2016 (7) TMI 813 - AT - Income Tax

Mismatch of amounts credited in TDS certificates and amounts credited in the P&L account - Held that - The subsequent years assessments have been framed u/s 143(3) of the Act for the assessment year 2009-10 and 2010-11, whereby no such additions have been made by the revenue in the assessment framed u/s 143(3) of the Act. As submitted before us that inclusion of advances from customers as income of the impugned assessment year will lead to double addition of the same income as the assessee company has duly offered for taxation the said income in the year in which services were rendered and same cannot be brought to tax as income in the year of receipt as the assessee company is following mercantile system of accounting. As submitted before us that this has led to double taxation of the same income which is not permissible as per Scheme of the Act In our considered view, the matter of reconciliation of income between the TDS certificates and books of accounts of the assessee company needs verification by the authorities below and in the best interest of justice, the orders of the learned CIT(A) is set aside and the matter is restored back to the file of the A.O. for de- novo determination of the issue on merits after considering the clarifications, evidences and replies submitted by the assessee company in its defense to substantiate its contentions , and decide the matter afresh in accordance with law. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee company in accordance with principles of natural justice in accordance with law before framing de-novo assessment on merits in set aside proceedings - Decided in favour of assessee for statistical purposes.

Summary

Issues Involved:
Mismatch of amounts credited in TDS certificates and P&L account.

Analysis:

Issue 1: Mismatch of amounts credited in TDS certificates and P&L account
The appeal was filed by the assessee company against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2008-09. The main contention was the discrepancy between the amounts on which TDS was deducted as per 26AS form and the turnover/income shown in the audited annual accounts. The AO observed a mismatch between the income credited in TDS certificates and the P&L account of the assessee company. The AO added an income of ?7,99,62,893 not shown in the P&L account, leading to the dispute. The CIT(A) upheld the addition, stating the assessee failed to explain the difference satisfactorily. The Tribunal noted the difference and highlighted that the service tax component and advances received from customers were included in the income, causing the mismatch. The Tribunal found that the authorities below did not apply their minds properly, causing prejudice to the assessee. The Tribunal set aside the CIT(A)'s order and restored the matter to the AO for a fresh determination, emphasizing the need for proper verification and consideration of the assessee's submissions.

In conclusion, the Tribunal allowed the appeal for statistical purposes, directing a de-novo determination by the AO, ensuring adequate opportunity for the assessee to present their case and emphasizing the principles of natural justice in the proceedings.