INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “C” KOLKATA

ITA No.421/Kol /2013 Assessment Year :2004-05
Harbans Lal Malhotra & Sons Pvt . Ltd (Appellant) vs ACIT (Respondent)
Date of Order: 04-12-2015

ORDER

PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XIX, Kolkata in appeal No.156/CIT(A)-XIX/ACIT, Cir-3/Kol/11-12 dated 23.11.2012. Assessment was framed by ACIT, Circle-3, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 27.12.2006 for assessment year 2004-05.

2. Sole issue raised by assessee in this appeal is that Ld. CIT(A) has erred in confirming the addition of ₹28,30,098/- on account of Tax Deducted at Source (TDS) certificate issued and claimed by assessee.

During the assessment proceedings, Assessing Officer asked the assessee to submit the list of receipts as per TDS certificate in comparison to the receipt as per accounts and same is furnished below:-

Name of deductor	Total TDS Deducted	Total T.O. as per TDS certificate	Corresponding T.O as per accounts	Difference, if any
ADMAAC (South, West)	86558/-	865578/-	-	865578/-
PNB, Kolkata	247610/-	1207852/-	1032510/-	175342/-
SBI, Howrah	114417/-	1144163/-	-	1144163/-
-do-	120138/-	1144163/-	499147/-	645015/-
			Total	2830098/-

The AO found from the above table that assessee has claimed TDS of the full amount but failed to declare the income in full as per the TDS certificates. The difference between the income as per TDS certificates and as per accounts is amounting to Rs. ₹28,30,098/-. Hence, the AO added the same to the total income of assessee.

3. Aggrieved, assessee preferred appeal before Ld. CIT(A) who upheld the action of AO by observing as under:-

“On this issue the appellant in his submission mentioned that the short credit of TDS was due to the fact that part income of the TDS certificate was already offered for taxation in the earlier year because of the mercantile system of accounting being followed by the assessee year to year. The assessee was also of the opinion that the revenue is in no way in loss or the assessee has not deferred the payment of taxes any way. It is further stated that in fact the assessee paid the taxes from his own pocket in advance and claimed the TDS afterward and therefore he should not be penalized for paying the taxes in advance.

The appellant above submission is not free from doubt as before the AO such explanation was never offered rather it is the assessee who has himself calculated the difference with respect to various TDS certificates totaling to Rs.28,30,098/-. In view of above facts the A/R submissions that the part income of the TDS certificate was already offered for taxation in the earlier year is an after-thought and it is unsubstantiated and fresh explanation which is unacceptable.”

Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us on the following ground:-

“1) That the Commissioner of Income Tax (Appeals)-XIV has erred, both on facts and circumstances of the case in confirming addition of Rs.28,30,098/- as made by A.C.I.T. on basis of TDs certificates issued and claim made by assessee on basis of system of accounting of interest income being consistently followed by the assessee Company.”

4. We have heard both the parties and perused the materials available on record. Before us Ld. AR submitted paper book running pages from 1 to 34 and stated as under :

Regarding the TDS certificate issued by ADMAAC, South West for an amount of ₹86,558/-. It was submitted that assessee has shown its income in the financial year 2002-03 on the basis of mercantile system of accounting. However, the party issued the TDS certificates in the financial year 2003-04. So the income on TDS certificate was duly offered for tax in the financial year 2002-03. In support of his claim, the ld. AR has submitted audited schedule of income along with the breakup of interest for the financial year 2002-03 which are placed on pages 6 & 7 of the paper book. The assessee claimed the credit of TDS certificate for the said amount of Rs. 86558/- in the relevant previous year 2002-03 but the same was not allowed by the AO. The ld. AR has submitted the assessment order for the previous year 2002-03 with the details of TDS rejected and the details of the TDS claimed by the assessee which are placed on pages 26 to 29 and 34 of the paper book. The ld. AR also submitted that the assessee has paid its tax out of its own fund and assessee claimed the benefit of TDS in subsequent year i.e. FY 2003-04 and TDS certificate is placed at page 25 of assessee’s paper book. From the details submitted by the ld. AR, we find no infirmity or ambiguity of any type.

As regards the TDS certificate issued by PNB, Kolkata for an amount of ₹1,75,342/-. It is submitted that assessee has followed mercantile system of accounting and declared all its income on accrual basis. However, the PNB paid interest on the fixed deposit in AY 2004-05 on the basis of cash accounting system, so the TDS was deducted in the AY 2004-05. In support of his claim the ld. AR has produced interest certificate for an amount of Rs. 175342.00 from the PNB clarifying that this is the interest pertaining to the financial year 2000-2001 which is placed at page 23 of the paper book. The ld. AR claims that the assessee has offered such income for taxation in the assessment year 2001-02 and in support of his claim the assessee has submitted audited interest income schedule along with the breakup of the interest which are placed on page 10 and 11 of the paper book.

As regards, two TDS certificates issued from SBI, Howrah for an amount of ₹ 234555.00 (114417+120138) the corresponding was booked on mercantile basis and the bank deducted TDS on the interest accrued on maturity based on cash system of accounting. In support of the interest income from SBI on fixed deposits, the assessee submitted the detail breakup of the interest income declared by the assessee, which is placed on page 16 of the paper book. The bank was to deduct the TDS @20.50% of the interest income but deducted @ 10% and 10.50% respectively, therefore issued two TDS certificates. The AO on the basis of two TDS certificate has treated the same amount twice and added to the income of the assessee. However the assessee has submitted the clarification letter from bank regarding the interest income from SBI which is placed at page 18 of the paper book certifying that the both the TDS certificate relate to the single interest income. The TDS certificates are also placed on pages 19 and 20 of the paper book. The ld. AR also submitted the detailed working interest year wise when the same was offered to tax on the basis of mercantile accounting system which is placed on page 17 of the paper book. On the other hand, Ld. DR vehemently relied on the orders of authorities below.

5. From the aforesaid discussion, we find that AO at the time of assessment made reconciliation between income based on TDS certificates and the actual income offered to tax. The AO found the difference between the income as per TDS certificates and income shown by assessee. As per AO the assessee has declared less income and claimed the full credit of the TDS. Accordingly the AO has added the undisclosed income for the above stated amount. However, we find from the submission of Ld.AR that all the income having duly shown in the relevant year by assessee and tax thereon has been duly paid as per mercantile accounting system. The reason for the difference was mainly on account of interest income which the assessee has declared on the basis of mercantile accounting system and the payer deducted the TDS on the cash basis of accounting. The ld. AR has submitted sufficient number of documents in the form of the paper book and we found no ambiguity from the details submitted. In view of above, we reverse the orders of authorities below and delete the addition made by AO which confirmed by Ld. CIT(A).

6. In the result, appeal filed by assessee is allowed.

Order pronounced in the open court 04/12/2015

(Mahavir Singh)           (Waseem Ahmed)
(Judicial Member)        (Accountant Member)