2022 (9) TMI 338 - AT - Income Tax

Undisclosed income - scrutiny assessment - exact amount as not discernable from the statement of 26AS - mismatch between the receipts shown by the assessee, vis- -vis. as per 26AS i.e. TDS details - HELD THAT - The assessee has explained its position that in the statement of 26AS, the amount for which a bill was prepared by the concerned authority would reflect and sometime it is not necessary that advance given by the assessee should match ultimately with the purchases made by it. The advance could be further adjusted for other purchases. This simple thing has not been appreciated by the revenue authorities. Assessing Officer keeps on making the reference of Bank account, partial payments, etc. If he has any doubt, he should ask Tata Metaliks DI Pipes Limited. In that exercise, lot of unnecessary litigation as well as wastage of resources could be avoided. Similar is the situation with regard to other small issues by making reference of irrelevant things the disallowance has been made. The simple way for AO was to cross verify from the concerned party, without adopting that course, he keeps on drawing inference of defects in the details of assessee by way of a deductive reasoning method. On due consideration of the details, we are of the view that the disallowance is not sustainable. We allow the appeal of the assessee and delete the disallowance. Appeal of assessee allowed.

Summary

Issues:
Single issue: Addition of Rs. 11,45,372 to taxable income of the assessee confirmed by Ld. CIT (Appeals).

Analysis:
The assessee appealed against the addition of Rs. 11,45,372 to its taxable income for A.Y. 2013-14, based on mismatch between receipts shown by the assessee and 26AS TDS details. The Ld. CIT (Appeals) upheld the additions, stating the income was received by the assessee as per Form 26AS. The AO's remand report rebutted the assessee's claims, highlighting the lack of supporting documents. The appellant failed to establish whether the receipts were included in its total income or provide clarifications, leading to the confirmation of additions. The assessee contended that the amounts were not its income, as they were TDS deductions by sundry creditors for purchases made, not received as income. The transactions with various parties were explained in detail with supporting documents, arguing against the additions. The Tribunal observed that the AO failed to appreciate the nature of transactions, rejecting the assessee's explanations solely based on 26AS discrepancies. The Tribunal found the disallowance unsustainable, emphasizing the need for cross-verification with concerned parties to avoid unnecessary litigation. Consequently, the appeal of the assessee was allowed, and the disallowance was deleted.

In conclusion, the Tribunal ruled in favor of the assessee, highlighting the importance of understanding the nature of transactions and the necessity for thorough verification before making additions to taxable income based solely on 26AS details. The decision emphasized the need for assessing officers to seek clarification directly from concerned parties to avoid erroneous conclusions and unnecessary disputes.