Bizcloud Vs ITO (ITAT Nagpur)
In the case of involving reassessment proceedings for AY 2017–18, the Income Tax Appellate Tribunal (ITAT), Nagpur Bench, partly allowed the assessee’s appeal for statistical purposes and restored the issue of turnover reconciliation to the Assessing Officer (AO) for fresh adjudication.
The assessee, a partnership firm, was subjected to reassessment proceedings after the AO observed from the ITBA system that professional receipts amounting to ₹1,42,87,000 were reflected in Form 26AS on which tax had been deducted under Section 194J by M/s Excellon Softwares Pvt. Ltd. Since the assessee had not filed its return of income, notice under Section 148 was issued. Despite several notices under Sections 142(1) and 144, the assessee did not respond during assessment proceedings.
The AO completed the assessment under Sections 147 read with 144 and 144B on a best judgment basis. While examining Form 3CB, the AO noticed that the assessee had disclosed gross receipts of ₹1,05,36,746 and claimed expenditure of ₹71,43,546. As supporting evidence and documents were allegedly not produced, the AO treated both the receipts reflected in Form 26AS and the receipts disclosed in Form 3CB as taxable income. Consequently, total income was determined at ₹2,48,23,950.
On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] held that the AO had wrongly made a double addition because the amount disclosed in Form 3CB and the receipts reflected in Form 26AS related to the same source. Accordingly, the addition of ₹1,05,36,746 was deleted. The CIT(A) also allowed deduction of business expenditure of ₹71,43,546, observing that complete disallowance was unjustified considering the nature and volume of business. However, the CIT(A) sustained gross receipts of ₹1,42,87,000 reflected in Form 26AS.
