TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1263
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.... income as per financials and income as per Form 26AS without appreciating the fact that the assessee has failed to furnish documentary evidences to substantiate its claim. 3. On the facts and circumstances of the case and in law the CIT(A) erred in not allowing a reasonable opportunity to the AO before taking into account additional evidences in the form of different reconciliation sheet as per rule 46A of I.T. Rules, 1962 without appreciating the fact that in the preceding Assessment Year in the assessee's own case remand report was called for to verify the submission of the assessee on similar issue. 4. On the facts and circumstances of the case and in law the CIT(A) erred in not appreciating the fact that the reconciliation sheet submitted before the CIT(A) was different from that of submitted before the AO during the course of assessment proceedings. 5. The appellant craves leave to amend or alter any ground or add new ground which may be necessary." 2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee being an advertising agency filed its return of income declaring total income at Rs. Nil. During the scru....
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....tion is enclosed herewith as Annexure 4 for your goodself kind reference. For case of reference, the below table captures the reconciliation of difference in Income in Form 26AS vis-à-vis the amount shown in books of accounts for the year:- S. No. Particulars Amount (INR) 1 Income as per profit & loss account 28,08,07,958 2 Add: Difference on account of service tax (Refer Para 2.7 to 2.1 3) 3,33,01,067 3 Less: Difference on account of income during the year under consideration but reflected in Form 26AS of the next year (I.e. AY 2014-15) (Refer Para 2. 16 to 2.25) (1,52,83,936) 4 Add: Difference on account of income offered in ROI of the preceding year (i.e. AY 2012-13) but reflected in Form 26AS of the year. (Refer Para 2. 14 to 2.23) 89,23,743 5 Less: Difference on account of income offered to tax in ROI for the year but not reflected in Form 26AS of the year. (Refer Para 2.24 to 2.25) (33,63,251) 6 Add; Difference due to miscellaneous reasons (Refer para 2.26 to 2.27) (8,82,939) 7 Income as per Form 26AS 30,35,02,642 The factual and the legal submissions in respect of the above differences have been discussed in seriatim below: ....
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....ar. Therefore, an under both the methods of accounting, the net impact on the total income would be identical. In view of the above, it is conspicuous that the service tax does not partake the character of "income" for the Appellant, irrespective of the accounting method followed. Accordingly, considering the Customers of the Appellant have inadvertently deducted the tax at source on the service tax portion and such service tax has also been deposited by the Appellant with the exchequer, the Appellant should be: entitled^ claim the credit TDS deducted on the same. In light of the above, it is most respectfully that the difference of INR 3,33,01,067 [referred in (A) above] on account of service tax could not be construed as "Income" of the Appellant for the year and hence, the addition made of account of this difference is palpably unsustainable and liable to quashed. Furthermore, since the portion of service tax should ideally not have been subject to any TDS, the taxes erroneously deducted at source by the customers on the service tax component have been claimed by the Appellant as credit during the year under consideration. Difference of INR 1,52,83,936 on account of Income....
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....-a-vis the amount of income shown in Form 26AS for the year under consideration and the corresponding TDS on the amount of Income [referred in (C) above] has been claimed by the Appellant during the year under consideration in accordance with the provisions of section 199 of the Act read with Rule 37BA of the Rules. Difference of INR 33,63,251 on account of Income offered to tax in ROI for the year but not reflected in Form 26AS of the year. With regard to the above, it is humbly submitted that the Appellant had earned an income of INR 33,63,251 through export of services during the year under consideration which was offered to tax by the Appellant in ROI for the year. However, since such income was not subjected to TDS, this income did not reflect in Form 26AS for year under consideration, thereby resulting in a difference in income in the account reported in the books of accounts vis-a-vis the income appearing in Form 26AS for the year. For ease of reference, the details of the documentary evidence and information showing the break-up of the difference stated in (D) above is enclosed herewith as Annexure 7. Difference of INR 8,82,939 due to miscellaneous reasons With re....
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.... as there was no TDS made on these receipts by the payees, as these were for export of .services. As this amount was received in foreign currency without deduction of tax, the same did not appear in Form 26AS, but was duly accounted as income in the books. The explanation of the assessee reproduced above on these two issues is self-explanatory and therefore this reconciliation is in order. (iv) Lastly, the assessee has pointed out that there was a difference of Rs. 8,82,939 which is on account of provisions for expenses created by his clients as well as reimbursement made to him on which TDS has been deducted. In this regard also, the submissions of the assessee are self-explanatory. 5. After due consideration of the facts and the submission of the assessee reproduced above, I am of the view that the assessee has sufficiently explained the discrepancy of Rs. 2,26,98,042 and therefore this addition is deleted. Ground 1 is accordingly allowed." 7. It is brought to the notice of the Bench by the Ld. A.R. for the assessee that identical issue as to the difference in income declared by the assessee in P&L account and TDS declared vis-à-vis gross revenue declared as per form ....