2023 (9) TMI 977 - AT - Income Tax

Addition on account of business income based on the unclaimed TDS in the 26AS of the assessee - Taxability of income comes from its accruing and arising in the hands of a person - TDS was accounted for in the partnership firm - CIT(A) deleted as here through technical mistake/oversight income of the Firm is wrongly represented in the hands of the appellant. However, at no point of time that income has accrued or arisen in the hands of the appellant - HELD THAT - As in the original return of income assessee has claimed impugned TDS - However, upon realizing the fact that the corresponding income of TDS was accounted for in the partnership firm and therefore, assessee had filed a revised return of income wherein the assessee did not claim the said TDS and he paid the additional tax by way of self-assessment tax. Thus, the assessee had not claimed total TDS in his revised return of income, therefore ld CIT(A) has rightly deleted the addition in the hands of the assessee. We note that there was no fault of the assessee when some other party had wrongly deducted tax at source on any transaction by quoting the PAN of the assessee by mistake. The assessee had already informed to the customers that the proprietary business in the name of M/s Yogi Transport was closed and a new partnership was formed from assessment year (A.Y.) 2014-15 onwards. The assessee had also informed the PAN of the partnership firm of M/s Yogi Transport but customers wrongly deducted TDS by quoting assessee s PAN. Even after this fact was pointed out to these companies personally by the assessee, the said parties did not care to revise their TDS returns. Thus, there was no fault on the part of the assessee, as the assessee has also subsequently filed revised return of income on 28.09.2018, wherein the assessee did not claim the said TDS and the assessee paid the additional tax by way of self-assessment tax. Therefore, we note that in these circumstances, the assessee should not be penalized. We note that action of assessing officer, in making prima facie adjustment by adding the turnover in the hands of the assessee, is quite illogical and unjustifiable in as much as it has resulted into double taxation. The partnership firm, M/s Yogi Transport had already accounted for this turnover in its books of accounts and shown profit thereon and also paid due tax thereon and now, the said entire turnover was again added to the income of the assessee and hence, it is a clear case of double taxation. Assessee has not claimed TDS in the revised return of income filed by him, and partnership firm of assessee has shown turnover which belongs to TDS hence there is no loss to the revenue. Appeal filed by the Revenue is dismissed.

Summary

Issues Involved:
1. Deletion of addition made by CPC.
2. Accuracy of income particulars shown by the assessee.
3. Restoration of the Assessing Officer's order.

Summary:

1. Deletion of Addition Made by CPC:
The Revenue challenged the deletion of an addition made by the Central Processing Centre (CPC) by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee, a partner in M/s Yogi Transport, filed a return showing business income and income from other sources. Certain parties deducted tax at source (TDS) under the assessee's PAN instead of the partnership firm's PAN. Consequently, the CPC added Rs. 2,13,98,205/- to the assessee's income based on unclaimed TDS of Rs. 1,60,305/-. The CIT(A) deleted this addition, noting that the income had not accrued to the assessee but to the partnership firm.

2. Accuracy of Income Particulars Shown by the Assessee:
The CIT(A) observed that the income in question was mistakenly represented under the assessee's PAN due to a technical oversight, and it actually belonged to the partnership firm. The assessee had filed a revised return, removing the TDS claim and paying additional tax through self-assessment. The Tribunal noted that the assessee had informed customers about the change in business constitution and PAN, but some customers continued to deduct TDS under the old PAN. The Tribunal found no fault with the assessee, as the revised return did not claim the disputed TDS, and the partnership firm had accounted for the turnover.

3. Restoration of the Assessing Officer's Order:
The Revenue argued that the CIT(A)'s order was brief and lacked discussion of the documents submitted by the assessee. However, the Tribunal upheld the CIT(A)'s decision, noting that the addition by the CPC led to double taxation since the partnership firm had already accounted for the turnover and paid due taxes. The Tribunal emphasized that the assessee should not be penalized for errors made by third parties in quoting the PAN. The Tribunal referenced the ITAT Surat decision in Dr. Swati Mahesh Vinchurkar Vs. DCIT, which supported the assessee's position.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s deletion of the addition and highlighting the prevention of double taxation and the lack of fault on the assessee's part. The order was pronounced on 28/08/2023.