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2020 (2) TMI 253 - AT - Income TaxMismatch in sales turnover - Discrepancy between 26AS data and its P L account - Admission of additional evidences - case of the assessee was selected under limited scrutiny - HELD THAT - CIT(A) has choosen not to accept the additional evidences filed by the assessee and rejected the reconciliation filed by assessee. During the arguments before us, the ld. AR contended that the voluminous data given to the ld. CIT (A) could not have compiled within a short span of two days i.e. the date of show cause 11.12.2017 and the date of order 13.12.2017. He argued that the details filed if considered with due diligence will reconcile the correct taxable income. DR also fairly argued that the matter needs to be examined by the Assessing Officer by taking into consideration the evidences filed by the assessee subsequently. Hence, taking into consideration and keeping in view, the arguments of both the parties, the time available to the assessee during the assessment proceedings, the examination under took by the Assessing Officer on the additional evidences field by the assessee before the ld. CIT (A) and the remand report thereof, we hereby set aside the matter to the file of the Assessing Officer to reconcile the mismatch of TDS vis- -vis the returned income of the assessee. Appeal of the assessee is allowed.
Issues Involved:
1. Legality and jurisdiction of the assessment order. 2. Validity of additions made based on discrepancies between Form 26AS and P&L account. 3. Consideration of additional evidence under Rule 46A. 4. Principles of natural justice and opportunity of being heard. 5. Charging of interest under Section 234B. 6. Initiation of penalty proceedings under Section 271(1)(c). Detailed Analysis: 1. Legality and Jurisdiction of the Assessment Order: The assessee challenged the assessment order passed under section 143(3) of the Income Tax Act, 1961, arguing that it was illegal, bad in law, and without jurisdiction. The assessee contended that the case was selected for limited scrutiny, and therefore, the addition made of ?4,78,93,068/- was beyond the scope and jurisdiction of the limited scrutiny. 2. Validity of Additions Based on Discrepancies: The core issue was the discrepancy between the receipts shown in Form 26AS (?6,60,65,680/-) and the total receipts disclosed in the Profit and Loss (P&L) account (?1,81,72,612/-). The assessee explained that the difference was due to the nature of its business as a C&F agent, where only the agency commission was treated as revenue, while other components like customs duty, freight, and other expenses were reimbursements and not recorded as income or expense in the books. The Assessing Officer (AO) added the difference to the total income due to the short compliance time given to the assessee. 3. Consideration of Additional Evidence Under Rule 46A: The assessee submitted voluminous documentary evidence before the Commissioner of Income Tax (Appeals) [CIT(A)] to support the reconciliation of receipts. The CIT(A) accepted the additional evidence under Rule 46A and forwarded it to the AO for a remand report. The AO, in the remand report, accepted the reconciliation except for an amount of ?3,37,067/-. Despite this, the CIT(A) did not accept the additional evidence and rejected the reconciliation. 4. Principles of Natural Justice and Opportunity of Being Heard: The assessee argued that the AO violated the principles of natural justice by not providing a reasonable opportunity to submit the required documents and explanations. The assessee was given only one day to comply with the show-cause notice, which was insufficient to compile and submit the voluminous data. 5. Charging of Interest Under Section 234B: The assessee contended that the interest charged under Section 234B was wrongly levied and excessive. This issue was raised as part of the grounds of appeal but was not specifically addressed in the judgment. 6. Initiation of Penalty Proceedings Under Section 271(1)(c): The assessee also challenged the initiation of penalty proceedings under Section 271(1)(c), arguing that the addition made was unjust, illegal, and bad in law, and therefore, the penalty proceedings were unwarranted. Judgment: The Tribunal found merit in the assessee's arguments regarding the short time provided for compliance and the voluminous nature of the documents. It noted that the AO had accepted the reconciliation except for a small amount in the remand report. The Tribunal set aside the matter to the file of the AO to reconcile the mismatch of TDS vis-à-vis the returned income of the assessee, considering the additional evidence submitted. Consequently, the appeal of the assessee was allowed, and the stay application became infructuous and was dismissed. Order Pronounced: The order was pronounced in the open court on 28/01/2020.
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