ITO Vs Star Consortium (ITAT Kolkata)
The Hon’ble ITAT, Kolkata in the case of ITO v. M/S Star Consortium [Income Tax Appeal No. 04/KOL/2020 C.O. No. 08/Kol/2020, dated April 7, 2021] dismissed an appeal filed by the Revenue Department and held that the Assessing Officer (the AO) cannot make additions merely by relying on information available in TDS Certificate i.e. Form 26AS on account of mismatch of amounts between Form 26AS and the turnover shown by the assessee in its P&L account.
Facts:
M/S Star Consortium (“the Assessee”) is engaged in the business of handling, maintaining, cleaning of aircrafts etc. While assessing the income of the Assessee, the AO noted that the Assessee has shown Rs 3,39,87,563/- in its P&L account but from perusal of Form 26AS, they received the payment of Rs 5,54,23,156/- from M/s Kingfisher Airlines Ltd (“the Payee”).
The AO issued a show cause notice to the Assessee asking the reason for the difference. The Assessee stated that the ground handling business was taken over by M/s Star Consortium Aviation Services Pvt. Ltd. (“Holding Company”) from June 01, 2008 and the alleged amount relates to the holding company for rendering services as aircraft handling and cleaning charges.
The Assessee submitted that this discrepancy happened due to wrong information filled by Payee in Form 26AS and furnished copies of communication with the Holding Company. The AO stated that there was no opportunity for him to cross verify the facts due to paucity of time and thus, added Rs 2,14,35,593/- in the income of the Assessee.
Being aggrieved, the Assessee filed an appeal before the CIT(A), wherein, the CIT(A) ordered in favour of the Assessee stating that the AO cannot take the plea that they did not have sufficient time to cross-verify the explanation given by assessee. But the CIT(A) made partial confirmation by adding Net Profit (“NP”) at 11.17% of the difference amount of Rs. 2,14,35,593/- in the income of the Assessee.
Aggrieved by the order of the CIT(A), the AO has filed the present appeal.
The Assessee has contended that, even if addition is made, the NP should be only 1.22% since the Assessee has shown NP on its turnover of ₹ 3,31,50,625/- which has been accepted by the AO as well as CIT(A).
Issues:
1. Whether the AO can make addition of difference in amount reflecting between Form 26AS and P&L account as the income of the Assessee?
2. Whether the CIT(A) can calculate the NP at different percentage as against calculated by the Assessee?
Held:
The ITAT, Kolkata in Income Tax Appeal No. 04/KOL/2020 C.O. No. 08/Kol/2020 dated April 7, 2021, has held as under:
