2015 (1) TMI 306 - AT - Income Tax

Addition on the basis of information from the Annual Information Report (AIR) - Reconciliation of professional receipts - Held that - Professional fees shown by the assessee in its P&L account far exceeds than the amount shown in the AIR information. Even the assessee has reconciled the major portion of the receipts. It has not been denied by the Revenue Authorities that full and complete details of the parties are not mentioned in the AIR information. The addition in this case has been made by the lower authorities solely on the basis of AIR information. In our view, the addition, made solely on the basis of AIR information, especially in the absence of full details of parties and when the professional receipts declared by the assessee far exceeds than the amount mentioned in the AIR information, is not sustainable in the eyes of law. - If the assessee denies that he is in receipt of income from a particular source, it is for the AO to prove that the assessee has received income as the assessee cannot prove the negative. Reliance can also be placed on the decision of Mumbai Bench of Tribunal in the case of Shri S. Ganesh vs. ACIT in 2010 (12) TMI 851 - ITAT, Mumbai wherein the Tribunal has held that in the absence of any material brought by the revenue authorities that the assessee has received amount more than the professional fees which has been declared by him in the P&L account and when the professional income declared by the assessee far exceeds the professional fees shown in the AIR information, then additions solely based on the AIR information are not sustainable. - Same are hereby ordered to be deleted. - Decided in favour of assesse.

Summary

Issues involved:
1. Addition of professional receipts based on Annual Information Report (AIR) for assessment years 2008-09 and 2009-10.
2. Reconciliation of professional receipts with books of accounts.
3. Disputed addition of unreconciled professional receipts as concealed income.
4. Consideration of additional evidence during appellate proceedings.
5. Legal validity of additions solely based on AIR information.
6. Comparison of professional fees in P&L account with AIR information.

Issue 1: The appellant contested the addition of professional receipts based on the AIR for assessment years 2008-09 and 2009-10. The Assessing Officer (AO) observed a significant variance in the professional receipts disclosed by the appellant and those reported in the AIR, leading to the addition of unreconciled amounts as concealed income.

Issue 2: The appellant attempted to reconcile the professional receipts with the books of accounts but faced challenges in reconciling specific amounts. The AO treated the unreconciled amounts as concealed income, despite the appellant's explanations.

Issue 3: During the appellate proceedings, the appellant submitted additional reconciliation statements and argued that all professional fees were received through banking channels, recorded in the books of accounts, and offered for tax. However, the Commissioner of Income Tax (Appeals) confirmed the addition of the remaining unreconciled professional receipts as concealed income.

Issue 4: The appellant presented additional evidence during the appellate proceedings, leading to a remand to the AO for further consideration. Despite the appellant's efforts to reconcile the receipts, the AO and CIT(A) maintained the addition of unreconciled amounts as concealed income.

Issue 5: The Tribunal analyzed the legal validity of additions solely based on AIR information. It was noted that the professional fees declared by the appellant far exceeded the amounts reported in the AIR, and complete details of parties were not provided in the AIR information. Relying on precedents, the Tribunal held that additions solely based on AIR information without substantial evidence were not legally sustainable.

Issue 6: The Tribunal compared the professional fees disclosed in the P&L account with the AIR information for both assessment years. Finding discrepancies and considering the appellant's reconciliations, the Tribunal concluded that the additions made by the Revenue solely based on the AIR information were not sustainable and ordered their deletion.

In conclusion, the Tribunal allowed the appeals of the assessee for both assessment years, emphasizing the insufficiency of additions based solely on AIR information without concrete evidence and highlighting the importance of reconciliations and legal validity in such cases.