The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Appeals) (CIT (A)) to annul an addition made, citing a discrepancy between Form 26AS and the Profit & Loss Account, attributable to the declaration of service tax amounts.
The case originated when the assessee filed its income tax return on 27/11/2012, declaring a taxable income of ₹.Nil, after allowing for the carry forward of current year’s losses totaling to ₹.1,94,48,261/-. Subsequently, the case was selected for scrutiny under CASS, and notices under section 143(3) & 142(1) of the Income Tax Act, 1961 were issued and served on the assessee. In response, an Authorised Representative of the assessee attended and filed the relevant information as required.
Mr. Chetan Kacha, the department representative, contended that the CIT (A) discussed the remand report from the Assessing Officer and emphasized that the assessee failed to submit supporting documents regarding the chart presented before the authorities. He relied on the orders of the Assessing Officer.
Contrarily, the counsel for the assessee, Mr. Pratik Sha, argued that the discrepancy between the amount declared by the assessee in its Profit & Loss account and the amount disclosed in Form 26AS stemmed from the method of accounting adopted by the assessee, particularly in relation to service tax. He clarified that the difference arose due to the assessee recording net income in its Profit & Loss Account, while Form 26AS reflected gross income inclusive of service tax. The CIT (A) duly acknowledged this distinction.
The tribunal, comprising Amjit Shukla (Judicial member) and S. Rifaur Rahman (Accountant member), examined the records and noted that the primary contention revolved around the disparity between the amounts declared in the Profit & Loss Account and Form 26AS. The significant difference, amounting to ₹.2,82,98,438/-, was attributed to service tax. Additionally, it was highlighted that the assessee also recorded discrepancies related to income offered in the previous year’s returns and certain income relevant to A.Y. 2013-14, which were reflected in the gross income declared in Form 26AS.
Upon reviewing the detailed reconciliation statement submitted by the assessee before the CIT (A), the ITAT found no grounds to overturn the findings of the CIT (A). Consequently, the grounds raised by the Revenue were dismissed.
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