2021 (2) TMI 320 - AT - Income Tax

Difference in turnover as per books of account and gross receipts as per Form 26AS - HELD THAT - In this case, the assessee has filed explanation before the Assessing Officer regarding difference in turnover reported in books of account and turnover as per Form 26AS, but could not produce books of account to justify its claim. It is not the case of the AO that assessee has not filed explanation to explain difference in turnover reported in books of account and Form 26AS. Only reason for rejection of explanation furnished by the assessee is non-furnishing of books of account. Moreover, the learned AR for the assessee pleaded before us that assessee is ready to file necessary details to explain difference between turnover reported in books of account and Form 26AS. In order to give one more opportunity of hearing to the assessee, the appeal is set aside to the file of the Assessing Officer and direct him to redo the assessment, after considering necessary evidence filed by the assessee including reconciliation explaining the difference between turnover reported in books of account and Form 26AS. Needless to say, the assessee shall appear before the Assessing Officer without seeking any adjournment and file necessary details for speedy completion of assessment proceedings - Appeal is allowed for statistical purposes.

Summary

Issues:
Assessment based on turnover discrepancy between books of account and Form 26AS, Ex-parte best judgment assessment, Failure to produce books of account, Confirmation of additions by CIT(A), Opportunity for the assessee to explain turnover difference.

Analysis:
The appeal was against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The assessee, a partnership firm, declared total income of Rs. 23,75,250, but discrepancies were noted in turnover between the return filed and Form 26AS. The Assessing Officer called for evidence and reconciliation, as there was a mismatch due to reimbursement of expenses. Despite requests, the assessee failed to provide books of account or details of expenses. Consequently, the Officer made an ex-parte best judgment assessment, adding Rs. 21,27,182 based on a 5% profit estimation on total receipts per Form 26AS.

The assessee's appeal to the CIT(A) was disposed of ex-parte as no appearance or details were submitted. The CIT(A) upheld the additions made by the Assessing Officer. The assessee then appealed to the ITAT, requesting another chance to explain the turnover differences. The ITAT considered that the assessee's failure to provide necessary details led to the assessment being based solely on available records. The ITAT acknowledged the obligation for the assessee to present evidence and explain discrepancies. The ITAT decided to set aside the appeal, directing the Assessing Officer to reassess after considering the evidence and reconciliation provided by the assessee regarding the turnover differences.

The ITAT emphasized the importance of the assessee's cooperation in providing necessary details promptly for the assessment proceedings. The decision to grant the assessee another opportunity to explain the turnover differences was made to ensure a fair assessment process. Therefore, the appeal was allowed for statistical purposes, and the Assessing Officer was instructed to conduct a reassessment with the additional information provided by the assessee.