Advocate Akhilesh Kumar Sah
These days, assessees are facing practical difficulties in respect of tallying of data reflected in Form 26AS from their own data which in many times do not tally and Assessing Officer(AO) takes adverse action due to that. The recent decision, P.K. Rajasekar vs. ITO, Non Corporate Ward 6(1), Chennai [IT Appeal No.121 (MDS.) of 2016, decided on 15/09/2016] of ITAT, Chennai is a good decision in this regard.
In the above mentioned appeal, the assessee/ appellant was engaged in the business of laying cables. During the year under consideration, the assessee received a sum of 64,85,397/- from one, Tulip Telecom P. Ltd. The assessee had offered the above said sum of 64,85,397/- for taxation. However, while filing the TDS return, Tulip Telecom P. Ltd. appeared to claim a sum of 1,26,84,856/- paid to the assessee. Out of the so-called claim of Tulip Telecom P. Ltd., a sum of 58,36,556/- given credit on 01.07.2010 was said to be, totally incorrect. When the assessee contacted the company Tulip Telecom P. Ltd., they said they will rectify the TDS return filed electronically. However, they have not rectified. Since the amount was not paid, according to the Ld. counsel, the same cannot be taken as income of the assessee. According to the Ld. counsel, a wrong entry filed by the deductor cannot be a reason to treat the same as income of the assessee.
On the contrary, the Ld. Departmental Representative, submitted that the assessee claimed that the credit of 58,36,556/- given on 01.07.2010 is a wrong entry and Tulip Telecom P. Ltd. has not filed revised TDS return so far. As per the details found in Form 26AS, the assessee received a sum of 1,23,19,906/- from Tulip Telecom P. Ltd. In view of the claim of the assessee, a letter was addressed to Tulip Telecom P. Ltd. by the AO on 6.12.2013. However, the AO not received any reply. The assessee gave another address of Tulip Telecom Pvt. Ltd. at Bangalore. The AO also addressed a letter to Bangalore address. Inspite of that, no reply was received from Tulip Telecom P. Ltd. Since Tulip Telecom P. Ltd. could not be contacted, according to the Ld. D.R., the AO had no other alternative except to take the particulars contained in Form 26AS as correct. Therefore, according to the Ld. D.R., the CIT(Appeals) rightly confirmed the order of the AO.
The learned members of the Chennai ITAT considered the rival submissions on either side and perused the relevant material available on record. The assessee claimed that the credit of 58,36,556/- said to be given on 01.07.2010 is a wrong entry and the company, namely, Tulip Telecom P. Ltd. failed to rectify the TDS return filed electronically. The Revenue claimed that the letter addressed to Tulip Telecom P. Ltd. was not responded. Therefore, the AO found that the assessee not established the claim. Accordingly, the AO treated the particulars contained in Form 26AS as genuine and the difference of 61,99,459/-, as per the credit shown in Form 26AS, was taken as undisclosed receipt by the assessee.
Under the scheme of Income-tax Act, the assessee is expected to pay tax after completion of assessment. In order to ensure the recovery of tax, the Income-tax Act provides payment of tax in advance, before completion of assessment and also provides for deduction of tax at source. When the payer deducted the tax as per the scheme of the Income-tax Act in respect of the payment made by them, the amount deducted by the payer towards TDS has to be treated as payment of tax. If the assessee claims that there was wrong entry and wrong credit, the AO has to examine the same with open mind and find out whether there was a genuine credit as found in Form 26AS. Tulip Telecom P. Ltd. is also a tax payer in this country. Therefore, the Revenue cannot shift the burden to the assessee on the ground that Tulip Telecom P. Ltd. could not be contacted. Tulip Telecom P. Ltd. is a company registered under the provisions of Companies Act and the Directors can very well be contacted by the AO and find out what is the error in TDS return.
The learned members of the ITAT opined that even though the burden of proof is initially on the shoulder of the assessee, the AO is also equally responsible to find out whether the credit entry found on 01.07.2010 is genuine or not. The AO cannot take advantage of the ignorance or handicap of the assessee and say that there was undisclosed receipt by the assessee. When the assessee claims that the entry as on 01.07.2010 is a wrong entry, the AO in all fairness has to examine the same and find out whether there was genuine entry or not. The AO was conferred the power of civil court to examine and find out the real nature of transaction. If the AO could not exercise the power conferred on him, it is not known how the individual citizen of this country will be able to find out the genuineness of the transaction. Therefore, in order to meet the ends of justice, this Tribunal is of the considered opinion that the AO has to find out the address of Tulip Telecom P. Ltd. and its Directors and thereafter find out whether so called credit of 58,36,556/- said to be given on 01.07.2010 is a genuine transaction or it is a wrong entry. Thereafter, the AO has to decide the same in accordance with law. Accordingly, the learned members of the ITAT set aside the orders of the authorities below and the entire issue was remitted back to the file of the AO for re-examining the matter afresh in the light of the material available on record and thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee.
The above mentioned decision of the ITAT, Chennai is a welcome & taxpayers friendly decision and shall help many assessees.