Undisclosed sales being excess turnover reported in service tax return. Addition set aside

Undisclosed sales being excess turnover reported in service tax return. Tribunal set aside the addition for de novo proceedings

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition made by the Assessing Officer (AO) towards undisclosed sales on the basis of comparison of turnover reported by the assessee in income tax return vis-à-vis the turnover reported in the return of service tax.

ABCAUS Case Law Citation
ABCAUS 3506 (2021) (06) ITAT

Undisclosed sales based on service tax return

The appellant assessee was engaged in the supply of labour for construction and allied activities. The assessee was also registered with the service tax department.

The AO recorded a finding that as per the AIR information received from the Service Tax Department, the turnover declared therein was much more than double what was reported in the return of income.

Accordingly, the AO made the impugned addition towards the undisclosed sales.

Before the Tribunal, the assessee contended that the service tax consultant had committed an error in mentioning export/exempt income while filing the online return of the service tax.

It was contended that wrong data in the service tax return was due to clerical or typographical error as the assessee had provided only domestic services within India.

It was further stated that the assessee can not be taxed for the hypothetical income which was neither earned or received on the solitary basis of an error in the service tax return.

In support of his contentions, the assessee relied upon the balance sheet, profit and loss account, bank statements etc.

It was urged that the matter be set aside to the file of the AO for suitable verification of the facts with the service tax Department.

The Tribunal set aside the assessment order and remanded the the matter back to the AO for a fresh verification of facts.

The Tribunal directed that the AO should  exercise his statutory  powers and obtain information from service tax department towards turnover and the service tax recovery if any of alleged inflated turnover.      

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