Addition for TDS Receipt Mismatch Rejected as Assessee’s Explanation Was Consistently Accepted

CIT 13 Vs S. Ganesh (Bombay High Court)

The Bombay High Court dismissed the Revenue’s appeal after holding that the Income Tax Appellate Tribunal had committed no error of law or perversity in partly allowing the assessee’s appeal. The dispute related to the addition of Rs. 47,37,000 made by the Assessing Officer on account of non-reconciliation of professional receipts with TDS certificates.

The Tribunal had examined the submissions of both parties and noted that the assessee was engaged as an Advocate, who typically argued matters through Advocates-on-Record or instructing Advocates, rather than being directly engaged by clients. According to the assessee, professional fees were received in different ways, including directly from clients, instructing Advocates, or Chartered Accountants who had collected the amounts from clients. Because of this practice, the assessee explained that it was not possible to provide the detailed break-up of all payments sought by the Revenue.

The High Court observed that the same explanation had been accepted in the past, including for Assessment Year 2006-07, and the Tribunal had accepted it again in the peculiar facts of the case. The Court found no reason to interfere with the Tribunal’s findings and held that the appeal did not give rise to any substantial question of law.

Accordingly, the Revenue’s appeal was dismissed, affirming the Tribunal’s order partly allowing the assessee’s appeal.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. Having heard Ms.Bharucha, learned counsel appearing on behalf of the Revenue and perusing the order passed by the Income Tax Appellate Tribunal, we are of the opinion that the Tribunal did not commit any error of law or perversity in partly allowing the appeal of the respondent assessee.

2. The assessee in regard to grounds 1 to 7 challenged the order of the Commissioner of Income Tax in confirming the addition of Rs.47,37,000/­ made by Assessing Officer on account of non­conciliation of professional receipts with TDS certificates. Insofar as that aspect is concerned, the Tribunal considered this submission of both sides and found that the assessee was engaged as an Advocate to argue the matters by what is popularly known as Advocates on record or instructing Advocates method, meaning thereby the client does not engage the assessee directly but a professional or the Advocate engaged by the client requests the assessee to argue the case. The brief is then taken as the counsel brief. That being the practice, the assessee gave an explanation that the break­up as desired cannot be given and with regard to all payments. It is pointed out that at times, assessee receives fees directly from the clients or from the instructing Advocates or Chartered Accountants if such professionals have collected the amounts from the clients.

3. Under these circumstances, the break­up as desired cannot be placed on record. An explanation which has been given by the assessee and accepted in the past has been now accepted by the Tribunal once again. Since it is accepted for the Assessment Year 2006­07, in the peculiar facts, in relation to the present assessee, we are of the view that this Appeal does not deserve to be entertained. It does not give rise to any substantial question of law.

4. Appeal is accordingly dismissed.