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2019 (8) TMI 1050 - AT - Income TaxAdditions towards being income corresponding to alleged unreconciled TDS amount as per the Form 26AS - TDS u/s 194J - differential in income as was extrapolated from TDS as is reflected in for No. 26AS information per income-tax department data base and income as is reflected in books of accounts maintained by the assessee - reconciliation statement / AIR information not provided to assessee - HELD THAT - No defect in the books of accounts are pointed out by the authorities below nor were books of accounts rejected by the authorities below. No cogent incriminating material were brought on record by the authorities below to evidence/prove that the assessee has received/earned any income outside its books of accounts. The authorities below also did not dislodge/rebutted the contentions of the assessee. The assessee‟s case was also scrutinised under the provisions of Section 143(2) read with Section 143(3) of the 1961 Act for immediately preceding year as well immediately succeeding year,but no such additions were made on account of mismatch of income vide TDS as is reflected in Form No. 26AS information per income-tax data base maintained by department and the income as is reflected in assessee‟s books of accounts. The assessment orders for AY 2010-11 and 2012-13 are placed on record in file. We are presently concerned with ay 2012-13. No doubt every assessment year is a separate unit and principles of res judicata are not applicable but indications can be drawn/gathered from assessment orders of the other years as to behaviour pattern of the tax-payer and modus operandi of the tax-payer adopted to defraud Revenue/conceal income, if any. No such incriminating information is brought on record by Revenue. Thus we accept contentions of the assessee and are of the considered view that no additions to the income are warranted in the hands of the assessee for impugned ay 2011-12 owing to differential in income as was extrapolated from TDS as is reflected in for No. 26AS information per income-tax department data base and income as is reflected in books of accounts maintained by the assessee. The assessee succeeds on these ground number 2-4 raised by assessee in its memo of appeal filed with the tribunal. Adhoc disallowance @ 10% of various expenses incurred by the assessee - HELD THAT - The assessee has discharged its onus by bringing on record complete details of the expenses incurred by it albeit the same was brought on record during the course of appellate proceedings before learned CIT(A)/remand proceedings conducted by the AO under directions of learned CIT(A). The powers of learned CIT(A) are co-terminus with powers of the AO. No enquiries were conducted by the AO/learned CIT(A) even during appellate/remand proceedings. The books of accounts were not rejected by authorities below nor any defect is pointed out by the AO/learned CIT(A) in the books of accounts maintained by the assessee. There is no allegation by Revenue that the assessee claimed any bogus expenses or any attempt is made to defraud Revenue. We are of the considered view that aforesaid adhoc disallowance of expenses under various heads of expenses to the tune of 10% of the total expenses incurred by the assessee under these heads of expenses is not warranted and we order deletion of the said adhoc disallowance of expenses. - Decided in favour of assessee.
Issues Involved:
1. Time-barred notice under section 143(2) of the Income-tax Act. 2. Addition of ?1,80,57,980/- due to unreconciled TDS as per Form 26AS. 3. Perversity of the CIT(A)'s finding regarding unreconciled TDS. 4. Excessiveness and arbitrariness of the addition of ?1,80,57,980/-. 5. Ad-hoc disallowance of 10% of expenses amounting to ?2,76,51,835/-. 6. Excessiveness and arbitrariness of the ad-hoc disallowance. 7. Mandatory and consequential nature of interest under section 234A. Detailed Analysis: 1. Time-barred notice under section 143(2): The assessee did not wish to pursue this ground, and it was dismissed as not being pressed. 2. Addition due to unreconciled TDS: The AO observed a difference between TDS claimed by the assessee and TDS as per Form 26AS. The assessee claimed TDS of ?6,02,54,624/- while Form 26AS showed ?6,33,43,230/-. The AO added ?3,08,86,060/- to the income by extrapolating the TDS difference. The CIT(A) restricted the addition to ?1,80,57,980/- after considering the revised TDS figure of ?6,15,37,261/- and the assessee's inability to reconcile a difference of ?18,05,798/-. 3. Perversity of the CIT(A)'s finding: The assessee argued that the CIT(A)'s finding of unreconciled TDS was contrary to the facts on record. The assessee provided detailed explanations and reconciliations, including errors made by clients in filing TDS returns. The Tribunal found that the assessee had discharged its primary onus and that the authorities had sufficient time to conduct necessary inquiries but failed to do so. The Tribunal accepted the assessee's contentions and deleted the addition. 4. Excessiveness and arbitrariness of the addition: The Tribunal found that the remaining unreconciled TDS difference of ?12,82,637/- was insignificant relative to the total TDS claimed. The Tribunal noted that the assessee had provided detailed reconciliations and explanations, and there was no evidence of undisclosed income. The Tribunal deleted the addition. 5. Ad-hoc disallowance of 10% of expenses: The AO made an ad-hoc disallowance of 10% of various expenses, amounting to ?2,76,51,835/-, due to the assessee's failure to provide documentary evidence. The CIT(A) upheld the disallowance. The Tribunal found that the assessee had submitted detailed explanations and evidence during appellate and remand proceedings. The Tribunal noted that no such disallowance was made in preceding and succeeding years and that the authorities had not pointed out any defects in the books of accounts. The Tribunal deleted the ad-hoc disallowance. 6. Excessiveness and arbitrariness of the ad-hoc disallowance: The Tribunal found that the assessee had provided detailed explanations and evidence for the expenses incurred. The Tribunal noted that the authorities had not conducted necessary inquiries or pointed out any defects in the books of accounts. The Tribunal deleted the ad-hoc disallowance. 7. Interest under section 234A: The assessee did not wish to pursue this ground, and it was dismissed as not being pressed. Conclusion: The Tribunal partly allowed the appeal, deleting the additions due to unreconciled TDS and the ad-hoc disallowance of expenses. The Tribunal found that the assessee had provided detailed explanations and evidence, and the authorities had not conducted necessary inquiries or pointed out any defects in the books of accounts.
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