Difference b/w Amounts shown in Form No.26AS and reflected in P&L Account cannot brought to Income Tax: ITAT [Read Order]

The Pune Income Tax Appellate Tribunal (ITAT) has recently held that the difference between amounts shown in Form No.26AS and reflected in Profit and Loss Account could not be brought to Income Tax.

Assessee Kritija Construction is a partnership firm engaged in the business of execution of contract works. While doing the assessment proceedings , the Assessing Officer brought to tax the difference of gross receipts in Form No.26AS and the total receipts reflected in the Profit & Loss Account of Rs.38,88,745/- and ordered to bring  the amount under Income Tax. Against the order assessee filed an appeal before the ITAT.

Shweta Joshi counsel for the assessee submits that “mere difference between the gross receipts shown in the Form No.26AS and gross receipts reflected in the Profit and Loss Account, cannot be brought to tax without examining the accrual of income”.

Ramnath P. Murkunde counsel for the revenue submits that “when the assessee had followed the cash system of accounting, every receipt of income is taxable on receipt basis and, therefore, no interference is called for”.

After considering the contentions of the both parties the division bench of ITAT Comprising Rama Rao, (Accountant) and. S. S. Viswanethra Ravi, (Judicial Member) allowed the appeal filed by the assessee and observed that the appellant firm had been following the cash system of accounting. Even in the cash system of accounting, every receipt cannot be taxed unless the receipt of money is on account of accrual of income.

Further while admitting the contention of the appellant the bench determined that appellant that work in respect of which the advance money was received, was not executed remains un-rebutted by the Department. Therefore, it cannot be said that the income had accrued and the right to receive money had not come into existence before actual receipt of the money took place and, therefore, such sum cannot be taxed. Therefore the difference between the amounts shown in the Form No.26AS and reflected in the Profit and Loss Account could not be brought to tax.

To Read the full text of the Order CLICK HERE

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