Case Law Details
Arush Gupta Vs ITO (ITAT Delhi)
The assessee appealed against the order dated 25.06.2025 passed by the CIT(A)/NFAC under Section 250 of the Income Tax Act, 1961, which had confirmed the assessment order dated 16.03.2024. The assessee had filed the return of income for Assessment Year 2022-23 on 30.11.2022 declaring total income of Rs.1,09,61,530, which was processed under Section 143(1). The case was selected for scrutiny, and after notices under Section 142(1) and a show cause notice dated 25.01.2024, the Assessing Officer made an addition of Rs.2,90,375 on account of a difference in GST returns. The AO observed that GST records reflected consultancy receipts of Rs.45,40,750, whereas the assessee had offered 50% of consultancy receipts of Rs.39,60,000 under Section 44ADA based on Form 26AS. Treating Rs.45,40,750 as the turnover, the AO computed professional income at Rs.22,70,375 and added the difference of Rs.2,90,375 to the returned income.
Before the CIT(A), the assessee contended that the AO had incorrectly adopted GST turnover of Rs.45,40,750 instead of Rs.42,01,750 as reflected in the annual GSTR-1 for FY 2021-22. It was also argued that the amount of Rs.42,01,750 comprised consultancy receipts of Rs.39,60,000 and rental income of Rs.2,41,750, both reported in GSTR-3B, and that the AO had failed to consider the rental income while comparing GST turnover with consultancy receipts. The CIT(A) observed that similar submissions and copies of GSTR-1 and GSTR-3B had already been furnished before the AO. Referring to information received through Insight Data based on GST returns of other parties, the CIT(A) noted that the AO had found consultancy payments of Rs.45,40,750 from 12 parties, including Rs.44,77,500 from OKAYA Power Pvt. Ltd. and Rs.63,250 from 11 other parties. The CIT(A) held that the assessee had not furnished evidence, including certificates from the 12 parties, to rebut the AO’s findings and therefore upheld the addition.
Before the ITAT, the principal ground challenged the adoption of GST turnover of Rs.45,40,750 instead of Rs.42,01,750 and the failure to consider rental income included in the GST figures. The assessee submitted that the CIT(A) had confirmed the addition without properly appreciating the material placed on record and requested an opportunity to furnish further evidence before the AO, including certificates from the parties. The Departmental Representative did not object to restoration of the matter to the AO for fresh consideration.
The Tribunal noted the assessee’s claim that the correct gross receipts reported in GSTR-1 were Rs.42,01,750 and that rental receipts of Rs.2,41,750, shown under the head “Income from House Property,” formed part of the GST gross receipts. The Tribunal directed the AO to consider all relevant aspects while deciding the matter afresh, including the claim regarding the correct GSTR figures, the treatment of rental receipts, and any evidence to be furnished by the assessee, including certificates from the 12 parties from whom consultancy fees were received. The Tribunal directed that an effective opportunity of hearing be granted and instructed the assessee to submit the necessary material before the AO within 60 days from the date of the order. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal of the assessee is directed against the order dated 25.06.2025 of ld. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made in assessment order dated 16.03.2024 was confirmed and the appeal was dismissed.
2. Facts in brief as culled out from the order of authorities below are that the applicant is an individual who is partner and director in various firms and companies dealing in manufacturing and sale of inverters, batteries and other components and appellant also provide consultancy services to a company. Appellant filed return income on 30.11.2022, computing total income at Rs.1,09,61,530/-. The return was duly accepted vide intimation u/s 143(1) dated 02.12.2022. The case of the assessee was selected for scrutiny assessment vide notice u/s 142(1) dated 02.06.2023. In pursuance of complete scrutiny assessment proceedings, a notice u/s 142(1) of the Act was issued followed by show-cause notice dated 25.01.2024 proposing various additions which was replied vide letter dated 01.02.2024. Final Assessment order was passed on 16.03.2024 making addition of Rs. 2,41,750/- on account of difference in GST return. It was observed by the AO that, on perusal of the GSTR, it was noticed that total sales done amounted to Rs.45,40,750/- but on perusal of the ITR, it is noticed that the assessee has admitted 50% of section 194JB receipts of Rs.39,60,000/- as per 26AS which amounts to Rs.19,80,000/- u/s 44ADA. It was further observed that when Rs.45,40,750/- is taken as turnover, Rs.22,70,375/- i.e. 50% of the sales as per GST of Rs.45,40,750/- would be the professional income. Hence, the difference of Rs.2,90,375/-was determined to be added to the total income of the assessee. Accordingly, the total income was assessed at Rs.1,12,51,910/- against the returned income of Rs.1,09,61,530/-. Thus, making an addition of Rs.2,90,375/-.
3. Aggrieved by the said assessment order, the assessee filed appeal before the ld. CIT(A). The material ground Nos. 2, 2.1 and 3 which related to the addition of Rs. 2,90,375/-, were dismissed by the ld. CIT(A) vide observation made in para 6.3 of the impugned order extracted below as under:
“6.3. Ground no. 2, 2.1 & 3 are related to addition of Rs.2,90,375/- as income from consultancy business not disclosed by the appellant. Ground no. 2 & 2.1 are related to appellant’s contention that the addition made by Ld. AO was bad in law as AO failed to consider rental income in GST turnover. In Ground no. 3 appellant stated that GSTR-1 turnover of Rs. 45,40,750/- was incorrectly considered by AO whereas correct gross receipt reported in GSTR-1 by the appellant was Rs. 42,01,750/-. Appellant filed copy of annual GSTR-1 for FY 2021-22 during the course appellate proceeding. Appellant further argued that total consultancy receipt was Rs. 39,60,000/- for year and rental income was Rs. 2,41,750/- total of both was reported in GSTR-3B as Rs. 42,01,750/-. Reply submitted by the appellant in support of his main ground of appeal was perused and considered. It was observed that appellant has submitted same argument along with GSTR-1 Copy and GSTR- 3B Copy before Ld. AO in response to show cause notice dated: 25.01.2024. AO has considered appellant’s reply and accepted it also by dropping proposal of other additions as raised in show cause notice. AO has not considered appellant’s reply in respect of addition form consultancy income of Rs. 2,90,375/- and discuss this issue in para 7.4 (page no. 23 to 25) of the Assessment Order. AO has stated that he has received information from Insight Data which was collected from the GST returns of other parties, who has declared the amount in their GST Return as consultancy payment made to appellant during the year AY 2022-23. Ld. AO observed that appellant received total consultancy payment from 12 parties totalling Rs. 45,40,750/- in which he has received Rs. 44,77,500/- from a company OKAYA Power Pvt. Ltd. having PAN no. AADCA7106P. This information was confronted to appellant through show cause but appellant has not given cogent reply to Ld. AO’s question. Ld. AO therefore observed that assessee’s submission was not acceptable and added Rs. 2,90,375/-only as 50% of 5,80,750/- u/s 44ADA (Rs. 45,40,75039,60,000). Appellant submitted similar reply in appellate proceeding also and submitted same document which was already considered by the Ld. AO therefore, it appears that appellant has nothing to add in support of his argument and appellant has no other document to rely upon. Appellant failed to explain how rental income of Rs. 2,41,750/- can be a part of consultancy receipt shown in GSTR-1. Further, appellant has not explain that AO has taken total consultancy receipt from the GSTR-1 Return of 12 different persons and concluded that GSTR consultancy turnover declared by appellant is incorrect. Out of 12 persons appellant received consultancy fee of Rs. 44,77,500/- from OKAYA Power Pvt. Ltd. and Rs. 63,250/- from other 11 parties but appellant has not furnished any evidence against the AO’s finding. Appellant failed to furnish any kind of certificate from these 12 parties. Therefore, appellant submission can’t be accepted on merit. Addition made by AO is upheld. Hence, Ground of Appeal no. 2, 2.1 & 3 are dismissed.”
4. Aggrieved by the dismissal of the appeal on that account, the assessee is in appeal before us and has raised the following grounds of appeal:
“1. That on the facts and in the circumstances of the case, the disallowance and/ OR denial of claims and/ OR relief, imposition of tax and interest with reference thereto, the quantification of tax liability, has been grossly unjustified, erroneous and unsustainable and necessary direction may be given to the (‘Ld. AO’) to give appropriate relief in accordance with law.
2. That on the facts and in the circumstances of the case, the order passed by Ld. AO is illegal, perverse and bad in law. 2.1 That the Ld. AO has erred in issuing notice u/s 143(2) of the Act without complying to the CBDT Instructions which are binding in nature and hence rendering the entire assessment proceeding u/s 143(3) of the Act is void ab initio.
3. That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in not considering rental income in comparison with GST turnover. 3.1 That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in considering wrong amount of GST turnover as Rs.45,40,750/- instead of Rs. 42,01,750/-.
4. That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in levying fees u/s 234F of the Act.
5. That on the facts and circumstances of the case, appellant should be allowed consequential relief for interest levied u/s 234Bof the Act.
6. That the appellant craves to add, amend, modify, rescind, supplement, OR alter any of the grounds stated here-in-above, either before OR at the time of hearing of this appeal.”
5. On perusal of the ground, we have noticed that the ground No. 3 is the material ground pertaining to the addition of Rs.2,90,375/- subject matter of the appeal. Other grounds are the consequential grounds with regard to the interest u/s 234F of the Act.
6. We have heard the ld. AR and the ld. DR. The ld. AR at the very outset submitted that the ld. AO has grossly erred in considering wrong amount of GST turnover as Rs.45,40,750/-instead of Rs.42,01,750/-. It was further argued that the ld. CIT(A) has failed to consider the said anomaly and without appreciating the submissions made by the assessee/appellant has confirmed the said addition made by the AO without considering the material/evidence on the ground that appellant has not furnished any evidence against the AO’s finding. The ld. AR therefore submitted that in view of the finding of the ld. CIT(A) that the appellant has failed to furnish any evidence against the AO’s finding and has not furnished any kind of certificate from 12 parties, therefore, an opportunity be given to the assessee to file the necessary details before the ld. AO in the larger interest of justice.
7. The ld. DR has left it to the discretion of the court of the Tribunal to consider the said submissions and has raised no objection to the restoring the matter to the file of the AO for deciding afresh.
8. We have considered the rival submissions. We have noticed that it was claimed by the assessee before the ld. CIT(A) that the amount of gross receipts as per GSTR-1 considered by the ld. AO amounting to Rs. 45,40,750/- was not correct because the gross receipts reported in GSTR-1 by appellant is Rs. 42,01,750/-. It is further submitted that the copy of the annual GSTR-1 for financial year 2021-22 relevant to assessment year 2022-23 highlighting the said amount was attached as an Annexure-2. It is further stated that the ld. AO made the addition without considering the fact that in return of income filed by the appellant, the rental receipts were also shown under income from house property in return of income amounting to Rs.2,41,750/- which was also part of the GST gross receipts. It was therefore submitted that the AO has erroneously made the addition of Rs.2,41,750/- pertaining to the rental income considering the receipts shown under the income from house property and wrongly considering receipts as per GSTR-1. In view of the above facts, the ld. AO is directed to consider all the aspects while deciding the matter afresh and also affording an opportunity to the assessee to furnish all necessary evidence alongwith certificate from 12 parties from whom appellant has received consultancy fee of Rs.44,77,500/- from OKAYA Power Pvt. Ltd. and Rs.63,250/-from other 11 parties. Hence the end of justice shall be met in case the matter is restored to the file of the Assessing Officer for deciding the issue afresh by affording an effective opportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Assessing Officer within the period of 60 days of this order.
9. In the result, the appeal of the assessee is allowed for statistical purposes.
Order Pronounced in the Open Court on 16/06/2026.
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