JCR & CO., MUMBAI v. ACIT 11(2), MUMBAI

ITA 1197/MUM/2012 | 2008-2009
Pronouncement Date: 22-10-2013 | Result: Allowed

Appeal Details

RSA Number 119719914 RSA 2012
Assessee PAN AAAFK1518P
Bench Mumbai
Appeal Number ITA 1197/MUM/2012
Duration Of Justice 1 year(s) 8 month(s)
Appellant JCR & CO., MUMBAI
Respondent ACIT 11(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 22-10-2013
Date Of Final Hearing 22-10-2013
Next Hearing Date 22-10-2013
Assessment Year 2008-2009
Appeal Filed On 21-02-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE SHRI H.L.KARWA PRESIDENT & SHRI N.K.BILLAIYA AM ITA N O. 1197 / MUM/ 20 12 ( ASSESSMENT YEAR : 20 0 8 - 20 0 9 ) JCR & CO. CHARTERED ACCOUNTANTS LEVEL I RAVAL HOUSE 18 TH ROAD KHAR (W) MUMBAI - 400 052 VS. A CIT 11 (2) MUMBAI PAN/GIR NO. : A A AFK 1518 P ( APPELL ANT ) .. ( RESPONDENT ) /ASSESSEE BY : M S . AARTI SATHE /REVENUE BY : MR. SHISHIR SRIVASTAVA DATE OF HEARING : 22 ND DATE OF PRONOUNCEMENT : 22 ND OCTOBER 2013 O R D E R PER N.K.BILLAIYA AM : WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE CIT(A) - 3 MUMBAI DATED 21 - 12 - 2011 PERTAINING TO ASSESSMENT YEAR 20 0 8 - 2009 . 2 . THE FIRST GROUND IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF ADDITION OF RS. 3 13 389/ - WHICH INCLUDES ENHANCEMENT OF RS. 31 921/ - ON THE BASIS OF THE DIFFERENCE BETWEEN THE INCOME RETURNED BY THE ASSESSEE AND THE DATA REVEALED BY THE AIR. ITA NO. 1197 /12 2 3 . THE FACTS GIVING RISE TO THE APPEAL OF THE ASSESSEE ARE THAT THE ASSESSEE IS A FIRM OF CHARTERED ACCOUNTANT. AS PER AIR INFORMATION THE ASSESSEE HAS RECEIVED PROFESSIONAL FEES FROM VARIOUS PERSONS AGGREGATING TO RS. 53 61 529/ - . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TH E ASSESSEE WAS REQUIRED TO RECONCILE THE RECEIPTS WITH ITS BOOKS OF ACCOUNTS. THE ASSESSEE FILED A RECONCILED STATEMENT HOWEVER A SUM OF RS. 3 36 715/ - REMAINED UNRECONCILED. THE ASSESSEE CLAIMED THAT THIS UNRECONCILED AMOUNT RELATES TO PROFESSIONAL FEES WHICH HAVE NOT BEEN RECEIVED BY THE ASSESSEE. THE AO TREATED THIS UNRECONCILED AMOUNT AS INCOME OF THE ASSESSEE. 4 . IN APPEAL BEFORE THE CIT(A ) THE ASSESSEE CLAIMED THAT IT IS MAINTAINING ITS BOOKS OF ACCOUNTS ON CASH BASIS AND THEREFORE THE UNRECONCI LED AMOUNT RELATES TO THE FEES WHICH HAS NOT BEEN RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE ONCE AGAIN FILED THE DETAILS OF THE AMOUNT REMAINED UNRECONCILED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A) OBS ERVED THAT IN SOME CASES THE ASSESSEE HAS CLAIMED TDS AMOUNT THOUGH THE INCOME WAS NOT SHOWN IN ITS BOOKS OF ACCOUNTS. THE CIT(A) FURTHER OBSERVED THAT IN RESPECT OF TDS CERTIFICATE OF RS. 4 079/ - THE ASSESSEE HAS NOT ACCOUNTED FOR THE INCOME AT RS.31 921 / - . IT WAS EXPLAINED THAT THIS AMOUNT WAS RECEIVED BY M/S PATHAK JOSHI & CO. WHICH HAS BEEN ACCOUNTED FOR BY THEM IN THEIR BOOKS OF ACCOUNTS. THE CIT(A) FURTHER DID NOT ACCEPT THIS SUBMISSION OF THE ASSESSEE AND DIRECTED TO ADD THE ITA NO. 1197 /12 3 AMOUNT OF RS. 31 921/ - T O BE TRE ATED AS INCOME OF THE ASSESSEE THEREBY MAKING THE ENHANCEMENT TO THE ADDITIONS MADE BY THE AO. 5 . BEFORE US LEARNED COUNSEL OF THE ASSESSEE REITERATED THAT THE ASSESSEE IS MAINTAINING ITS BOOKS OF ACCOUNTS ON CASH BASIS AND THEREFORE AS AND WHEN THE FEES ARE RECEIVED IT IS TAKEN AS INCOME IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT IS THE SAY OF THE LEARNED COUNSEL THAT THE ENTIRE AMOUNT IS RECONCILIABLE. 6 . LEARNED DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7 . WE HAVE CAREFULLY PERUSED THE ORDER S OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS MAINTAINING ITS BOOKS OF ACCOUNTS ON CASH SYSTEM OF ACCOUNTING . THEREFORE THERE IS A FORCE IN THE CONTENTION OF THE LEARNED COUNSEL THAT THE ENTIRE FEES ARE SHOWN AS IN COME AS AND WHEN THEY ARE RECEIVED. IT MAY BE POSSIBLE THE ASSESSEE MIGHT HAVE CLAIMED THE CREDIT OF TDS WITHOUT TAKING INCOME INTO CONSIDERATION FOR WANT OF RECEIPTS OF THE INCOME. IN OUR CONSIDERED VIEW THIS ISSUE NEEDS REVERIFICATION AT THE ASSESSMENT STAGE. WE ACCORDINGLY RESTORE THIS ISSUE TO THE FILES OF THE AO. THE ASSESSEE IS DIRECTED TO ONCE AGAIN FILE RECONCILIATION STATEMENT SHOWING UNRECONCILED RECEIPTS AS INCOME OF THE SUBSEQUENT YEARS IN WHICH THE PAYMENT HAS BEEN RECEIVED BY THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO SHOW THAT THE TDS AMOUNT CLAIMED BY THE ASSESSEE HAS BEEN SHOWN AS ITS INCOME DURING THE YEAR UNDER CONSIDERATION. THE AO IS DIRECTED TO VERIFY THE CLAIM MADE BY THE ASSESSEE AND THE RECONCILIATION STATEMENT FILED BY THE ASSESSEE AFTER GIVING A REASONABLE ITA NO. 1197 /12 4 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES. 8 . GROUND NO.2 RELATES TO DECLINING OF THE CREDIT OF TDS AMOUNTING TO RS.28 493/ - . 9 . IT IS THE CLAIM OF THE ASSESSEE THAT IT HAS TAKEN CREDIT OF THE TDS OF RS. 28 493/ - ON THE BASIS OF 26AS AS THE ASSESSEE HAS NOT RECEIVED THE TDS CERTIFICATE IN PHYSICAL FORM FROM ITS CLIENTS. THIS ISSUE ALSO NEEDS REVERIFICATION. HENCE WE ALSO RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. TH E AO IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE AS PER FORM 26AS FOR THE YEAR UNDER CONSIDERATION. THE AO IS ALSO DIRECTED TO VERIFY AS TO WHETHER THE TDS AMOUNT HAS BEEN SHOWN AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND ACCORDINGLY ALLOW THE CREDIT FOR THE SAME AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 10 . GROUND NO. 3 RELATES TO THE ADDITION OF RS. 21 009/ - AS UNDERSTATED INCOME IN THE FORM OF INTEREST ON F IXED DEPOSITS RECEIPTS. 11 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT AS PER THE AIR INFORMATION THE ASSESSEE FIRM HAS RECEIVED INTEREST INCOME AGGREGATING TO RS. 1 82 763/ - . THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS SHOWN R S. 47 620/ - IN A.Y.2008 - 09 AND RS. 1 14 134/ - IN A.Y. 2009 - 10. THE AO FURTHER OBSERVED THAT RS. 21 009/ - REMAINED TO BE RECONCILED/EXPLAINED AND ACCORDINGLY MADE THE ADDITION. ITA NO. 1197 /12 5 12 . BEFORE THE CIT(A) IT WAS EXPLAINED THAT THERE WAS PREMATURE ENCASHMENT OF 3 FIXED DEPOSITS RESULTING INTO A LOSS OF INTEREST OF RS.42 948/ - WHICH HAS RESULTED INTO COMPUTING THE INTEREST BY A LESSER AMOUNT AT RS. 21 009/ - . THE CIT(A) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION OF RS. 21 009/ - MADE BY THE AO. 13 . BEFORE US LEARNED COUNSEL OF THE ASSESSEE ARGUED THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF AIR INFORMATION DISREGARDING THE FACTS OF INTEREST SHOWN IN THE BOOKS OF ACCOUNT. WE FIND THAT THIS CONTENTION OF THE ASSESSEE NEEDS REVERIFICAT ION BY THE AO. WE ACCORDINGLY RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE. THE AO IS DIRECTED TO VERIFY THE ACTUAL INTEREST PAID BY THE BANK DIRECTLY CALLING FOR THE DETAILS FROM THE BANKS AFT ER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. 14 . GROUND NO. 4 RELATES TO DISALLOWANCE OF RS. 31 852/ - OUT OF REMUNERATION TO PARTNERS. 15 . DURING THE COURSE OF THE SCRUTINY ASSESSMENT P ROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS SHOWN INTEREST INCOME AND PROFIT ON SALE OF SHARES AMOUNTING TO RS .47 620/ - AND RS.32 010/ - . THE AO FURTHER NOTICED THAT THE ASSESSEE HAS WORKED OUT THE REMUNERATION PAID TO THE PARTNERS INCLUDING THE ABOVE INTEREST INCOME AND SHARE OF PROFIT ON SALE OF SHARES FOR THE PURPOSES OF CALCULATION OF THE BOOK PROFITS . THE AO WAS OF THE FIRM BELIEF THAT THESE T WO INCOME S SHOWN FALL UNDER ITA NO. 1197 /12 6 THE HEAD INCOME FROM OTHER SOURCES AND ACCORDINGLY RECALCULATED THE REMUNERAT ION ALLOWABLE UNDER SECTION 40(B) BY EXCLUDING THE AFORESAID AMOUNT S FROM BOOK PROFIT AND COMPUTED THE DISALLOWANCE AT RS. 31 852/ - . 16 . BEFORE THE CIT(A) IT WAS EXPLAINED THAT THE ASSESSEE HAS NOT INCLUDED THE CAPITAL GAIN OF RS.32 020/ - WHILE COMPUTING THE BOOK PROFIT AND THEREFORE THE AO HAS ERRED IN DEDUCTING THE SAME ONCE AGAIN. THE CIT(A) WAS ALSO NOT CONVINCED WITH THE FACT THAT THE INTEREST INCOME ON FDR SHOULD BE TREATED AS BUSINESS INCOME AND CONFIRMED THE ACTION OF THE AO. 17 . BEFORE US THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT SO FAR AS THE CAPITAL GAINS IS CONCERNED THIS INCOME HAS NOT BEEN CONSIDERED FOR THE PURPOSE OF COMPUTING THE REMUNERATION TO PARTNERS IN THE COMPUTATION OF INCOME. SO FAR AS INTEREST ON FDR IS CONCERNED LE ARNED COUNSEL OF THE ASSESSEE CLAIMED THAT THE ASSESSEE HAS BEEN SHOWING INTEREST ON FIXED DEPOSITS AS ITS BUSINESS INCOME S INCE PAST YEAR S AND NO DISTURBANCE HAS BEEN MADE BY THE AO THEREFORE THE RULE OF CONSISTENCY SHOULD BE FOLLOWED. 18 . PER CONTRA LEARNED DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 19 . WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE LOWER AUTHORITIES AND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. SO FAR AS THE CAPITAL GAINS OF RS. 32 010/ - IS CONCERNED IT CANNOT FORM PART OF THE BOOK PROFIT ITA NO. 1197 /12 7 BY ANY STRETCH OF IMAGINATION. WE THEREFORE RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO VERIFY WHETHER THE ASSESSEE HAS EXCLUDED THE CAPITAL GAINS WHILE COMPUTING THE REMUNERATION PAID TO THE PARTNERS OR NOT. SO FAR AS THE INTEREST ON FIXED DEPOSITS OF RS. 47 620/ - IS CONCERNED THE CLAIM OF THE ASSESSEE HAS TO BE VERIFIED AS TO WHETHER IT HAS BEEN SHOWING THE SAME AS BUSINESS INCOME IN EARLIER YEARS WHILE COMPUTING THE REMUNERATION PAID TO THE PARTNERS. TH E AO IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE KEEPING IN MIND THAT THE INTEREST ACCRUES ON FIXED DEPOSITS AND THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNTS ON CASH SYSTEM OF ACCOUNTING. IF THE ASSESSEE HAS TAKEN ACCRUED INTEREST THEN THE CLAIM OF TH E ASSESSEE IS NOT TENABLE IN THE LIGHT OF ITS METHOD OF ACCOUNTING. NEEDLESS TO MENTION THE AO SHALL GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 4 IS ALLOWED FOR STATISTICAL PURPOSES . 20 . RESULTANTLY THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 /10/ 2013 . S D / - ( ) ( H.L.K ARWA ) SD/ - ( ) ( N.K.BILLAIYA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 2 /10 /2013 /PKM PS ITA NO. 1197 /12 8 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY // / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI