Deepsons (India) Pvt. Ltd. Vs ACIT (ITAT Delhi)
Whether difference between turnover reflected in CBEC / Service Tax data and turnover recorded in the books of account can, by itself, justify an addition for under-reported revenue without independent enquiry by the Assessing Officer.
Brief Facts: The assessee filed return declaring total income of ₹1,02,48,020.
The case was selected for scrutiny and assessment was completed by making an addition of ₹4,21,34,712 alleging under-reporting of revenue, based on CBEC / Service Tax data.
The AO compared service tax turnover with turnover as per books and treated the difference as undisclosed income.
The assessee explained that:
Customer advances are taxable under Service Tax law, but Revenue under Income-tax law is recognized only upon execution of conveyance deed / actual sale.
Reverse charge payments and non-revenue items were also included in CBEC data.
A detailed reconciliation statement was furnished before the AO and CIT(A).
No defect was found or pointed out in the books of account.
Brief Statutory Provision
Section 28 of the Income-tax Act, 1961 – Income chargeable to tax must represent real income.
Section 145 of the Income-tax Act, 1961 – Income shall be computed in accordance with the method of accounting regularly followed.
