The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made in gross receipts reflected in Form 26AS inclusive of service tax.
Assessee-Mediserv is a partnership firm. In the course of assessment, AO noted that the assessee has shown gross receipts of Rs.39,09,400/- as against gross receipts reflected in Form 26AS of Rs.43,03,044/-.
On account of this difference of Rs.3,93,644/-, AO called for explanation from the assessee. Not convinced by the submissions, AO completed the assessment by making and addition of this difference of Rs.3,94,644/- by treating it as undisclosed gross receipt.
Aggrieved by the order, the assessee filed an appeal before CIT(A). The CIT(A) dismissed the appeal. Against the order of the CIT(A) assessee filed an appeal before the Income Tax Appellate Tribunal.
Before the tribunal, Manish Rastogi, counsel for the assessee submitted that the assessee is engaged in the business of providing servicing of medical equipment. Service charges received by the assessee from the services were subjected to TDS which are duly reflected in Form 26AS, he added.
Thus service tax is also collected which is subsequently deposited to the Government account, he pointed out.
Gross receipts reflected in Form 26AS is inclusive of service tax whereas the assessee has filed its return by taking the gross receipts without the component of service tax. Hence, there is no difference in the reporting of the gross receipts which has a bearing on the total income returned by the assessee, the assessee representative argued.
Therefore the counsel submitted that “gross receipts reflected in Form 26AS is inclusive of service tax whereas the assessee has filed its return by taking the gross receipts without the component of service tax. Hence, there is no difference in the reporting of the gross receipts which has a bearing on the total income returned by the assessee”.
Rupesh Agrawal, counsel for the revenue supported the decision of the lower authorities.
It was observed by the tribunal that “Addition made by the AO is on account of difference between the figure of gross receipts reported by the assessee which is including the service tax component whereas the figure reported in Form 26AS is inclusive of the service tax component which has been adequately reconciled by the assessee”.
Thus, the two member bench of the Rajpal Yadav, (Vice President) and Girish Agrawal, (Accountant Member) allowed the appeal filed by the assessee and deleted the addition made by the Assessing Officer.
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