2016 (9) TMI 500 - AT - Income Tax

FDRS Interest taxability - income accrued - Held that - Assessee is engaged in the business of sales of bikes and owner of bikes are insured with M/s National Insurance Co. Ltd. or assessee IndusInd Bank. All sums received by the assessee as job charges duly declared. No dealings of the assessee with National Insurance Co. Ltd. and books of accounts has been accepted. No such sums received by the assessee. On perusing a Certificate from the Bank alongwith copy of FDR it shows that the interest is on account of FDRs of wife of the assessee Smt. Sarita Yadav. It is of the view that once no sum is credited in the books of accounts of the assesssee, it is really not known how any figure reflected in Form 26AS can be treated as income of the assessee as Form 26AS neither forms part of books of accounts of the assessee. As find considerable cogency in the assessee s counsel that it is a well settled law that the bank account is not books of account of the assessee, therefore, the Form 26AS cannot be made a basis for addition. As regards the TDS Certificate is concerned, on perusing the records, as noted that the National Insurance Company has issued a TDS Certificate in the name of the assessee and mere issue of TDS certificate does not establish that there is any income credited to the income of the assessee as no sum is either due to the assessee or any sum has been actually received by the assessee, thus the addition of ₹ 11,605/- and ₹ 8,47,592/- is not tenable in the eyes of law, hence, the same are deleted. With regard to addition of ₹ 4,19,563/- relating to FDR interest, from the records, it reveals that this amount relates to Smt. Sarita Yadav, W/o Sh. Vikas Yadav, who is a regular income tax assessee. The FDRs interest and TDS claim was duly made in her return. The TDS deducted under the assessee PAN actually its belong to her. Nor the interest is claimed by the assessee nor the benefit of TDS is availed. Hence, the addition in dispute is untenable and the same is deleted. - Decided in favour of assessee

Summary

Issues Involved:
1. Discrepancy in income declaration and addition by Assessing Officer.
2. Justification of additions made by Assessing Officer.
3. Appeal against the order of the Commissioner of Income Tax (Appeals).
4. Consideration of Form 26AS in determining income.
5. Treatment of TDS certificates in assessing income.

Issue 1: Discrepancy in income declaration and addition by Assessing Officer

The appellant filed an appeal against the order passed by the Commissioner of Income Tax (Appeals) regarding the assessment year 2010-11. The Assessing Officer observed a variance in the income declared by the appellant and the receipts not shown in the books of accounts, leading to additions of specific amounts. The Commissioner upheld the additions due to lack of satisfactory explanations from the appellant, resulting in sustaining the addition of ?12,78,760/-. The appellant contested this decision before the Tribunal.

Issue 2: Justification of additions made by Assessing Officer

The appellant argued that since no sums were credited in the books of accounts, the amounts reflected in Form 26AS could not be treated as income. The appellant emphasized that the bank account is not part of the books of accounts, hence Form 26AS should not be the basis for additions. The Tribunal agreed with the appellant's stance, noting that the mere issuance of TDS certificates does not establish income credited to the assessee when no sums were received. Consequently, the additions of ?11,605/- and ?8,47,592/- were deemed untenable and deleted.

Issue 3: Appeal against the order of the Commissioner of Income Tax (Appeals)

The appellant's counsel contended that the addition related to FDR interest actually belonged to another individual, Smt. Sarita Yadav, who had duly claimed the interest and TDS in her return. The Tribunal acknowledged this argument and found the addition of ?4,19,563/- to be unwarranted, leading to its deletion. The Tribunal cited a previous ITAT Delhi Bench decision supporting the deletion of additions based solely on Form 26AS information.

Issue 4: Consideration of Form 26AS in determining income

The Tribunal emphasized that information from revenue authorities' databases, such as Form 26AS, cannot solely justify income additions and should prompt further inquiries. It highlighted the importance of concrete evidence and explanations from the assessee to support income claims. The Tribunal referenced a case where the addition based on Form 26AS was deleted due to lack of evidence linking the amounts to the assessee.

Issue 5: Treatment of TDS certificates in assessing income

The Tribunal reiterated that the issuance of TDS certificates does not automatically imply income credited to the assessee, especially when no sums were received or due. It emphasized the need for corroborating evidence to substantiate income claims and justified the deletion of additions where no concrete link to the assessee was established. The Tribunal's decision favored the appellant, leading to the allowance of the appeal against the Commissioner's order.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, and the Tribunal's rationale in deciding the appeal in favor of the appellant.