The Income Tax Appellate Tribunal (ITAT) of Mumbai Bench recently while deleting the addition made by the Assessing officer (AO) held that mismatch in contract receipts shown in profit and loss (P&L) account and Form 26AS reconciled by self-speaking documentary order.
The assessee ACE Build Tech, is a contractor. During the course of assessment proceedings, the Assessing Officer noted a difference of Rs. 73,04,678/- on account of mismatch in the contract receipts as per books of accounts and as per 26AS and this Assessing Officer alleged understatement of receipts from five entities and made addition on the basis of presumptions without any cogent positive and adverse material establishing actual understatement of receipts/turnover by the assessee.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal) CIT(A), who dismissed the appeal of assessee. Thereafter, the assesee filed a second appeal before the tribunal.
Kanav Bali, the counsel for the assessee submitted that assessee produced all documentary evidences relating in the form of reconciliation statements, details of RA Bill booked, copy of TDS certificate in the form of 16A reflecting the TDS deducted on the amount payable towards work done inclusive of WCT and service tax along with confirmations.
Further counsel contended that in the books the assessee has accounted for the net receipts as WCT/VAT/Service Tax is not the income of the assessee which created a difference between the receipts shown by the assessee and 26AS.
Thus, the reconciliation between the difference between Form 26AS and the books maintained by the appellant, which were duly audited, had duly been submitted in the course of assessment proceedings and appellate proceedings.
Kanav Bali S, Departmental representatives submitted that assessee failed to produce documentary evidence to substantiate his claim.
It was observed by the tribunal that only because there was a mismatch between TDS certificate/26AS and the turnover/receipts shown by the assessee in its P&L account cannot be a sole basis for making addition in hands of assessee to bring the difference to tax.
Moreover, the assessee has successfully established that the mismatch occurred due to inclusion of WCT/VAT/Service Tax in the bills and factum of deduction of TDS on the total bill amount.
After observing the facts and examining the documents, the two-member bench of Chandra Mohan Garg (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) deleted the addition and observed that mismatch in the contract receipts as per books of accounts and as per 26AS was reconciled by self-proving documents.
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