TDS Mismatch in 26AS and Profit & Loss Account: ITAT Orders Reassessment on Lack of Substantiating Evidence

The Income Tax Appellate Tribunal of Kolkata Bench has issued a directive for the reassessment of a case where there was a discrepancy between the Tax Deducted at Source (TDS) reported in Form 26AS and the profit and loss account. This discrepancy arose due to insufficient supporting evidence.

The assessee filed an income tax appeal against the order of the Commissioner of Income Tax (Appeals), Kolkata, regarding the 2015-16 assessment year.

The assessee is a transport services business, claimed that the Assessing Officer (AO) observed a discrepancy between their profit & loss account and Form 26AS, which showed a higher deduction of TDS (Tax Deducted at Source) than the income reflected in the profit & loss account.

The assessee argued that the additional amount in Form 26AS was reimbursements received from Tata House for expenses, but the AO was unconvinced due to insufficient documentary evidence. The (CIT(A)) upheld the AO's decision and confirmed the addition to the assessee's income. The appellant appealed to the Tribunal.

The assessee claimed that the other receipts were reimbursement of the expenses receipt from Tata House as against fuel and driver and parking charges inside the parking complex amounting to Rs.4,54,73,775/-. The assessee also submitted a reconciliation statement to demonstrate that the total receipts of the assessee from the aforesaid 21 parties were of Rs.6,26,96,580/-, whereas, the amount on which the TDS was deducted was only Rs.1,58,59,982/-.

The lower authorities did not find the assessee's explanation satisfactory and made the addition. The lower authorities argued that the assessee had failed to explain how the reimbursement had been claimed and accounted for. The lower authorities also argued that there was a wide difference in the turnover figure shown by the assessee.

The Two Member Bench Dr. Manish Borad (Accountant Member) and Sanjay Garg (Judicial Member) restored the issue to the file of the Assessing Officer for decision afresh with a direction that the Assessing Officer will give proper opportunity to the assessee to furnish the relevant documents to prove his contention and thereafter the Assessing Officer will examine and verify the documents and thereafter pass a speaking order accordingly.

In the result, the appeal of the assessee is treated as allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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