ITO Vs Aman Enterprise (ITAT Ahmedabad)
ITAT Ahmedabad held that mere reporting in the GST return doesn’t make the amount taxable as per the provisions of the Income Tax Act. Considering entire booking advance, as per GST return, as income without examining the income in accordance with percentage completion method not correct.
Facts- During the course of assessment, AO made additions towards understatement of receipt of service; over statement of purchase and expenditure from unaccounted source. CIT(A) allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that CIT(A) has correctly held that this amount was in respect of booking advance and there was no understatement of revenue. As GST was applicable on booking amounts the assessee had reported this amount in the GST return. A mere reporting in the GST return doesn’t make the amount taxable as per the provisions of the Income Tax Act. The AO, rather than examining whether the income was correctly reported in accordance with percentage completion method, had erroneously held the entire booking advance receipt as income of the assessee, which can’t be held as correct. The Revenue has not controverted the findings as given by the Ld. CIT(A) in this regard. Therefore, the order of the Ld. CIT(A) on this issue is upheld.
