2021 (2) TMI 166 - AT - Income Tax

Addition u/s 68 - Cash credit surrendered - Income erroneously offered by the assessee in current AY - Non-consideration of return of income filed in response to notice u/s 148 - whether an income voluntarily offered by the assessee can be held to be not assessable? - Rejection of the plea not to assess income, which was wrongly offered in the return of income - HELD THAT - Assessee has offered the amount which formed part of sundry creditors balance. Major portion of very same amount was assessed in AY 2008-09 by the AO and deleted by the Ld CIT(A). AO has accepted the above said creditors in AY 2012-13. We have also noticed that the above said credits were not received during the financial year relevant to AY 2013-14. Even the assessee has surrendered above said amount voluntarily, yet the same is not legally assessable as income of AY 2013-14 as per the provisions of Income tax Act. As observed by Honourable Third member in the case of R Natarajan 2012 (4) TMI 329 - ITAT CHENNAI the Income tax Act does not authorize levy of tax on the same amount of income more than once. It is also well settled proposition that income pertaining to a particular year can be assessed only in that year, i.e., the income pertaining to one year cannot be assessed in any other year. In the case of CIT v. Milton Laminates Ltd 2013 (3) TMI 192 - GUJARAT HIGH COURT held that the Assessing Officer is free to give effect to order of Commissioner (Appeals) without restricting income to returned income, i.e., the assessing Officer can compute income lower than that returned income. In the case of Nirmala L. Mehta v. A. Balasubramanian 2004 (4) TMI 43 - BOMBAY HIGH COURT held that, There cannot be any estoppel against the statute, Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law . We hold that the income erroneously offered by the assessee in AY 2013-14 cannot be assessed in that year, merely for the reason that the assessee has offered the same voluntarily. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Non-consideration of return of income filed in response to notice under Section 148 of the Income-tax Act, 1961.
2. Rejection of the plea not to assess income, which was wrongly offered in the return of income.

Issue-wise Detailed Analysis:

1. Non-consideration of Return of Income Filed in Response to Notice under Section 148 of the Income-tax Act, 1961:

The assessee, engaged in the real estate business, faced survey operations under Section 133A of the Income-tax Act on 30.7.2013. Following the survey, the assessee voluntarily declared an amount of ?4,14,42,864/- as income for the assessment years 2008-09 to 2013-14. The assessee filed a return of income on 02.10.2013 for AY 2013-14, declaring a total income of ?2,60,41,500/-. The AO reopened the assessments for the years 2008-09 to 2013-14 by issuing notices under Section 148 of the Act. However, since the assessment for AY 2013-14 was pending, the AO withdrew the notice for that year. The assessee filed a return in response to the notice under Section 148, excluding the amount of ?2,60,38,898/-. The AO did not consider this return due to the withdrawal of the notice and completed the assessment based on the original return.

2. Rejection of the Plea Not to Assess Income, Which Was Wrongly Offered in the Return of Income:

The assessee argued that the additional income of ?2,60,38,898/- offered in AY 2013-14 was erroneously included, as these were advances received from customers in earlier years, shown as sundry creditors. The AO assessed sundry creditors as unexplained credits under Section 68 of the Act for AY 2008-09, but the first appellate authority deleted a significant portion of this addition. The assessee contended that these credits were genuine and should not be assessed again in AY 2013-14. The AO and the first appellate authority did not accept this plea, maintaining that the assessee voluntarily declared the income.

Judgment Analysis:

The Tribunal noted that the sundry creditors amounting to ?2,60,38,898/- offered in AY 2013-14 were received in earlier years and could not be assessed as income in AY 2013-14. The Tribunal referenced the decision in the case of R. Natarajan vs. ACIT, where it was held that income voluntarily offered but not legally assessable in a particular year should not be taxed in that year. The Tribunal emphasized that there is no estoppel against the statute, and income pertaining to one year cannot be assessed in another year. The Tribunal concluded that the income of ?2,60,38,898/- erroneously offered by the assessee in AY 2013-14 could not be assessed in that year, even if it was voluntarily offered.

Conclusion:

The appeal of the assessee was allowed, and it was held that the income of ?2,60,38,898/- erroneously offered in AY 2013-14 could not be assessed in that year. The Tribunal's decision underscored the principle that income must be assessed in the correct assessment year, and voluntary declarations cannot override statutory provisions. The order was pronounced in the open court on 11th Jan, 2021.