2020 (2) TMI 1636 - AT - Income Tax

Addition on difference in the receipts shown in the audit report and form No. 26AS - assessee has not maintained consistent policy of accounting - CIT(A) has accepted the contentions of the assessee that difference in the receipts shown in the audit report and form No. 26AS were duly reflected in the previous and subsequent assessment years and thus offered to tax - HELD THAT - As in this case there were apparently some differences in the total receipt as per form 26AS and receipts as per P L Account. The assessee filed reconciliation before the AO submitting that all these receipts were duly accounted for from 2010-11 onwards to 2014-15 and all the ledger accounts were also filed of M/s. Bartec India Pvt. Ltd. Engineer India Ltd. Mangalore Refinery Petro Chemical Ltd. and M/s. Dcore Exports Ltd. in support of the reconciliation. We note that the only basis on which the AO rejected the reconciliation of the assessee is that the assessee has not properly explained the items of difference and the AO has merely based his conclusion on the basis of audit reports. CIT(A) has recorded a finding that note in the audit report was general in nature and does not bear any relevance to the facts and circumstances of the case. CIT(A) noted that the receipts were offered to tax either in the preceding or subsequent years whereas TDS was claimed in the year of deduction. CIT(A) has noted that in the ledger accounts of all the parties all receipts were properly shown and offered to tax and accordingly held that the receipt which is offered to tax in the preceding and subsequent years could not be brought to tax in the current year as it would amount to double taxation - we are of the view that the assessee has duly explained these differences and there is in fact no difference in accounting for the receipts by the assessee. Thus we do not find any fault or infirmity in the order of Ld. CIT(A) and accordingly the order is upheld by dismissing the appeal of the Revenue.

Summary

Issues:
Appeal against CIT(A) order regarding mismatch in receipts shown in Audit Report and Form 26AS.

Analysis:
The Revenue appealed against the CIT(A) order concerning the discrepancy in receipts shown in the Audit Report and Form 26AS for the assessment year 2014-15. The AO noted a mismatch between the receipts in Form 26AS and the P&L account of the assessee. The AO directed the assessee to reconcile the difference, failing which it would be added as unaccounted income. The assessee provided ledgers but failed to reconcile satisfactorily. The AO calculated the difference as unaccounted income and added it to the assessee's income.

In the appellate proceedings, the CIT(A) allowed the appeal of the assessee. The CIT(A) observed that the auditor's qualification report was general and did not specifically relate to the case. The CIT(A) noted that the receipts were offered for tax in preceding or subsequent years, and TDS was claimed accordingly. The CIT(A) found that the mismatch was due to the timing of when receipts were accounted for and TDS claimed. The CIT(A) held that the addition based on the mismatch was unjustified and directed the AO to delete the addition.

Upon review, the ITAT observed discrepancies in total receipts as per Form 26AS and P&L Account. The assessee provided reconciliations and ledger accounts to support the claim that all receipts were accounted for from 2010-11 to 2014-15. The AO rejected the reconciliation based on the auditor's report without proper explanation of the differences. The ITAT upheld the CIT(A) order, noting that the assessee had adequately explained the differences and there was no fault in the accounting for receipts. The ITAT dismissed the Revenue's appeal, affirming the CIT(A) order.

In conclusion, the ITAT upheld the CIT(A) decision, emphasizing that the assessee had offered receipts for tax in preceding or subsequent years, and TDS was claimed accordingly. The ITAT found no fault in the assessee's accounting practices and dismissed the Revenue's appeal against the CIT(A) order.