IT: Where Tribunal deleted addition made by Assessing Officer taking a view that assessee had been able to reconcile sales figures appearing in TDS certificate with those recorded in books of account, said finding of Tribunal being a finding of fact, no substantial question of law arose therefrom
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[2013] 40 taxmann.com 167 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax - III
v.
Needwise Advertising (P.) Ltd.*
V. M. SAHAI AND N. V. ANJARIA, JJ.
TAX APPEAL NO. 954 OF 2011†
AUGUST 29, 2012
Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income [Reconciliation of accounts] - Assessment year 2004-05 - In course of assessment, Assessing Officer noted that there was difference in sales as disclosed in profit & loss account and as per TDS certificates brought on record - Assessee's explanation did not satisfy Assessing Officer and as a result, certain addition was made to assessee's taxable income - Tribunal opined that assessee had been able to reconcile sales figures appearing in TDS certificate with those recorded in books of account - It was thus concluded that Assessing officer was not justified in rejecting books of account and in estimating gross profit resulting in impugned addition - Whether finding recorded by Tribunal being based upon facts and material available on record, no substantial question of law arose therefrom - Held, yes [Para 6] [In favour of assessee]
Varun K. Patel for the Appellant.
JUDGMENT
N.V. Anjaria, J. - The present appeal by the Revenue arise out of order dated 16.12.2010 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'A', passed in ITA No. 2119 of 2007 for the Assessment Years 2004-2005.
1.1.Following question is raised by the appellant proposing it to be a substantial question of law.
"Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 41,42,905/- made on account of rejection of book results and estimation of gross profit?"
2. Heard Mr. Varun K. Patel, learned counsel for the appellant.
3. In course of the proceedings of assessment in respect of assessment year 2004-2005, while considering the return of income of the respondent-assessee, the assessing officer observed that the assessee had taken credit of TDS amount to the extent of Rs. 84,46,135/- which was on the basis of TDS certificate received by it. However, on verification of those certificates, it was noticed that they represented for the amount of Rs. 44 crore. The assessee had disclosed sales of services of Rs. 42.83 crore only. There was, therefore, difference of Rs. 1.17 crore in the sales as disclosed in the profit & loss account and as per the TDS Certificates.
3.1 The explanation tendered by the assessee did not satisfy the Assessing Officer as a result of which, addition of Rs. 41,42,905/- was made.
3.2 The assessee preferred appeal before the Commissioner of Income Tax (Appeals), which was allowed. The CIT(A) observed that in course of the assessment proceedings the assessee had reconciled the amount of tax deducted at source with the total receipts. He therefore, held that making an estimation of sales figures as recorded in the books of account, who was not warranted.
3.3 Against the order of CITA(A) the department preferred an appeal wherein one of the grounds was in respect of above deletion of Rs. 41,42,905/-. The appeal of the revenue came to be dismissed bringing the department before this Court by way of present appeal.
4. Upon considering the facts on record, the Tribunal was convinced that there was no discrepancy between the amount of tax deducted at source vis-a-vis the total receipts. The Assessing Officer erroneously proceeded to reject the books of account and erred in estimating the gross profit consequently making the addition in the income. It was observed by the Tribunal that the assessee had been able to reconcile the sales figures appearing in the TDS certificate with those records in the books of account.
5. In the course of proceedings before assessing officer himself assessee had in his explanation explained the discrepancy. It was stated that one of the party M/s Metro Publicity and another Titron Communication were used to deduct the tax at source on payment basis, whereas another party namely Mudra Communication deducted the tax at source on credit basis. Another reason for discrepancy was that the amount of sales mentioned in the profit and loss account was in excess than the amount of service tax on the customer which was levied by the broadcasters. The reconciliation explanation by the assessee could be seen from the following table :
| Name of the Customer | Amount of Sales inclusive of Service Tax passed on | Amount of payments received |
| Mudra Communication | 26,78,54,251 | 26,79,26,205 |
| Metro Publicity | 5,82,46,361 | 5,36,07,371 |
| Triton Communication | 12, 54,92, 185 | 11,94,92,185 |
| TOTAL:- | 45,15,92,797 | 44,00,25,761 |
| Less :-Service tax suffered and passed on | 2,32,26,418 | |
| Net Sales as per P&L A/c | 42,83,66,379 |
6. In view of the above, we are of the considered opinion that the confirming findings recorded by the Tribunal were based upon the facts and material relevant to the issue before it. They were eminently proper in the facts of the case. They were findings of facts and in the realm of appreciation. When the findings are factual in nature and properly arrived at, no interference is called for in the present appeal. No substantial question of law arises for consideration.
7. Accordingly, the appeal is dismissed.
SUNIL*In favour of assessee.
†Arising out of order of Tribunal in ITA No. 2119 (Ahd.) of 2007, dated 16-12-2010
Regards
Prarthana Jalan
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