Case Law Details
PCIT Vs MBC Infra Space Pvt. Ltd. (Gujarat High Court)
The Gujarat High Court dismissed the Revenue’s appeal filed under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal for Assessment Year 2013-14. The dispute arose from the deletion of an addition of Rs. 3,74,27,513 made by the Assessing Officer on account of the difference between payments reflected in Form 26AS and the assessee’s books of account. The original assessment under Section 143(3) had also included a disallowance relating to employees’ contribution towards PF. However, the Commissioner (Appeals) deleted the addition relating to the Form 26AS discrepancy, and the Tribunal subsequently upheld that decision.
The Revenue contended that the assessee had received contractual payments from two parties on which tax had been deducted at source, but the corresponding receipts had not been fully disclosed in the return of income. During the assessment and appellate proceedings, the assessee explained that there had been double deduction of TDS on the same project, once at the time of raising bills and again at the time of payment on certain bills. The Revenue argued that the Assessing Officer had correctly made the addition and that the Tribunal had failed to appreciate the facts properly.
The Revenue also proposed several substantial questions of law, including whether the Tribunal was justified in deleting the addition despite the assessee following the mercantile system of accounting, whether the assessee had failed to produce necessary third-party confirmations relating to TDS deductions, and whether the Tribunal had overlooked alleged factual discrepancies concerning the value of the contract and the total receipts arising from it.
After examining the record, the High Court noted that the Tribunal had specifically found that the Assessing Officer had not verified the assessee’s claim. The Tribunal observed that the total contract amount was Rs. 1.2 crore, while running account (RA) bills of Rs. 8.32 crore had been raised during the relevant financial year. It also recorded that the assessee had received Rs. 8.32 crore, but only Rs. 7.7 crore was reflected as received during the year in the books of account and bank statements. The Tribunal further found that the Commissioner (Appeals) had deleted the addition after verifying the bank account, contract amount, and receipts based on the running bills.
The High Court held that, considering these findings, the Tribunal had rightly dismissed the Revenue’s appeal. It concluded that no substantial question of law arose from the Tribunal’s order or the questions proposed by the Revenue. Accordingly, the Court declined to entertain the appeal and dismissed it, thereby affirming the Tribunal’s decision deleting the addition relating to the difference between Form 26AS and the books of account.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. The appellant revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as `the Act) challenging the order dated 1.3.2022 passed by the Income Tax Appellate Tribunal, Surat (hereinafter referred to as `the tribunal’) in ITA No.675/SRT/2018 for AY 2013-14.
2. Heard learned standing counsel Mr. Nikunt Raval appearing for the appellant – department.
3. Factual matrix of the present case is as under:
3.1. The respondent – assessee company has filed its return of income for AY 2013-14 on 28.9.2013 declaring total income of Rs.57,45,077/-. The case of the respondent assessee was selected for scrutiny. Thereafter, assessment u/S.143(3) of the Act was completed on 28.3.2016 assessing the total income of the assessee at Rs.4,32,54,749/- by making addition of Rs.3,74,27,513/-on account of difference in payment received as per Section 26AS and as per books and Rs.82,159/- on account of disallowance of payment of employees contribution towards PF after due date.
3.2. Being aggrieved and dissatisfied with the order passed u/S.143(3) of the Act, the respondent – assessee preferred appeal before the CIT (Appeals), Valsad. The said appellate authority allowed the appeal filed by the respondent – assessee vide order dated 2.7.2018 and deleted the addition of Rs.3,74,27,513/- on account of difference in payment received as per Section 26AS and as per books.
3.3. Against the order passed by CIT (Appeals), Valsad, the appellant revenue preferred appeal before the tribunal. The tribunal vide impugned order dated 1.3.2022 dismissed the appeal filed by the appellant herein and, therefore, the appellant – revenue has preferred the present appeal.
4. Learned standing counsel for the appellant assailed the impugned order passed by the tribunal mainly on the ground that during the course of assessment proceedings, it was noticed that the assessee has received contractual payment from two different parties and TDS was also deducted by the parties on the payment made. However, the respondent assessee did not fully disclose such income / receipt in its return of income furnished before the appellant – department. Accordingly, show cause notice came to be issued to the assessee and he was asked to show cause as to why the difference amount in receipts is not added to the total income of the assessee for the year under consideration.
5. It is also pointed out that during the course of assessment proceedings as well as the appellate proceedings, the assessee has claimed that there was double deduction of TDS on the same project which was entered into with the two different parties at the time of bill raised and also at the time of payment made on certain bills.
6. Learned counsel referred the order passed by the AO and pointed out that the AO has correctly made additions of Rs.3,74,27,513/- on account of difference in payment received as per Section 26AS.
7. At this stage, learned counsel has referred the observations made by the tribunal while dismissing the appeal filed by the appellant herein and contended that the tribunal has not properly appreciated the fact that AO has rightly made additions of the aforesaid amount while passing the assessment order.
8. Learned counsel therefore urged that the present appeal be admitted for consideration of following substantial questions of law:
“(i) Whether the learned tribunal was justified in deleting the addition made by the AO on account of difference in payment as per 26AS data and as per books of account maintained by the assessee for the year ignoring that the assessee was following mercantile system of accounting and thus the assessee was bound to offer the tax on total payment?
(ii) Whether the learned tribunal was justified in deleting the addition made by the AO considering that the assessee had also failed to discharge the onus cast upon it to submit necessary third party confirmation related to TDS deduction for the differential amount?
(iii) Whether the learned tribunal has erred in admitting the assessee’s plea regarding total receipts arising out of contract for Rs.10,89,58,138/- as against actual value of the contract from Rs.10,20,00,000/- leading to factual discrepancy in the case?
(iv) Whether the learned tribunal has erred in dismissing grounds of appeal of Revenue on account of difference in payment as per 26AS and as per books without considering the fact that the assessee failed to discharge the onus cast upon it to submit necessary confirmation of third parties related to TDS deduction “
9. We have considered the submissions canvassed by learned standing counsel for the appellant – revenue. We have also perused the material placed on record including the orders passed by the CIT (Appeals) and tribunal.
10. The tribunal has specifically observed that AO has not verified the claim of the assessee and the total contract amount was only of Rs. 1.2 crore and the assessee has raised RA Bills of Rs. 8.32 crore during the relevant financial year. The assessee has received amount of Rs.8.32 crores, out of which as per the books of account, as per the bank statement is of Rs.7.7 crores only, which was received in the current year. It is also observed by the tribunal that the CIT (Appeals) has rightly deleted the addition after verification of bank account, contract amount which was received by the assessee on the basis of running bills.
11. Thus, after considering the facts and circumstances of the present case, the tribunal has rightly dismissed the appeal preferred by the present appellant. We are of the view that in the present appeal, no substantial questions of law arises for consideration as suggested by the appellant in paragraph Nos.4(i) to 4(iv) of the memo of the appeal.
12. In view of the aforesaid discussion, we are not inclined to entertain the present appeal. Accordingly, the appeal stands dismissed.
Author Bio
