2015 (12) TMI 1016 - AT - Income Tax

Reconciliation of the difference between receipts as per TDS Certificates and receipts disclosed by the assessee - Held that - On an appreciation of the facts on record we do not find the arguments and claims put forward by the assessee to be factually tenable. As per the business agreement dt.10.10.2003 and the letter dt.4.11.2003 supplementing the aforesaid agreement, the assessee s principal, M/s. Oyzterbay Pvt. Ltd. was to grant the assessee rentals of ₹ 36,000 per month in lieu of rents paid to the landlord; which works out to ₹ 4,32,000 per annum (viz. ₹ 36,000 x 12). This, in our considered view, certainly does not account for the difference of ₹ 8,91,075 between the receipts ofRs.43,94,366 as per the TDS Certificates and receipts of ₹ 35,03,291 declared by the assessee. In this view of the matter, we concur with and uphold the finding of the learned CIT (Appeals) that the explanation put forth by the assessee in an attempt to reconcile the difference in the receipts / turnover declared in the profit and loss account vis- -vis the receipts/turnover in the TDS Certificates, is unacceptable as it does not controvert the findings of the learned CIT (Appeals) in the impugned order. - Decided against assessee

Summary

Issues:
1. Disallowance of interest paid to partners
2. Disallowance of staff salary
3. Disallowance of sundry expenses
4. Disallowance of postage and telephone charges
5. Addition of rental receipts
6. Appeal against CIT (Appeals) order
7. Charging of interest under Section 234B, 234C, and 234D

Disallowed Expenses:
The assessment for Assessment Year 2006-07 involved disallowances of interest paid to partners, staff salary, sundry expenses, and postage/telephone charges. The Assessing Officer determined the total income of the assessee at a higher amount due to these disallowances.

Addition of Rental Receipts:
The Assessing Officer initiated proceedings under Section 154 of the Income Tax Act to tax the difference in rental receipts between what was declared by the assessee and what was reflected in the TDS Certificates. The difference amounted to &8377; 8,91,075, which was brought to tax in the assessee's hands, resulting in an increased income assessment.

Appeal Against CIT (Appeals) Order:
The assessee appealed against the order of the CIT (Appeals) for Assessment Year 2006-07, challenging the addition made by the Assessing Officer regarding the difference in turnover as per Form No.16A and the Profit and Loss Account. The appellant contended that the rental receipts were not directly received by them but by the principal, and if considered, corresponding expenditure should be allowed.

Charging of Interest:
The assessee denied liability to be charged interest under Section 234B, 234C, and 234D of the Act. However, the Tribunal upheld the charging of interest as consequential and mandatory, citing legal precedent. The Assessing Officer was directed to recompute the interest if necessary.

Judgment Analysis:
The Tribunal dismissed general grounds of appeal and upheld the charging of interest under Section 234B, 234C, and 234D. Regarding the addition of rental receipts, the Tribunal found the assessee's contentions regarding reimbursement of expenses not factually tenable. The business agreement and related documents did not support the claimed offset of expenditure, leading to the dismissal of the appeal against the CIT (Appeals) order.

This comprehensive analysis covers the disallowed expenses, addition of rental receipts, appeal against CIT (Appeals) order, and the charging of interest under Section 234B, 234C, and 234D, providing a detailed understanding of the legal judgment.