CIT(A) in cryptic order can not reject reconciliation with Form No. 26AS filed before him

CIT(A) in cryptic order can not reject reconciliation of difference between gross receipts and Form No. 26AS filed before him on the ground that it did not resolve.

ABCAUS Case Law Citation:
ABCAUS 2696 (2019) (01) ITAT

The instant appeal by the assessee was directed against the order of the CIT(A) in sustaining the addition made by the Assessing Officer on account of difference in gross receipts with Form 26AS.

The assessee was an individual and filed her return of income. During the course of processing of the return u/s 143(1), it was found that the assessee had shown nil receipts in the P&L Account of ITR-4.

However, the copy of form 26AS generated from the system revealed that the assessee had been credit with receipts on which TDS had been deducted.

Accordingly, the Assessing Officer reopened the assessment after recording reasons and notice u/s 148 of the Act was issued to the assessee on 8th August, 2011. Subsequently, detailed notice u/s 142(1) was also issued to the assessee asking him to explain the difference in gross receipts as shown in the return of income and as appearing in Form No. 26AS.

The assessee submitted that in the ITR-4 filed, the profit with all the details for expenses, TDS and Assets and Liabilities was duly shown, but due to clerical error, turnover was omitted to be shown. It was submitted that this was a mistake as without turnover, the profit could not arise.

Regarding difference with 26AS it was submitted that the receipts represented amounts realized against sales made in preceding years against debtors outstanding as opening balance.

The Assessing Officer, thereafter, asked the assessee to produce the original copies of the bills raised during preceding year for which the payments were received. The assessee was also asked to furnish the confirmations from all the debtors from whom the payments were outstanding.

However, the Assessing Officer was not satisfied with the explanation given by the assessee and held that the assessee was not showing the income on accrual basis as claimed and was showing the same on receipt basis.

Further, since the assessee had not filed return of income for the immediate preceding assessment year, therefore, the Assessing Officer held that the gross receipts as appearing in Form No.26AS were to be considered for assessment purpose during the year under consideration.

Accordingly, the Assessing Officer made addition of the difference between the receipts with Form 26AS.

The CIT(A) upheld the action of the Assessing Officer. Aggrieved with the order of the CIT(A), the assessee was in appeal before the Tribunal.

The assessee submitted that she had filed that the entire reconciliation before the CIT(A). However, the.CIT(A) in a cryptic order dismissed the appeal of the assessee holding that discrepancy between the gross income deductible from Form NO.26AS and that returned by the assessee in the return of income does not get resolved by the voluminous documents placed on record.

The Tribunal observed that the Assessing Officer made the addition on the ground that the assessee could not reconcile the difference between receipts as per Form No.26AS and the income shown in the P&L Account towards direct income.

The Tribunal found that the various details furnished by the assessee showed that the assessee had successfully reconciled the difference between the Form No.26AS and the income shown by the assessee.

The Tribunal opined that although these details were furnished before the CIT(A), however, he, in a very cryptic order, rejected the voluminous details filed before him on the ground that the issue of difference between the two figures does not get resolved. This type of action on the part of the CIT(A) was not justified especially when the assessee had submitted the requisite details before him substantiating the difference and reconciliation thereof.

The Tribunal set aside the order of the CIT(A) and directed the Assessing Officer to delete the addition.

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