| Question And Answer | |
|---|---|
| Subject: | Addition due to diffrence in receipts as per 26AS and disclosed in Profit and loss account Stay of demand |
| Category: | Income-Tax |
| Querist: | Manali |
| Answered by: | Advocate Neelam Jadhav |
| Tags: | 26AS, Refund, Rejection of books of account |
| Date: | November 17, 2022 |
Assessee is company has filed the Return of Income for every year. Since assessee is engaged in the business of executing contracts , due to TDS there is always refund to the company. Almost every year assessment is completed U/Sec 143(3) by making an addition on the ground of difference in receipts as per 26AS and receipts as per profit and loss account since assessee could not give reconciliation. Assessee submits that since it is company, books of accounts are audited under co act as well as income tax Act and diffrence in mainly due to offering of income on accrual basis and therefore there there is bound to be diffrnece due to offering of income in next year however exact reconciation is not possible due volume of transcation and number of vendors.. assessee also.submitted that if the addition is to be made , then only real income be tax and not all the receipts. In the assessement also no other discrepancies in books of accounts are brought on record by the AO. Assessee filed an appeal for every year and requested AO to withhold refund up to 20% demand and issue balance refund.
However AO is not accepted the request of assessee and adjusted the entire demand and not issued the refund.
Issues :
1. Whether action of AO can added entire diffrence in receipts in Form 26AS and books of accounts is justified.
2. Whether such addition can be made with out rejecting books of accounts u/Sec 145 of the Act.
3. Whether AO is correct in rejecting assessee’ s request of holding refund after keeping in 20% demand and issue balance refund to assessee.
Pl guide .
.
The Assessee is corporate entity, hence all the accounts has to be prepared as per the Companies Act, as well as Income -tax Act. Accordingly the income of the Appellant has to be declared on accrual basis for the year. Merely because some of the entries are not reflected in 26AS and the income was shown by the Appellant in return of income, cannot be a ground for making difference amount of additions.
In ITO v. Star Consortium [2021] 189 ITD 105 (Kol)(Trib.) held that where difference between amount shown as turnover by assessee and as reflected in Form 26AS. 26AS Form alone could not lead to make addition of income. Accordingly the addition made by the AO is not valid .
In CIT v. Shakti Industries [2013] 217 Taxman 77 (Gujarat) (Mag.) the Court held that held that when the books of account are not rejected, addition cannot be made .
In Shri Jeen Mata Buildcon (P.) Ltd. v. ITO [2022] 97 ITR 706 (Jaipur)(Trib.) held that where Assessing Officer had not found a single defect in assessee’s books of account, addition made by Assessing Officer on difference between amount reflected in books of account and that in terms of form 26AS was to be deleted.
When the assessee has requested the Assessing Officer for withhold 20% of the demand of each year and refund the balance refund amount, the AO is bound to issue the refund order . In Aditi Infrabuild and Services Ltd. v. A CIT (2022)442 ITR 50 (Delhi) (HC) the Court held that adjustment of refund in excess of 20 Per Cent of tax in dispute is held to be not valid . Directed to refund adjustment made in excess of 20 per cent and stay was granted till disposal of appeal by CIT(A).
On facts of the case the assessee may approach High Court by filing writ petition .