Income Tax Appellate Tribunal - Delhi
Suman Sehrawat,Delhi vs Ito,Ward-72(1), Delhi on 7 May, 2025
1
ITA No. 1171/Del/2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC": NEW DELHI
Ms. MADHUMITA ROY, JUDICIAL MEMBER
ITA No. 1171/DEL/2024
Assessment Year: 2017-18
Suman Sehrawat, Vs ITO, Ward-72(1),
248, Pocket-6, Sector-25, Delhi.
Rohini, New Delhi-110085.
PAN- BCTPS 9905 G
APPELLANT RESPONDENT
Assessee represented by Shri Lalit Mohan, CA &
Shri Ankit Kumar Adv.
Department represented by Sh. Sanjay Kumar, Sr. DR
Date of hearing 27.02.2025
Date of pronouncement 07.05.2025
ORDER
PER Ms. MADHUMITA ROY, JM:
The instant appeal, filed by the assessee, is directed against the order dated 28.02.2024 (DIN & Order No. ITBA/APL/S/250/2023-24/1061678974) passed by the Learned Commissioner of Income-tax (Appeals)-2, Mumbai, arising out of the order dated 15.07.2019 passed by the ADIT, CPC Bengaluru ("AO"), under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), for assessment year 2017-18 with the following grounds: 2 ITA No. 1171/Del/2024
"1 That the learned Commissioner of Income Tax (Appeals). National Faceless Appeal Centre (NFAC), Delhi has erred both in law and on facts in upholding the determination of income of the appellant by including sum of Rs. 16,04,850/- as income of the appellant in an intimation u/s 143(1) of the Act 1.1 That while upholding the aforesaid addition the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the sum of Rs. 16,04,850/- was offered as income under the head other sources and the same stood accepted as such, then such sum could not be again taxed as income u/s 115BBE of the Act 2 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the adjustment made was without jurisdiction and beyond the scope and ambit of the provisions contained in section 143(1) of the Act and thus unsustainable.
3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that intimation dated 15.7.2019 is without reasons and therefore unreasonable is otherwise a nullity.
4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that intimation dated 15.7.2019 was made without granting opportunity much less fair meaningful and effective opportunity and therefore such an intimation is otherwise vitiated."
2. Facts leading to the case in hand is the adjustment of Rs. 30,00,000/- made on account of inconsistency being found between the lottery income under Income from Other Sources head in return and Form 26AS. The Assessee had shown Rs. 30,00,000/- as receipt from M/s MSG AII Trading International (P) Limited and tax whereupon was deducted under Section 194B of the Act to the tune of Rs. 9,00,000/- as is evident from Form 26AS. The assessee challenged the same to the effect that the said adjustment is not a mistake apparent from records but a 3 ITA No. 1171/Del/2024 debatable issue which needed to be verified by issuing notice under Section 143(2) of the Act; further that the adjustment under Section 143(1)(a)(vi) is only limited with the income appearing in Form 26AS, Form 16A or Form 16 which is not being included in computing the total income in the return. As the assessee admittedly included the income of Rs. 30,00,000/- as receipt from M/s MSG AII Trading International (P) Limited appearing in Form 26AS, the total income of Rs. 31,41,394/- under the head "other sources" includes that particular income of Rs. 30,00,000/-. Further, the case of the assessee is that it was organized adventure in the nature of trade game and expenses to the tune of Rs. 16,04,850/- as was incurred for the purpose, the same are being claimed out of income of Rs. 30,00,000/- as above and in that view of the matter there is no inconsistency in reporting the income. Further that TDS deducted at special rate could not mechanically be made a basis to assume that there was income aspect at special rate under Section 115BB. The assessee filed its return of income declaring income at Rs. 17,23,160/- on 15.12.2018 for the year under consideration which is evident from pages 1 to 53 of the paper book filed before us. The communication proposed under Section 143(1)(a) of the Act dated 17.03.2019 has also been placed on record whereupon the assessee duly filed its reply on 19.03.2019, inter alia, as under:
4ITA No. 1171/Del/2024
Income from other sources:
Sl. No. Reasons Sub-reasons 1 Income clubbed with PAN which is offering the income
another tax payer u/s 64/65 Amount of Income clubbed. 2 Incorrect details quoted by No such Income earned - Deductor wrongly Deductor quoted my PAN TDS on such income has not been claimed in the return Incorrect income reported by deductor Revised TDS return has been filed by deductor which needs to be considered now.
3 Any other reason if any (to The total income of Rs. 3141394 shown under be specified). Please use the the head other source includes income of Rs. 30 option if none of the above Lacs. It may be mentioned here that it was a reasons are applicable Organised Adventure in nature of trade game and Expenses of Rs. 1604850 are been done for the purpose and the same are been claimed out of Rs. 3000000. So there is no inconsistency in reporting the income. I hereby request you to kindly go through the form and process the return.
2.1 Finally, intimation u/s 143(1) of the Act determining the income at Rs.
47,23,160/- as against the declared income of Rs. 17,23,160/- upon making addition of Rs. 30,00,000/- was passed vide order dated 15.07.2019. The same was in turn partly allowed by Ld. CIT(A) sustaining the addition of Rs. 16,04,840/-. Hence the instant appeal before us.
2.2. The CPC, Bengaluru made the addition by stating the following reasons: 5 ITA No. 1171/Del/2024
(vi) Income as per Form 26AS which has not been included in computing the total income in the return 143(1)(a)(vi) Sl. Head of Income Income as Amount paid/ Variance Reason No. per income credited as per tax return Form 26AS
(i) (ii) (iii) (iv)=(ii)- (v)
(iii) 1 Other sources 0 3000000 3000000 There is inconsistency between the lottery income under income from other sources head in the return and form 26AS 2.3 Ld. CIT(A) while sustaining the addition held as follows:
Sl. No. Particulars As provided by As computed Variance Taxpayer in Under Section Return of 143(1) Income 1 Income other than owning race horse(s) A Dividend, Gross 0 0 0 B Interests, Gross 1,44,860 1,44,860 0 C Rental income from machinery, 0 0 0 plants, buildings, etc. Gross D Others, Gross (excluding income 30,00,000 60,00,000 30,00,000 from owning race horses) in case of variance, please check the details in Table 'Others' (excluding Gross income from owning race horses' given at end.
E Total (ia+1b+ic+id) 31,44,860 61,44,860 30,00,000 F Income includible in 'le' chargeable to tax at special rate (Chapter XII/XIIA) i. Winning from lotteries, 0 30,00,000 30,00,000 crossword puzzles, races, games, gambling, betting etc. (U/s 115BB) 6 ITA No. 1171/Del/2024 2.4 It is the case of the assessee that Rs. 30,00,000/- which included Rs. 16,04,840/- was offered to tax under the head "Income from Other Sources", which was duly considered and accepted by the Ld. CIT(A) which is evident at para 7 of the order impugned dated 28.02.2024, which is reproduced as follows:
"7. However it is seen that the appellant has offered a sum of Rs 13,95,150_under the head "Income from Other Sources" of the sum of RS 30,00,000/ received. Hence the balance addition of Rs. 16,04,840/- is confirmed. Addition of another Rs 13,95,150/- will result in double addition. The adjustment under 143(1) is therefore restricted to Rs 16,04,840/-. This ground is partly allowed"
2.5 The following is evident from the copy of return filed by the assessee, appearing at pages 35-36 of the paper book filed before us, which reads as follows:
Schedule OS: Income from other sources 1 Income a Dividend, Gross 1a 0 b Interest, Gross 1b 144860 c Rental income from machinery, plants, 1c 0 buildings, etc., Gross D Others, Gross (excluding income from owning race horses) Mention the source SL Source Income No. 1 Winning from lotteries, crossword puzzles etc. 2 Others Tiranga Rooman 30,00,000 Choo Game (Adventure in nature of T) Total 1di+1dii+idiii) 30,00,000 E Total (1a+1b+1c+1div) 1e 31,44,860 2.6 It is further evident from the reply dated 19.03.2019 that the fact of total income declared by the assessee to the tune of Rs. 31,41,394/- shown under the 7 ITA No. 1171/Del/2024 head "Other sources" includes income of Rs. 30,00,000/- was clearly brought to the notice of the Department.
2.7 Further, that the expenses incurred to the tune of Rs. 16,04,850/- in Organised Adventure in nature of trade game was also claimed by the assessee out of the said income of Rs. 30,00,000/- earned by the assessee. In that view of the matter there is no inconsistency in reporting the income as was the case before the Ld. CIT(A) which has been further reiterated before us at the time of hearing of the instant appeal.
3. Ld. Counsel for the assessee further submitted that adjustment u/s 143(1)(a)(vi) is only limited for the income which is appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income whereas the assessee admittedly included Rs. 30,00,000/- as income in his return of income filed u/s 139(1) of the Act which is further evident from Form 26AS appearing at page 35 of the PB filed before us.. As the total income of Rs.
31,44,860/- shown under the head "other sources" includes income of Rs. 30,00,000/- the entire receipt, therefore, was primarily disclosed by the assessee as is included in Form 26AS and therefore, there cannot be any inconsistency at all found in reporting the said income by the Department. Further the adjustment in intimation is only permissible if it is made in terms of the provision of Section 8 ITA No. 1171/Del/2024 143(1)(a) of the Act i.e. adjustment can be made of income which was not included in computing the total income which is, thus, not permissible in the case in hand. It was further submitted that the TDS cannot mechanically make a basis to presume that there was income assessable at special rate under Section 115BB of the Act. In this regard the assessee submitted as follows:
"3.2 Section 190 of the Act reads as under:
"Deduction at source and advance payment "190. (1) Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall he payable by deduction or collection at source or by advance payment or by payment under sub-section (1A) of section 192, as the case may be, in accordance with the provisions of this Chapter.
3.3 It is submitted that it is evident from the plain reading of aforesaid section that Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction or collection at source or by advance payment or by payment under sub-section (1A) of section 192 of the Act, as the case may be, in accordance with the provisions of this Chapter. It is thus submitted that TDS is a part of tax on income of payee/recipient. It is therefore submitted that whether TDS deductible or not and, if deductible under which section TDS has to be deducted depend on nature of receipt of payee/recipient from whose payment TDS to be deducted. It is therefore submitted that assessing the income on the basis that TDS has been deducted at a special rate could not mechanically be made a basis to assume that there was income assessable at special rate u/s 115BB of the Act."
3.1 Under such circumstances of the matter, assessee relied upon following decisions:
9ITA No. 1171/Del/2024
i) GE India Technology Centre (P) Ltd. v. CIT 327 ITR 456 (SC);
ii) Vijay Ship Breaking Corpn. & Others v. CIT 314 ITR 309 (SC);
3.2 It was also submitted by him that the addition of income appearing in Form 26AS which has not been included in computing the total income in return tantamount to double taxation as income has already been offered by the assessee as "Income from other sources" in the return of income filed by the assessee. Addition by the AO of the same income under Section 143(1) of the Act is, thus, not permissible in the eyes of law. While making this submission he relied upon the following decisions:
- CIT v. Laxmi Pat Singhania v. CIT 72 ITR 291 (SC);
- State of Uttar Pradesh v. Raja Buland Sugar Co. Ltd. 118 ITR 50 (SC);
- Shree Sanad Textiles Industriesb Ltd. v. DCIT [ITA No. 995/Ahd./2014 dated 6.1.2020];
- A.K. Lumbers Ltd. v. ACIT [ITA 8761/Del/2019 dated 10.7.2020];
- New Pooja Jewellers v. AcIT [ITA 1329/Kol/2018 dated 26.2.2020];
- Bhagwant Merchants (P) Ltd. v. ITO [ITA 2614/Kol/2019 dated 29.5.2020];
- ITO v. Shaik Zameer [ ITA No. 1019/Hyd/2017 dated 18.5.2018]; &
- Shri Ashok Desing Naik v. ITO [ITA No. 48/Bang/2019].
3.3 The Ld. DR relied upon the order passed by the Ld. CIT(A) 3.4 We have heard the rival submissions made by the respective parties and have also perused the relevant materials available on record. Under the present facts and circumstances of the matter the argument made by the Ld. AR is found to 10 ITA No. 1171/Del/2024 be correct having regard to the return of income filed by the assessee as appearing at pages 35-36 of the paper book filed before us which already found to have placed on record before the Ld. CIT(A) in its reply filed. We further find that the appellant relied upon the judgment passed by the Kolkata Bench of the ITAT in the case of Anita Seth v. DCIT, CPC, Bengaluru [ITA no. 109/Kol/2022 dated 18.04.2022]. While dealing with identical aspect of the matter the Coordinate Bench observed as under:
"5. We have heard both the parties and perused the record. The question is limited as to whether the CPC u/s. 143(1)(a) of the Act can make any adjustment/addition in the aforesaid facts and circumstances. According to us, the CPC could not have made the adjustment since the question of fact arises on the factual matrix of this case as noted above. The assessee's contention is that the amount of Rs. 31,21,167/- is included in the turnover of Rs. 5. ITA No.109/Kol/22 A.Y 2017-18 ANITA SETH 52,81,344/-. Therefore, merely based on TDS entries given in Form 26AS for deduction of tax u/s. 194J, the adjustment could not have been made without conducting any enquiry, more particularly when the man power supply is not covered as a profession within the meaning of section 44AA of the Act read with relevant notifications. We find force in the contention of the Ld. AR that this particular issue could not have been decided by the CPC u/s. 143(1)(a) of the Act. In case, if the department finds that there is an anomaly, then it has liberty to do so by conducting scrutiny assessment under the provisions of law or to re-open the assessment u/s. 147 of the Act. Thus, we find that CPC had no jurisdiction to make impugned adjustment within the meaning of section 143(1)(a) of the Act. Accordingly, the adjustment made by the CPC stands deleted."
4. Having regard to the entire aspect of the materials and particularly in view of the fact that the income of Rs. 30,00,000/- received from M/s MSG AII Trading International (P) Limited had already been disclosed in the return of income filed 11 ITA No. 1171/Del/2024 by the assessee and tax whereupon was deducted under Section 194B of the Act to the tune of Rs. 9,00,000/- as is evident from Form 26AS and expenses to the tune of Rs. 16,04,850/- as organized adventure in the nature of trade game was incurred for the purpose, the entire addition of Rs. 30,00,000/- made by the Ld. AO by invoking Section 143(1)(a)(vi) in the hands of the assessee is found to be palpably wrong and the order, therefore, is found to be not sustainable in the eye of law and consequently the addition of Rs. 16,04,850/- sustained by the Ld. CIT(A) is, thus, deleted.
5. In the result, appeal of the assessee in ITA No. 1171/Del/2024 is allowed. Order pronounced in open court on 07.05.2025.
Sd/-
(Ms. MADHUMITA ROY) JUDICIAL MEMBER *MP* Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI