In the case of Sandhya Agarwal Vs ACIT, the Income Tax Appellate Tribunal (ITAT), Kolkata, dealt with an issue regarding a mismatch in the contract receipts reflected in Form 26AS and the income reported in the assessee’s Income Tax Return (ITR). The Tribunal directed a re-adjudication of the case.
The assessee, Sandhya Agarwal, had disclosed a certain amount as contract receipt in her ITR, which did not tally with the amount reflected in Form 26AS. The Assessing Officer (AO) treated the difference as undisclosed contract receipt, leading to the appeal in the ITAT. The assessee claimed that the discrepancy was due to a reversal of contract receipt by a party, Birla Corporation Ltd, which was not updated in Form 26AS due to the non-revision of their TDS return.
To validate this claim, the assessee presented additional evidence, including a confirmation from Birla Corporation Ltd and the relevant ledger from their books of account. The ITAT, considering the evidence and ITAT Rules, remitted the matter back to the AO for verification, leading to a significant turn in the case.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Appeal No. ITBA/NFAC/S/250/2022-23/ 1043061411(1) dated 18.05.2022 passed against the assessment order by ACIT, Circle-28, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 30. 10.2017 for AY 2015-16.
2. Ground taken by the assessee is in respect of addition of Rs. 14,02,259/- made on account of mismatch between the contract receipts reflected in Form 26AS vis-а-vis reported by the assessee in its return of income. The difference has been treated as undisclosed contract receipt by the Ld. AO for which the assessee is in appeal before the Tribunal.
3. Brief facts of the case are that assessee filed her return reporting a total income of Rs. 15,12,100/-. Case of the assessee was selected for scrutiny by identifying the following three issues:
(i) Contract receipt/fees mismatch;
(ii) Sales turnover mismatch;
(iii) Tax credit mismatch.
3.1. Statutory notices were issued and served on the assessee which were duly complied with. Ld. AO also issued notice u/s. 133(6) of the Act to one of the party viz., Birla Corporation Ltd. to examine the issues identified. On verification, Ld. AO noted that as per information in the TRACES, contract receipt of the assessee were Rs. 1,78,75,267/-. Further, Ld. AO noticed that contract receipts of Rs.7,31,768/- were not reflected in the TRACES. He thus, worked out total contract receipt of Rs. 1,86,07,035/-. Against this, Ld. AO noted that assessee has disclosed contract receipt of Rs. 1,72,04,775/- in the return, thus, the difference of the two, amounting to Rs. 14,02,259/- was added to the total income as undisclosed contract receipt. Aggrieved, assessee went in appeal before the Ld. CIT(A) who confirmed the addition made by the Ld. AO. Aggrieved, assessee is in appeal before the Tribunal.
4. Before us, Ld. Counsel submitted that there was a reversal of contract receipt amounting to Rs. 14,02,259/- by one of the party viz., Birla Corporation Ltd., which has resulted into the mismatch between contract receipts reflected in Form 26AS and the return of the assessee. According to the Ld. Counsel, this amount was reversed by Birla Corporation Ltd. in their books of account but such impact was not given in Form 26AS due to non-revision of their TDS return. To substantiate the claim made by the Ld. Counsel, additional evidence along with application for admission of the said addition evidence is submitted before the Tribunal vide application dated 09.05.2023 in respect of confirmation from Birla Corporation Ltd. and relevant ledger in their books of account. Ld. Counsel prayed for admission of the additional evidence in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 (hereinafter referred to as the “ITAT Rules”) and prayed that the matter may be set aside to the file of Ld. AO for verification of the fact from the additional evidence placed on record to allow the claim of the assessee.
5. Taking into consideration rule 29 of the ITAT Rules, submission made by the Ld. Counsel were confronted to the Ld. Sr. DR, who did not object for the same.
6. We have heard the rival contentions and gone through the material placed before us. We find that confirmation letter from Birla Corporation Ltd. along with ledger account from their books of account which demonstrates the reversal of the contract receipts as claimed by the assessee has not been considered by the authorities below. These relevant documentary evidence have been placed before us in the paper book. We find it appropriate to take these additional evidence on record and remit the matter back to the file of Ld. AO for verification of these documents in respect of difference in contract receipts reflected in Form 26AS and that reported in the income-tax return filed by the assessee for which an addition of Rs. 14,02,259/- has been made. Ld. AO is directed to verify the details and consider the deletion in respect of the difference for which addition has been made based on the verification. Needless to say that assessee be given reasonable opportunity of being heard and make any further submission to substantiate her claim. Accordingly, appeal of the assessee is allowed for statistical purposes.
7. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 23rd June, 2023.