books net turnover is taken, The appellant has given a chart showing figures of 3 years to show that actually the amount of receipt shown in financials is higher than that in Form 26 AS. 5.3.2 I have considered the facts of the case. The appellant has claimed TDS on the basis of Form 26 AS and at the same time has shown less receipt from M/s Sanghi Industries. The appellant should be given one ....
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.... AO to act. Hence, this action of Ld. CIT (A) is bad-in-law and not sustainable. Hence, this ground of appeal raised by assessee is allowed." 3. On merits 3.1 No real income merely based on form 26AS: Attheoutset, the authorities below proceeded on a serious misconception of law because no income accrues merely because in form 26AS, the payer has deducted tax on a higher amount than what the assessee has booked in his account. The assessee can't control the action of a third party. The third party follows its own accounting system by which the assessee is not bound. The assessee has been constantly following accrual system of accounting wherein the income is recognized only when invoice is raised. It is not disputed in this case that the assessee raised the invoices in the next financial year on 1.04.2017 & 7.04.2017(PB 36-37) falling in A.Y. 2018-19 and not in the subjected year 2017-18. Accordingly, the assessee has credited the income in A.Y. 2018-19 and debited the account of M/s Sanghi Industries Ltd in the next year as shown in ledger account (PB 38) whereas, no such amount was debited in the account of that party in the current year as per ledger account (P....
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....d lack of corresponding services by deductee to deductor - Whether only a mismatch between TDS certificate (26AS) and turnover shown by assessee in its profit and loss account could not be sole basis on which entire addition of difference could have been brought to tax - Held, yes Whether view taken by Commissioner(Appeals) seemed to be a plausible view and, accordingly, his action of deleting addition was to be confirmed - Held, yes [Para 6]. [In favour of assessee] 6. .........We note that only because there is a mismatch between TDS certificate (26AS) and turnover shown by the assessee in its P& L account cannot be the sole basis on which the entire addition of the difference could have been brought to tax. Therefore, on the facts and circumstances discussed above we find the view of the Ld. CIT(A) to be a plausible view and accordingly his action of deleting Rs. 2,14,35,593/- is confirmed and therefore, the appeal of the revenue stands dismissed. 7. ....... the Ld. CIT(A) should have first of all rejected the audited books of account produced by the assessee in accordance to Section 145 of the Income Tax Act, 1961 (hereinafter referred to as the Act) which the....
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....well as TDS credit from this party have been duly considered in a different year. This ground is considered allowed for statistical purpose. 5.5 Taking into consideration the above facts and circumstances, we do not find any infirmity in the order of the ld. CIT(A) on the issue in question. Thus Ground No. 3.1 & 3.2 of the assessee are dismissed. 6. Apropos Ground No. 4 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ''5.3.4 Ground No. 4 - Disallowance of temporary labour charges :- The AO had sought certain specific details pertaining to temporary labour wages. However, as the details were not furnished, the expenses were disallowed. The appellant claims that sample vouchers demanded by the AO had been produced. The claim of the appellant does not seem to be correct in the facts. The disallowance is confirmed.'' 6.1 During the course of hearing, the ld. AR of the assessee submitted that entire disallowance of Rs. 26,35,358/- should be deleted for which the ld. AR of the assessee put forth the following submissions. ''The AO wrongly made the disallowance out of temporary expenses of Rs. 26,35,358/-alleging no....
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....rest u/s 234B & 234D which is mandatory and consequential in nature. 8. As regards the additional ground raised by the assessee amounting to Rs. 80,20,210/-, it is noted that the AO made an addition by observing as under:- 3.3 "On perusal of details and reply filed by the Assessee the following facts are observed: i. As per details filed by Assessee vide reply uploaded on 11.12.2019, the Govt. Dues includes Service Tax payable for the financial year 2015-16 at Rs. 17.20,570/- and Service Tax payable for financial year 2016-17 of Rs. 82,90,520/- totaling to Rs. 80,20,090/-. This is discussed in detail in below para ii. For above payable dues Assessee stated that these outstanding dues are of two years which are pending due to some disputes. The reply of Assessee is not correct and acceptable because as per documents provided by Assessee shows that for F.Y. 2015-16 opening balance of Service Tax was Rs. 06,10,570/-, out of which during the year Assessee deposited Rs. 68,90,000/- on various dates and only amount of Rs. 17.20,570/- remains payable. Which clearly tells that there was no dispute and Assessee deposited Service Tax on regular interval during t....
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....ch disallowance is required to be made. The AO may call for a reconciliation statement from the appellant and restrict the disallowance to the amount of Service Tax showed as expenditure in the P & L Account, which remained unpaid before the due date of return. This ground is considered allowed." 8.2 The ld. AR of the assessee has submitted the following written submissions 1.1 At the outset, the provision of Sec. 43B cannot be made applicable on the facts of the present case in as much as the Assessee used to collect/credit the amount of the service tax receivable from the customer which is credited to a separate account namely Service Tax @14.5% (7,10,085.34/-) (PB II-48) and Service Tax @15% (61,80,106.15/-) (PB II-49) and thereafter the balances were transferred to Service Tax Payable Account for the different years like service tax payable (2016-17) and service tax payable (2015-16). Accordingly, the Assessee credited service tax payable account (FY 2015-16) (PB II-46) which is related to AY 2016-17 wherein Rs. 17,20,570/- was credited. Similarly, the service tax payable (FY 2016-17) of Rs. 62,99,520/-(Net of Input Adjustment) (PB II-47) relating to AY 2017-18, und....
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....epeated for the reason that the same related to (FY 2015-16) AY 2016-17 and not to this year, but the balance amount of Rs. 62,99,520/- was disallowed. Interestingly, in the set aside order, the AO has further fuled the fire by creating a confusion based on the wrong appreciation of the facts in as much as what the AO contended therein is that the total turnover as per the Sales Account Ledger submitted by the Assessee was Rs. 5,28,88,139/- where from, reducing the amount of the service tax payable, the net turnover shown by the Assessee in the P&L accounts Rs. 4,59,97,948/- (PB4). Considering this fact, he inferred that claim of the Assessee that he did not debit the Service Tax in the P&L account is incorrect. However, the facts admitted by the AO shows that in the P&L account the Assessee had shown the turnover of Rs. 4.59 cr. only. It is not the case that the amount of Rs 5.28 cr. was credited first and thereafter the amount of Service Tax Rs. 68,90,191/- was reduced. In fact, a perusal of the sales account ledger 15%(4,11,00,807/-) (PB II- 51 to 54) and 14.5% (48,97,140/-) (PB II -55) do not at all show the total amount of turnover as wrongly stated by the AO. Thus, the jurisd....