2018 (6) TMI 1566 - AT - Income Tax

Undisclosed receipts - Difference in receipts as per the books of account and as per 26AS - assessee explained the discrepancy in the receipts being the service tax which was not included in the part of turnover recorded in the books of account whereas the TDS was deducted by the payer on the amount which includes the service tax - Held that - If the assessee is showing the total receipts in the books of account on the basis of bill raised and the service tax return was filed on the basis of amount collected or actual receipt then the explanation of the assessee cannot be faulted with in respect of the amount of difference between the total receipts shown in the books and the receipts shown in the service tax return. The assessee has furnished reconciliation explaining the cause of discrepancy in the receipt shown in the 26AS statement and the ld CIT(A) has reproduced the entire list of 91 transactions where the TDS was deducted on the amount including the service tax whereas the assessee has shown the receipts in the books excluding the service tax CIT(A) has considered specific fact of discrepancy in the amount shown in the 26AS in comparison to the books of account. The bills including service tax were raised and the TDS was deducted inclusive of service tax amount of ₹ 1,61,36,763/-. The revenue has not brought any fact or material to contradict the factual details recorded by the ld. CIT(A). Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A), the same is hereby upheld. - Decided against revenue

Summary

Issues involved:
1. Whether the CIT(A) was justified in allowing the appeal of the assessee and deleting the addition of ?72,76,821 made on account of undisclosed receipts.

Detailed Analysis:
1. The assessee, a company engaged in the business of advertisement, filed its return of income for the relevant assessment year declaring total income. During scrutiny assessment, the Assessing Officer asked for reconciliation of gross receipts as per books of account and 26AS. The assessment was completed accepting the reconciliation. However, in reassessment, the Assessing Officer raised the issue again. The discrepancy was explained by the assessee as service tax not included in turnover recorded in books but included in 26AS, leading to the addition of undisclosed receipts.

2. The assessee challenged the action before the CIT(A) by providing a detailed reconciliation explaining the discrepancy in receipts. The CIT(A) accepted the explanation and reconciliation, deleting the addition made by the Assessing Officer.

3. The Revenue contended that the service tax payable amount was not paid to the Central Excise Department during the relevant year, leading to discrepancies in receipts shown in income tax return and service tax return. The Assessing Officer noted differences in receipts shown in books, service tax return, and bills raised. The Revenue relied on the AO's order.

4. The assessee explained the discrepancy due to service tax included in gross receipts but not in books. The difference in treatment was due to service tax payable on collection basis till a certain date and irrespective of payment thereafter. The books were maintained on a mercantile basis, while service tax returns were filed on actual receipt basis.

5. The Tribunal considered the rival contentions and the material on record. It noted the difference in treatment of service tax and the reconciliation provided by the assessee. The CIT(A) had detailed the discrepancies and reasons for the differences in receipts declared. The Tribunal found no error in the CIT(A)'s order and upheld the deletion of the addition.

6. The Tribunal concluded that the CIT(A) had considered the specific facts of the case, including the discrepancy in 26AS compared to books of account. The bills, service tax, and TDS deductions were analyzed, and no material was presented by the Revenue to contradict the findings. Therefore, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.