Case Law Details
Kritija Construction Vs ITO (ITAT Pune)
The issue in the present appeal relates to the taxability of difference of amounts shown in the Form No. 26AS and reflected in the Profit & Loss Account. It is an admitted fact that in the present case the appellant firm had received advance of Rs.38,88,745/- from one Siddhashila Developers on which TDS had been deducted. The appellant had claimed the credit for TDS on such receipt, however, had not offered advance money to tax. Admittedly, the appellant firm had been following the cash system of accounting. Even in the cash system of accounting, every receipt cannot be taxed unless the receipt is of money is on account of accrual of income. Admittedly, in the present case, the contention of the appellant that work in respect of which the advance money was received, was not executed remains un-rebutted by the Department. Therefore, it cannot be said that the income had accrued and the right to receive money had not come into existence before actual receipt of the money takes place and, therefore, such sum cannot be taxed. Therefore, we are of the considered opinion that difference between the amounts shown in the Form No.26AS and reflected in the Profit & Loss Account, cannot be brought to tax.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-6, Pune [‘the CIT(A)’] dated 22.09.2020 for the assessment year 2016-17.
2. Briefly, the facts of the case are that the appellant is a partnership firm engaged in the business of execution of contract works. The Return of Income for the assessment year 2016-17 was filed on 15.02.2017 declaring total income of Rs.3,24,930/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-9(2), Pune (‘the Assessing Officer’) vide order dated 27.12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.42,13,675/-. While doing so, the Assessing Officer brought to tax the difference of gross receipts in Form No.26AS and the total receipts reflected in the Profit & Loss Account of Rs.38,88,745/-. The factual background of the case is as under :-
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