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2019 (1) TMI 1764 - ITAT AHMEDABADAccrual of income - undisclosed contract receipt - difference in income declared by the assessee and income represented in form 26AS - Liquidated Damages for belated execution of the contract - Whether should be allowed as an expense from the alleged contract receipt - HELD THAT:- Difference above is representing the liquidated damages deducted by the Gujarat Council of primary education. AO was very much aware of the address of Gujarat Council of primary education. In case of any doubt, it was the duty of the AO to take the confirmation from the Gujarat Council of primary education. But we note that none of the authorities below has used the powers given under section 133(6) and 131 of the Act to verify the contention of the assessee. As referred the bank statement of the assessee and found that the exact amount of payment received as approved in the bills was reflecting therein. Thus it is clear that there was nothing received by the assessee over and above the bills approved by the Gujarat Council of primary education. No allegation of the Revenue that the assessee has received the amount of difference as discussed above outside the books of accounts. The books of accounts of the assessee during the relevant period were audited, and no defect of whatsoever was pointed out by the auditor of the assessee. There cannot be any addition merely on account of the difference between the income shown by the assessee in its financial statements and income shown in the form 26AS. In holding so, we find support and guidance from the order of Ravindra Pratap Thareja [2015 (10) TMI 1487 - ITAT JABALPUR] wherein held that merely because a payment is reflected in AS-26 and is shown to have been made to the assessee, it cannot be brought to tax in his hands when the said money is not received by the assessee. Even if the said difference is treated as the income of the assessee, then also it is entitled to claim the same amount of liquidated damage as expenses under section 37(1) resulting no tax liability in the hands of the assessee. See MAZDA LTD. [2017 (9) TMI 1038 - GUJARAT HIGH COURT] - addition deleted - Decided in favour of assessee Disallowance of payment made to the subcontractor - notices issued under section 133(6) of the Act were not either served to them or there was no compliance - AO held that the payment made by the assessee was not representing the genuine transactions - HELD THAT:- Assessee has furnished the copies of the PAN of all the parties along with the jurisdiction. Thus we are of the view that the AO before holding that the payment made by the assessee is not genuine, he should have verified from the respective AO having jurisdiction over the assessee. But the AO failed to do so. Assessee has filed the copies of income tax return acknowledgment along with the computation of income in the case of Shri Mahammed Husen Syed Assessee has made payment to Nimesh builders and Mahammed Husen Syed after deduction of the TDS. The assessee in respect of these parties has also filed the confirmation. Addition was made by the AO on the ground that notices under section 133(6) of the Act were either not served or served, but no compliance was made - AO was in possession of the PAN of all the parties along with the jurisdiction then before making any disallowance it was the duty of the AO to verify the same from the AOs having jurisdiction over the assessee. AO did not doubt the reasonableness of the expenses. Thus in our considered view, the other details filed by the assessee cannot be just brushed aside without any cogent reasons to conclude that the expenses claimed by the assessee are not genuine. In view of the above, we reverse the order of authorities below. Accordingly, we set aside the order of learned CIT (A) and direct the AO to delete the addition made - Decided in favour of assessee.
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