2019 (4) TMI 1214 - AT - Income Tax

Addition based on mismatch in amount reflected in AIR/26AS and the P L account - verification of wrong entry - HELD THAT - As held in case of P.K. Rajasekar 2016 (9) TMI 1498 - ITAT CHENNAI , Where assessee claimed that there was wrong credit entry by payer-client in Form 26AS, the AO has to examine its genuineness. The Assessing Officer was conferred the power of civil court to examine and find out the real nature of transaction. If the Assessing Officer could not exercise the power conferred on him, it is not known how the individual citizen of this country will be able to find out the genuineness of the transaction. Also it has been laid down by the CBDT in its Instruction No. 5/2013 dated 08.07.2013 that the AO may also, if deemed necessary, issue a notice to the deductor to compel him to file correction statement as per the procedure laid down. Therefore, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make an order afresh after giving reasonable opportunity of being heard to the assessee. We also direct the assessee to file the relevant documents/evidence before the AO. - Appeal is allowed for statistical purposes.

Summary

Issues:
Appeal against CIT(A)'s order confirming additions of undisclosed income and investments, failure to verify explanations, lack of opportunity for appellant to present evidence, and rejection of additional evidence by CIT(A) without proper application.

Analysis:
1. The appeal pertains to the assessment year 2012-13, challenging the CIT(A)'s confirmation of additions totaling ?1,44,75,355/- as undisclosed income due to a mis-match between AIR Information and the company's books of accounts regarding TDS deductions by customers. The AO's addition was based on lack of supporting documents despite the assessee's explanation regarding service tax. The CIT(A) upheld the addition as the assessee failed to provide necessary evidence or party confirmations.

2. Another issue involves the addition of ?30,00,000/- under section 69 of the Act for undisclosed investments based on AIR Information about FDRs with banks. The AO made the addition due to the assessee's failure to submit supporting documents, citing a short time frame for obtaining bank details. The CIT(A) confirmed this addition as well, noting the lack of evidence from the assessee regarding the FDR mismatch.

3. During the appellate proceedings, the assessee submitted additional evidence related to income from specific parties, aiming to prove discrepancies in Form 26AS. However, the CIT(A) rejected these documents as no application under Rule 46A was filed, and party confirmations were missing. Consequently, the CIT(A) upheld the ?1,44,75,355/- addition related to income discrepancies.

4. Regarding the ?30,00,000/- addition for FDR mismatch, the assessee presented ledger copies and bank statements during the appeal. However, these were rejected by the CIT(A) due to the lack of a formal application for admission. The CIT(A) affirmed the addition, emphasizing the assessee's failure to provide complete records of FDR transactions.

5. The Tribunal, after considering the arguments and precedents, set aside the CIT(A)'s order on both additions. Citing a case precedent and CBDT instruction, the Tribunal directed the AO to re-examine the issues, emphasizing the need for verifying the genuineness of credit entries and providing a fair opportunity to the assessee to present relevant documents. The Tribunal instructed the assessee to submit necessary evidence before the AO for a fresh decision.

6. Consequently, the appeal was allowed for statistical purposes, and the matter was remitted to the AO for a fresh assessment after giving the assessee a fair chance to present relevant documents and explanations.

This detailed analysis covers the key issues raised in the appeal and the Tribunal's decision to address the discrepancies in income and investments, emphasizing the importance of providing necessary evidence and following procedural requirements during assessments.