2023 (5) TMI 841 - AT - Income Tax

Revenue recognition - Differential amount of TDS - Difference of TDS between the amount of TDS of assessee and the ITS data available - Assessee submitted that he had already recognized the income constituting 90% of the fee which was realized during the AY 2016-17 and only TDS component had not been recognized as the same was not reflecting in Form 26AS as on the date of filing of return and this is a case of double taxation - HELD THAT - As in the interest of justice, we remit this issue to the file of the AO who shall examine the assessee s claim that the assessee has already recognized the income in AY 2016-17 itself. To the extent revenue has been recognized in AY 2016-17, the assessee shall be granted relief. Needless to say that the assessee be given opportunity of being heard. Appeal of the assessee stands allowed for statistical purpose.

Issues:
The issues involved in the judgment are:
1. Addition of Rs. 181,500 as assessed by the Assistant Commissioner of Income Tax.
2. Application of mind in confirming the addition of Rs. 181,500.
3. Double addition made by the Assistant Commissioner of Income Tax.
4. Charging interest under section 234A, 234B, and 234C of the Income Tax Act.
5. Initiation of penalty proceedings under Section 271(1)(c) of the Income Tax Act.

Issue 1 - Addition of Rs. 181,500:
The assessee, a practicing Chartered Accountant firm, filed a return of income for Assessment Year 2016-17 declaring total income of Rs. 30,43,570. The Assistant Commissioner of Income Tax assessed the total income at Rs. 35,11,020 after making an addition of Rs. 4,67,450 on account of a mismatch of TDS. Upon filing a rectification application, the AO rectified the differential amount of TDS to Rs. 44,995 and assessed the total income at Rs. 34,93,520 after an addition of Rs. 4,49,950.

Issue 2 - Application of Mind in Confirming the Addition:
The Commissioner of Income Tax (Appeal) confirmed the addition of Rs. 181,500 without appreciating the facts that the appellant follows the cash basis of accounting and the said amount had already been offered to tax during the assessment year under consideration, resulting in double addition made by the AO.

Issue 3 - Double Addition:
The CIT(A) granted partial relief to the assessee by restricting the addition to the income of the appellant for AY 16-17 to Rs. 1,81,500, with the balance to be assessed in AY 17-18. The TDS credit granted was restricted to Rs. 13,51,954 for AY 16-17, with the balance to be made available when the corresponding income is offered to tax in AY 17-18.

Issue 4 - Charging Interest and Penalty Proceedings:
The CIT(A) confirmed the order of the AO in charging interest under section 234A, 234B, and 234C of the Income Tax Act, as well as in initiating penalty proceedings under Section 271(1)(c) of the Act.

Conclusion:
The Tribunal remitted the issue of recognizing the income in AY 2016-17 back to the AO for examination, allowing the appeal of the assessee for statistical purposes. The decision was pronounced on 18th May 2023.

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