The Mumbai Bench of Income Tax Appellate Tribunal( ITAT) held that no addition could be made solely on the basis of a mismatch between sales reported in the books and figures in Form 26AS, especially when the discrepancy arose due to double Tax Deducted at Source (TDS) deduction by the client, Wockhardt Hospitals Ltd (WHL).

Sudhir Dayalal Mistry,appellant-assessee,was engaged in the business of interior and turnkey contracting under the name M/s. Modfun. He filed his return of income for A.Y. 2012–13, declaring Rs.45,20,414.During assessment, the Assessing Officer (AO) found a mismatch of Rs.54,39,879 between the sales reported in the profit and loss account and the figures in Form 26AS.

The assessee explained that the difference arose due to timing and that the income was offered in the next assessment year, with TDS claimed in the current year. However, the AO rejected the explanation, held that it amounted to postponement of tax liability, and added the amount as undisclosed income. Penalty proceedings under section 271(1)(c) were also initiated.

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Separately, the AO made an ad hoc disallowance of ₹85,487, being 10% of expenses like transportation, conveyance, and motor car charges, citing possible personal use.

The Commissioner of Income Tax(Appeals)[CIT(A)] confirmed both the additions and disallowance without considering the assessee’s detailed reconciliation.

The two member bench comprising Amit Shukla(Judicial Member) and Prabhash Shankar (Accountant Member) heard both parties and reviewed the documents. It noted that the addition of Rs.54,39,879 was based solely on a mismatch between Form 26AS and the sales reported in the books.

The assessee explained that the contract with Wockhardt Hospitals Ltd. spanned two years, and the total receipts across both years matched the figures in Form 26AS. TDS was deducted on both interim and final bills, leading to duplicate entries in Form 26AS.

The assessee provided a detailed reconciliation and confirmations from WHL during the proceedings before the CIT(A), showing how the mismatch arose due to timing differences and system-related TDS deductions. The tribunal found that these details were not properly considered by the CIT(A).

It held that no addition could be made just because of differences in Form 26AS when proper books were maintained and income was already reported. The bench found no need to send the matter back for further verification and deleted the addition.

As for the disallowance of ₹85,487 on estimated personal use of expenses, the ITAT noted that no specific evidence was shown to support it. Since it was made on an ad hoc basis, the disallowance was also deleted.

Therefore,the appeal of the assessee was allowed.

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