Korrun India Private Limited Vs ACIT (ITAT Bangalore)
GST Turnover Is Higher Than Book Sales: Can the Entire Difference Be Added as Income?
Large Additions Based on Differences in Reported Figures
The assessee had declared total income of approximately ₹14.52 crore. During scrutiny, the Assessing Officer compared its purchases and sales with information available from GST records, import data and vendor confirmations. Finding differences, the Assessing Officer made an addition of about ₹61.24 crore under section 69C in relation to purchases. A further ₹5.53 crore was added on account of differences between transactions recorded by the assessee and amounts confirmed by certain vendors.
On the sales side, the Assessing Officer found a difference of approximately ₹29.59 crore between the figures in the financial statements and GST data. The assessee furnished a reconciliation, but the Assessing Officer considered the supporting documents insufficient and added the difference to income. Smaller additions relating to repairs and maintenance and TDS related disallowances were also made.
Thus, the assessment was substantially founded on the proposition that differences between figures reported in separate records had not been satisfactorily explained.
Why the GST and Book Figures Differed, According to the Assessee
The assessee’s case was that the purchase figures being compared did not cover the same set of transactions. It explained that the purchases recorded in its financial statements included imports of materials, which were not reflected in the GST based data used for comparison. Conversely, that data included supplies of services, whereas the related expenses were recorded under other heads in the financial statements. The assessee also relied on documents such as Bills of Entry to support its explanation regarding imports.
