2010 (7) TMI 424 - AT - Service Tax

Mandap keeper s service assessee declared certain amount in course of survey under section 133A of Income-tax Act, 1961 Department treated as consideration towards taxable services provided in relation to Mandap Keeper - balance sheet nowhere discloses that the amount disclosed to Income-tax authority was attributable to consideration in relation to Mandap Keeper - no evidence produced by revenue to place their stand Appeal dismissed

Summary

Issues:
1. Whether an amount declared in a survey under section 133A of the Income-tax Act, 1961 should be treated as receipt for taxation under the Finance Act, 1994.
2. Evidence presented by the Department to support their conclusion against the respondent.
3. Consideration of the disclosure of Rs. 35 lakhs as taxable income related to Mandap Keeper services.

Analysis:

Issue 1: The crucial issue before the Tribunal was whether the amount of Rs. 35,00,000 declared during a survey under section 133A of the Income-tax Act, 1961 should be considered as taxable receipt under the Finance Act, 1994 in connection with Mandap Keeper services. The respondent's counsel argued against the appeal, stating lack of evidence supporting the Department's conclusion. The respondent provided a letter dated 21-3-2005 to the Commissioner of Income-tax, which did not establish that the disclosed amount was related to taxable services. The Department failed to produce evidence contradicting the respondent's claims, leading the Tribunal to dismiss the revenue's appeal.

Issue 2: The Department was required to present evidence to counter the respondent's claims regarding the nature of the disclosed amount. The learned DR mentioned that evidence had been gathered by the sister department and that the disclosed amount was considered taxable income for the assessment year 2005-06. However, the balance sheet of the appellant did not explicitly link the Rs. 35 lakhs to consideration for Mandap Keeper services. In the absence of concrete evidence from the revenue, the Tribunal found it appropriate to dismiss the appeal and stay application.

Issue 3: After examining the evidence on record, including the reply to the Income-tax authority and the balance sheet, the Tribunal concluded that the disclosed amount was not attributable to consideration for Mandap Keeper services. The lack of evidence from the revenue to support their stance led to the dismissal of the appeal and stay application, as the Tribunal found no basis to treat the amount as taxable income related to the services in question.

This judgment highlights the importance of presenting concrete evidence to support claims in tax-related matters and emphasizes the need for a clear link between disclosed amounts and taxable services to avoid unfounded tax implications.