9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (4) TMI 621 - AT - Income TaxDifference of turnover - less turnover shown in income tax return as compared to service tax return - Difference of Receipt/turnover as per the income tax and as per the service tax return and as assessee has shown total receipts/turnover - HELD THAT - The turnover reported in service tax return is not actual one as proper classification of services were not mentioned in the service tax return and his claim was proved from various other supporting documentary evidences. The difference of turnover was derived by grossing up the turnover mentioned in service tax return of first half by 50% and considered fully as works contract service liable to partial reverse charge. We find that the submission of the assessee were brushed aside by the Assessing officer and preferred calculating the turnover on the basis of service tax paid and ignoring for 26AS which is an authentic document to substantiate the actual turnover of the assessee. In the direction U/s 144A of the Act from the Addl.CIT, it was clearly directed that instead of applying statistical ratios emphasis should be given on invoices shown by the assessee and the corresponding entries in the company s ledger. We find that all those evidences were placed before the Assessing Officer and before the ld. CIT(A). Before, Ld. CIT(A) the assessee has shown total 151 invoices, which were raised by the assessee company and the said company has paid ₹ 7,85,15,834/-. The assessee has shown the same at ₹ 7,84,40,700/- and the difference is not much. CIT(A) restricted the addition to the extent of profit on such differences. The profit on such differences can be made @ 10% which will be ₹ 7,513/- and accordingly, the addition was restricted to that extent. In response to notice U/s 133(6) of the Act alongwith reply of M/s Aarti Industries, We find the in Form 26AS were furnished, the Assessing officer ignored all those details. He also ignored reconciliation and written submission filed by the assessee. The direction of Addl.CIT under section of the Act were also overlooked and given two folds justification in support of his calculation of turnover of assessee. First relates to service tax return and other is that in earlier year i.e. A.Y. 2014-15, the addition on account of less turnover shown in income tax return as compared to service tax return were made and no objection was raised by the assessee on such proposed addition and no appeal was filed by the assessee. The said justification of the assessee was also not accepted by the ld. CIT(A). CIT(A) held that merely the assessee accepted the addition in earlier year to save the cost of litigation that does not give liberty to the Assessing Officer to make huge addition without pointing out specific defects in the books of assessee or reply received from contractee party. All the payments were received from M/s Aarti Industries Ltd. either by way of account payee cheques or RTGS only. There is no occasion for earing any out of book receipts from M/s Aarti Industries. And deleted the substantial part of the addition. We find that the order of Ld. CIT(A) is also based on factual analysis of Fo-26AS as well. Appeal of the Revenue stands dismissed.
Issues Involved:
1. Deletion of addition of ?1,68,42,822/- by CIT(A) based on presumption and statistical analysis. 2. Reliance on Form 26AS versus figures reported in Service Tax Return. 3. Reconciliation of turnover discrepancies between Income Tax Return and Service Tax Return. 4. Validity of the assessment order in light of directions under Section 144A of the Income Tax Act. Issue-wise Detailed Analysis: 1. Deletion of Addition by CIT(A) Based on Presumption and Statistical Analysis: The Revenue appealed against the CIT(A)'s decision to delete the addition of ?1,68,42,822/- out of a total addition of ?1,68,49,975/-. The CIT(A) held that the addition was made on the basis of presumption and statistical analysis, ignoring vital facts and the reconciliation of turnover. The Assessing Officer (AO) had followed directions given by the Additional CIT under Section 144A of the Income Tax Act. However, the CIT(A) found that the AO had not adhered to the directions properly and instead applied a statistical grossed-up ratio, leading to a significant addition. The CIT(A) concluded that the turnover as reported in Form 26AS was an authentic document and should be considered over the service tax return figures. 2. Reliance on Form 26AS versus Figures Reported in Service Tax Return: The CIT(A) relied on Form 26AS to substantiate the actual turnover of the assessee, which showed a negligible difference compared to the figures reported in the income tax return. The AO had ignored the reconciliation and written submissions provided by the assessee, which were supported by Form 26AS. The CIT(A) noted that the service tax return figures were not actual due to frequent corrections in invoices by the contractee company, M/s Aarti Industries, which led to discrepancies. The CIT(A) held that the AO's reliance on service tax returns without considering the corrections and the actual turnover reported in Form 26AS was unjustified. 3. Reconciliation of Turnover Discrepancies: The assessee explained that the difference in turnover between the income tax return (?7.84 crores) and the service tax return (?9.52 crores) was due to corrections and withdrawals of certain invoices after filing the service tax return. The AO added the difference to the income of the assessee, but the CIT(A) found that the assessee had provided a reasonable explanation supported by documentary evidence. The CIT(A) noted that the invoices issued and the corresponding entries in the company's ledger were verified, and the actual turnover was accurately reflected in Form 26AS. The CIT(A) restricted the addition to the profit element on the negligible difference, amounting to ?7,513/-. 4. Validity of the Assessment Order in Light of Directions under Section 144A: The assessee had sought directions under Section 144A of the Income Tax Act, and the Additional CIT directed the AO to focus on the invoices and corresponding ledger entries rather than applying statistical ratios. The AO, however, did not follow these directions and made a substantial addition based on statistical analysis. The CIT(A) held that the assessment order was null and void as it was passed in defiance of the mandatory directions under Section 144A. The CIT(A) emphasized that the turnover reported in the service tax return was not actual due to improper classification of services and corrections made after filing the returns. Conclusion: The Tribunal upheld the CIT(A)'s decision, affirming that the addition made by the AO was based on an incorrect approach and ignoring the proper reconciliation and documentary evidence provided by the assessee. The Tribunal found no reason to deviate from the CIT(A)'s findings and dismissed the Revenue's appeal, confirming that the assessment should be based on the actual turnover as reflected in Form 26AS and the verified invoices. The Tribunal also highlighted that the directions under Section 144A were mandatory and should have been followed by the AO.
|
