2014 (7) TMI 336 - AT - Income Tax

Addition u/s 69C addition on the ground that assessee deducted TDS on higher value and issued TDS certificate for higher amount - assessee did not claim the whole expenditure during the year as deduction as part of the expenses was reversed - Held that - merely because the TDS was deducted at a higher amount and paid to the credit of the Central Government is not a ground to make the addition in the hands of the assessee company without any basis - The only reason advanced by the AO while making the addition was that TDS has been deducted and has also been paid to the Government Account, thus, income on account of repairing of ₹ 10,20,000/- has arisen to the company which has not been shown correctly. The Tribunal in the hand of the recipient of the amount on account of repairing charges has held that there was bonafide mistake committed by the assessee in the books of account which was rectifiable at any point of time - the assessee company M/s. Silicon Computech Private Limited has rectified the same and passed necessary entries in the books of account and hence there was no justification for making any addition on this ground - M/s Silicon Computech Private Limited has paid correct amount of repairing charges - the addition u/s 69C made in the hands of the assessee on account of unexplained expenditure under the head repairing expenses by lower authorities was not justified - the addition of ₹ 5,95,000 is set aside Decided partly in favour of Assessee.

Summary

Issues Involved:
1. Validity of reassessment u/s. 147.
2. Addition of Rs. 5.95 lakhs u/s. 69C of the Act.

Analysis:

Issue 1: Validity of reassessment u/s. 147
The appeal was filed against the Commissioner of Income Tax (Appeals) order upholding the validity of reassessment u/s. 147. The assessee initially raised the issue in Ground no. 2.1, challenging the reopening of assessment. However, during the hearing, the Authorized Representative withdrew this ground, leading to its dismissal as not pressed. As a result, the issue of the validity of reassessment u/s. 147 was not further adjudicated upon.

Issue 2: Addition of Rs. 5.95 lakhs u/s. 69C of the Act
The Assessing Officer added Rs. 5.95 lakhs to the assessee's income under section 69C for unexplained investment. This addition was based on the discrepancy between the credited repairing expenses and the TDS certificate issued. The assessee explained that the maintenance work expenses were not fully claimed and reversed a portion of the amount paid to the vendor. Despite providing explanations and supporting documents, the Assessing Officer deemed the expenses unexplained, leading to the addition. On appeal, the Commissioner of Income Tax (Appeals) upheld the addition, emphasizing the failure to prove the payment of the residual amount. The Commissioner rejected the contention that the TDS deduction was a mistake, citing the relevant tax provisions. However, the Tribunal, in a similar case involving the vendor, ruled in favor of the vendor, stating that the mistake in accounting was rectifiable and that the necessary entries were made to correct the error. Relying on this precedent, the Tribunal deleted the addition of Rs. 5.95 lakhs in the assessee's case, noting that the mistake was rectified and there was no justification for the addition.

In conclusion, the Tribunal allowed the appeal, deleting the addition of Rs. 5.95 lakhs made under section 69C of the Act, based on the precedent set in a similar case involving the vendor. The Tribunal found that the mistake in accounting was rectified, and there was no basis for the addition.