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2019 (2) TMI 620 - AT - Income TaxAddition on account of difference in gross receipts - assessee could not reconcile the difference as per Form No.26AS and the income shown in the P&L Account towards direct income - Held that - AO made addition on the ground that the assessee could not reconcile the difference between ₹ 16,05,263 as per Form No.26AS and the income shown in the P&L Account towards direct income. As find from the various details furnished by the assessee in the paper book that the for the assessee has successfully reconciled the difference between the Form No.26AS and the income shown by the assessee. Although these details were furnished before the CIT(A), however, find the CIT(A) in a very cryptic order, rejected the voluminous details filed before him on the ground that the issue of difference between the two figures does not get resolved. This type of action on the part of the CIT(A) is not justified especially when the assessee has submitted the requisite details before him substantiating the difference and reconciliation thereof. Therefore, set aside the order of the CIT(A) and direct the AO to delete the addition. - Decided in favour of assessee.
Issues:
1. Addition of ?3,60,364 made by the Assessing Officer on account of difference in gross receipts. 2. Reconciliation of income as per Form No.26AS and income shown in the Profit & Loss Account. 3. Justification of the action taken by the CIT(A) in rejecting the details filed by the assessee. Analysis: Issue 1: Addition of ?3,60,364 The Assessing Officer made the addition based on the discrepancy between the gross receipts as per Form No.26AS and the income shown in the Profit & Loss Account. The assessee explained that the turnover was omitted due to a clerical error, and the gross receipts included payments from the previous year. However, the Assessing Officer found the explanation unsatisfactory, concluding that the income was not shown on an accrual basis. Additionally, the Assessing Officer noted discrepancies in the TDS amounts claimed by the assessee. The CIT(A) upheld the addition, emphasizing the discrepancy between the income in Form 26AS and the return of income. Issue 2: Reconciliation of Income The assessee provided detailed explanations and reconciliations to justify the difference in gross receipts as per Form 26AS and the income declared. The CIT(A) dismissed the appeal, stating that the voluminous documents did not resolve the income difference. However, the Tribunal found that the assessee had effectively reconciled the figures, which were submitted before the CIT(A) but not adequately considered. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to delete the addition, ruling in favor of the assessee. Issue 3: Action of the CIT(A) The Tribunal criticized the CIT(A) for rejecting the reconciliations provided by the assessee, despite the detailed submissions made to substantiate the income difference. The Tribunal deemed the CIT(A)'s decision unjustified and directed the Assessing Officer to remove the addition based on the reconciled figures. The Tribunal highlighted the importance of considering all relevant details presented by the assessee before making a decision. In conclusion, the Tribunal allowed the assessee's appeal, emphasizing the importance of properly considering and reconciling the income figures to avoid unjust additions based on discrepancies.
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