2023 (3) TMI 390 - AT - Income Tax

Tribunal directs reassessment of tax additions, rejects unexplained cash deposit claim

The Tribunal directed the Assessing Officer to reevaluate the additions made by the Assessing Officer in the case. The Tribunal found that the addition of ... Difference between Form 26AS and P&L A/c - Amount which was not reconciled by the assessee - submission of the learned Counsel for the assessee that although full reconciliation was filed before the learned CIT (A), however, the same was not properly appreciated by CIT (A) - HELD THAT:- We find the assessee before the AO has stated that the difference is due to accounting policy adopted by the Auditors. Even in the submission given before the AO, still there is reconciliation difference - We find that the assessee has filed certain details before the learned CIT (A) reconciling the difference. CIT (A) has not given any finding on such reconciliation while sustaining the addition - we deem it proper to restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case - Assessee 1st ground allowed for statistical purposes. Unexplained cash deposit - HELD THAT:- As we find from the Paper Book filed by the assessee that although the assessee has not filed any details before the Assessing Officer, however, the assessee has filed the invoice wise details on which cash was received - It is also an admitted fact that the number of invoices shows that the assessee has raised the invoices on which cash was received which was deposited in the Bank - The turnover of the assessee has not been disputed by the Assessing Officer. Since all these invoices are part of the total sales, therefore, we are of the considered opinion that the learned CIT (A) is not justified in sustaining the addition - 2nd issue raised by the assessee is allowed. Issues:1. Addition of Rs.1,23,42,928/- for difference between Form 26AS and P&L A/c.2. Addition of Rs.7,74,970/- on account of unexplained cash deposit.Analysis:Issue 1: Addition of Rs.1,23,42,928/- for difference between Form 26AS and P&L A/c:The Assessing Officer noted a discrepancy in the credits appearing in Form 26AS and the P&L A/c of the assessee company. The difference of Rs.1,87,71,423/- was attributed to the accounting policy adopted by the Auditors, specifically related to discounts allowed by customers. The Assessing Officer made the addition as the assessee failed to reconcile the difference adequately. The learned CIT (A) upheld this addition, stating that the assessee's explanations were insufficient. The Tribunal observed that although the assessee submitted a full reconciliation before the CIT (A), it was not properly considered. The Tribunal directed the issue to be restored to the Assessing Officer for further substantiation by the assessee to reconcile the difference between the P&L A/c and Form 26AS.Issue 2: Addition of Rs.7,74,970/- on account of unexplained cash deposit:The Assessing Officer noted cash deposits of Rs.7,74,790/- in the bank account of the assessee, for which the source was not adequately explained by the assessee. The learned CIT (A) sustained this addition, as the assessee failed to reconcile the cash deposits. However, the Tribunal disagreed with this decision, noting that the assessee provided detailed invoice-wise information on cash receipts, totaling to Rs.7,74,970/-, which were part of the total sales. The Tribunal concluded that the addition was unjustified and directed the Assessing Officer to delete the addition.In conclusion, the Tribunal allowed the appeal filed by the assessee for statistical purposes, directing the Assessing Officer to reevaluate both the issues mentioned above.