2019 (2) TMI 804 - AT - Income Tax

Accrual of income - Non disclosure of receipts - Assessee could not prove the invoice raised by it during the year was in the nature of advance only - Held that - Findings of the CIT(A), we are of the view that AO has brought to tax revenue of ₹ 2,89,17,000/- in the current year primarily on the ground that DS of ₹ 10,93,559/- was deducted by M/s Sistema Shyam Teleservices Ltd. on the bill for entire amount invoice by the assessee in November, 2011. It is noted that the assessee had offered the receipts in two financial years and claimed proportionate credits of TDS as per Rules, hence, AO has not rightly made the addition. It is further noted that payments have actually been received in two separate financial years and not in the current year and assessee also booked expenditure with reference to the payments made in the two financial years. CIT(A) has rightly deleted the addition in dispute which does not need any interference on our part, therefore, we uphold the action of the CIT(A) on the issue in dispute and reject the ground raised by the Revenue.

Summary

Issues:
1. Addition of income without proving nature of invoice
2. Appeal against CIT(A) order

Analysis:
1. The case involved an appeal by the Revenue against the CIT(A)'s order deleting an addition of ?2,89,17,000 to the assessee's income for the assessment year 2012-13. The AO added this amount as the assessee allegedly did not disclose receipts from M/s Sistema Shyam Teleservices Ltd. The CIT(A) found that the revenue pertained to two financial years based on a Joint Promotional Activity Agreement and ledger account evidence. The AO's basis for taxing the amount in the current year was the TDS deduction by M/s Sistema Shyam Teleservices Ltd. The CIT(A) referred to Section 199 of the Income Tax Act and Rule 37(BA)(3) of the IT Rules, allowing credit for TDS across years proportionately to income assessable. The CIT(A) ruled in favor of the assessee, stating that the addition lacked merit as the receipts were offered in two financial years with proportionate TDS credits, and payments were received in different years. The ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

2. The Revenue contended that the CIT(A) erred in law by deleting the addition without considering the nature of the invoice raised by the assessee. The ITAT found that the AO's addition was primarily based on the TDS deduction by M/s Sistema Shyam Teleservices Ltd. and that the assessee had correctly offered the receipts in two financial years with proportionate TDS credits. The ITAT agreed with the CIT(A)'s reasoning that the addition lacked a basis, as payments were received in different financial years, and expenditure was booked accordingly. Therefore, the ITAT upheld the CIT(A)'s decision to delete the addition, dismissing the Revenue's appeal.

This detailed analysis of the judgment provides insights into the issues raised, the arguments presented by both parties, and the reasoning behind the final decision rendered by the ITAT.