Evidence reconciling discrepancy in 26AS and books not submitted before CIT(A) hence matter remanded

Bankers Cardiology Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)

ITAT Ahmedabad held that additional evidence reconciling the discrepancy in receipts as per Form No. 26AS and books of accounts were not submitted before AO or CIT(A). Accordingly, matter send back to CIT(A).

Facts- The assessee, a private limited company engaged in operating a hospital, filed its return of income on 30th September 2015, declaring a total income of Rs.6,31,35,810/-. The case was taken up for scrutiny, and the assessment order u/s. 143(3) of the Income Tax Act, 1961 was passed on 20th December 2017, making various additions totalling Rs.63,19,416/-.

One of the additions made by AO was Rs.14,08,008/- on account of alleged short credit of receipts as per Form No. 26AS vis-à-vis the books of accounts. The AO observed that there was a discrepancy between the amounts reflected in Form No. 26AS and the assessee’s books of accounts concerning receipts from United India Insurance Corporation Ltd. (UIICL).

CIT(A) deleted an amount of Rs.3,530/- and sustained the balance addition of Rs.14,04,478/-. Being aggrieved, the present appeal is filed.

Conclusion- Held that the additional evidence, including the ledger accounts of UIICL, Chart of insurance amount sanction for patients and corresponding bills of patients insured by UIICL, were not submitted before the AO or the CIT(A). This additional evidence appears to have merit, as it could potentially reconcile the discrepancy in the receipts as per Form No. 26AS and the books of accounts. Considering the importance of this additional evidence, which could materially impact the outcome of the case, it is necessary that the CIT(A) reviews this evidence and decides the matter on its merits. The Departmental Representative, during the hearing, did not object to restoring the matter to the CIT(A) for a fresh decision.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred to as “CIT(A)”], dated 26th June 2023, for the Assessment Year (A.Y.) 2015-

16. The principal issue in this appeal concerns the confirmation of an addition of Rs.14,04,478/- by the CIT(A) on account of alleged short credit of receipts as per Form No. 26AS vis-à-vis the books of accounts.

2. The appeal was filed with a delay of 129 days. The assessee has filed a petition seeking condonation of this delay, citing that the delay was due to the senior staff member handling taxation matters being on maternity leave, which led to the oversight in not filing the appeal on time. The appeal was filed promptly upon discovery of the order after the staff member resumed duty. In the interest of justice, the assessee prays for the condonation of the delay.

Facts of the Case

3. The assessee, a private limited company engaged in operating a hospital, filed its return of income on 30th September 2015, declaring a total income of Rs.6,31,35,810/-. The case was taken up for scrutiny, and the assessment order under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was passed on 20th December 2017, making various additions totalling Rs.63,19,416/-.

4. One of the additions made by the Assessing Officer (AO) was Rs.14,08,008/- on account of alleged short credit of receipts as per Form No. 26AS vis-à-vis the books of accounts. The AO observed that there was a discrepancy between the amounts reflected in Form No. 26AS and the assessee’s books of accounts concerning receipts from United India Insurance Corporation Ltd. (UIICL). The AO noted that the receipts from UIICL as per Form No. 26AS were Rs.15,62,530/-, whereas the amount shown in the books was Rs.1,58,052/-. Consequently, the AO added the difference of Rs.14,04,478/- to the assessee’s income.

5. The assessee preferred an appeal before the CIT(A) who deleted an amount of Rs.3,530/- and sustained the balance addition of Rs.14,04,478/-. Before the CIT(A), the assessee contended that the discrepancy was due to a typographical error in the reconciliation statement submitted during the assessment proceedings. It was argued that the actual amount received from UIICL was Rs.15,98,052/-, which was duly recorded in the books of accounts. However, the amount shown in the reconciliation statement was inadvertently recorded as Rs.1,58,052/-, leading to the addition. The CIT(A) acknowledged the submission but was not convinced by the explanation provided. Consequently, the CIT(A) sustained the addition of Rs.14,04,478/-, concluding that the discrepancy had not been satisfactorily explained.

Aggrieved by the order of CIT(A), the assessee is in appeal before us with following grounds of appeal:

1. On facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming an addition of Rs. 14,04,478/-, out of the addition of Rs. 14,08,008/-, as made by the AO, for alleged short credit of receipts as per Form No. 26AS vis -à-vis books of accounts, without appreciating that the entire receipts as per Form No. 26AS are duly recorded in the regular books of accounts of the appellant company. Hence, the impugned addition as sustained by the learned CIT(A) is absolutely incorrect and erroneous and needs to be deleted.

2. The appellant craves leave to add, amend, alter, substitute, modify in any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.

On Condonation of Delay

6. Having considered the reasons stated in the petition for condonation of delay along with an affidavit of the director of the company Shri Darshan Banker, we find that the delay in filing the appeal was due to circumstances beyond the control of the assessee. The explanation provided by the assessee is reasonable and merits acceptance. The DR raised no objection in condoning the delay, therefore, in the interest of justice, we condone the delay and proceed to hear the case on merits.

On Merits of the Case

7. The Authorised Representative (AR) of the assessee, stated that the amount received from UIICL relates to Mediclaim of the patients and the amount received is already credited to the profit and loss account. The AR also took us through the ledger account of UIICL which is matching with the amount as per form 26AS. The AR further explained the typographical error in the reconciliation statement submitted during the assessment proceedings. Upon reviewing the submissions and the evidence presented by the assessee, it is noted that the additional evidence, including the ledger accounts of UIICL, Chart of insurance amount sanction for patients and corresponding bills of patients insured by UIICL, were not submitted before the AO or the CIT(A). This additional evidence appears to have merit, as it could potentially reconcile the discrepancy in the receipts as per Form No. 26AS and the books of accounts.

8. Considering the importance of this additional evidence, which could materially impact the outcome of the case, it is necessary that the CIT(A) reviews this evidence and decides the matter on its merits. The Departmental Representative, during the hearing, did not object to restoring the matter to the CIT(A) for a fresh decision.

9. In view of the above, we set aside the order of the CIT(A) and restore the matter to the file of the CIT(A) for a fresh adjudication on merits, after considering the additional evidence submitted by the assessee. The CIT(A) is directed to afford a reasonable opportunity of being heard to the assessee before passing a fresh order.

10. The appeal is allowed for statistical purposes.

Order pronounced in the Open Court on 28th August, 2024 at Ahmedabad.