PARAS KUHAD,JAIPUR V. ACIT - 7, JAIPUR

ITA 1004/JPR/2024

AI Insights

The case involves Sh. Paras Kuhad, a legal professional, who appealed against the additions made to his income by the ACIT, Jaipur, which were confirmed by the CIT(A). The additions were based on discrepancies between the receipts shown in the assessee's income tax return and those reflected in Form 26AS. The Tribunal examined the method of accounting used by the assessee, which was the cash method, and found that the additions were not justified as the income was declared based on actual receipts. The Tribunal also noted procedural lapses in the assessment process and emphasized the need for a fair opportunity for the assessee to present his case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469933 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Radhasoami Satsang v. Commissioner of Income-tax, CIT v. Excel Industries Ltd., Saurashtra Packaging (P.) Ltd v. Commissioner of Income-tax, Zuari Leasing & Finance Corporation Ltd. Vs ITO, Shrimanta Shankar Academy Vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUP SINGH
• Assessee Lawyers: TARUN MITTAL; HARSHIT AGARWAL
• Keywords: Opportunity of being heard; Additional evidence; Revised return; Bad and doubtful debts; Rule of consistency; Capital Gains; TDS; FORM 26AS
• Section: 143(3); 142(1); 143(2); 139(1); 205; 133(6); 191; 194J; 139(5)

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 1004/JP/2024 fu/kZkj.k o\"kZ@Assessment Year : 2017-18 Sh. Paras Kuhad, 307-309, Ganpati Plaza, M. I. Road, Jaipur cuke Vs. ACIT-7, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACWPK 8738 R vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Tarun Mittal, CA & Sh. Harshit Agarwal, CA jktLo dh vksj ls@ Revenue by : Sh. Anup Singh, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 17/12/2024 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 22/01/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The present appeal filed by the assessee is against the order of the National Faceless Appeal Centre (NFAC), Delhi [ for short CIT(A) ] passed on 24.06.2024 and it relates to the assessment year 2017-18. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated 20.12.2019 passed under section 143(3) of the 2 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT Income Tax Act, [ for short “Act”] by the Assistant Commissioner of Income Tax, Circle-7, Jaipur [for short AO]. 2. In this appeal, the assessee has raised following grounds: - “1. On the facts and in the circumstances of the case, the Id. CIT(A) has erred in confirming addition of Rs. 1,37,53,473/- made by ld. AO, on account of difference in receipts as per Form 26AS and as shown in return of Income, arbitrarily. 1.1 That, the Id. CIT(A) has further erred in confirming the addition made by Id.AO by not appreciating the submission made and evidences adduced by assessee. Appellant prays that specific request was made by assessee that an opportunity of personal hearing may be provided prior to passing the order, however appeal was decided without considering such request which is against the principle of natural justice and order so passed deserve to be quashed. 1.2 That, the Id. CIT(A) has further erred in conforming the addition of Rs. 1,37,53,473/- made by ld. AO by completely brushing aside the fact that assessee is regularly maintaining books of accounts on \"Cash method of accounting\" (which are also subject to audit), as against which some of his clients follow \"Mercantile method of accounting\", which has resulted in deviation in receipts as per books and as per Form 26AS. Appellant prays that the receipts declared by assessee are in consonance with method of accounting regularly followed, thus addition so confirmed deserves to be deleted. 1.3. That, Id.CIT(A) has further erred in not appreciating that in some cases, tax has been erroneously deducted at PAN of assessee, even though, there was no payment to assessee and in some cases, though tax was deducted at source in the year under consideration, whereas payment was actually received in subsequent year and thus was offered for tax in subsequent year. Appellant prays that eventually all the receipts actually chargeable to tax have been offered for taxation and addition made on this account deserve to be deleted. 1.4. That, Id.CIT(A) has further erred in not appreciating that in the case where services have been provided to various companies of same group, they have made payments as per their convenience, which has also led to some deviation, though actually assessee has offered entire receipts for taxation. Appellant therefore prays that addition made by ld. AO and confirmed by Id.CIT(A) without considering such instances deserves to be deleted. 2. The appellant craves the right to add, delete or amend any of the grounds of appeal either before or at the time of hearing of appeal.” 3 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 3. Succinctly, the fact as culled out from the records is that the assessee e-filed his income tax return on 28.10.2017 thereby declaring total income of Rs. 6,12,66,320/-. The said return of income so filed was selected for limited scrutiny under CASS. Pursuant to that selection notice u/s 143(2) of the Act was issued on 13.08.2018, which was duly served upon the assessee. Ld. AO noted that the assessee revised his ITR on 30.09.2018 and declared total income of Rs. 6,19,02,760, this return was also selected for scrutiny and notice u/s 143(2) was again issued on 27.09.2019. Thereafter, notices u/s 142(1) of the Act along with query letters were issued to the assessee. In response thereto, the assessee has filed his submission on ITBA portal from time to time and furnished the required detail / information along with necessary supporting other documents on ITBA portal. 3.1 As is evident from the record that the assessee is a legal professional and declared total receipts of Rs. 5,88,39,075/- in the year under consideration. The books of the assessee were audited as required u/s 44AB of the IT Act. Based on the return of income so filed, audited accounts and other information so filed ld. AO observed that receipts shown in ITS data are more than the receipts declared by the assessee in his income tax return filed for the year under consideration. Therefore, vide 4 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT notice dated 01.10.2019, the assessee was requested to submit reconciliation of income as per ITR and 26AS statement. 3.2 Ld. AO based on the submission noted that the assessee declared his income short by Rs. 30,73,552/-. Therefore, pursuant to that observation ld. AO issued a show cause notice to the assessee on 08.12.2019 asking him to show cause as to why an addition of Rs. 30,73,552/- under the appropriate provisions of the Act should not be made to his total income for the year under consideration. The assessee submitted his reply on 13.12.2019 thereby contending that the receipts to the tune of Rs. 1,37,53,473/- (Rs. 30,73,552/-) was only net balance of debit and credit entries) were not declared by the assessee in his ITR. The reply filed by the assessee has been considered carefully but found not acceptable by the ld. AO on account of the following reasons: 1. The assessee has submitted that some payments have been received in subsequent years but as of now the assessee has not submitted any documentary evidence which proves that the payments were offered to tax in the year in which it received. 2. In some cases, the person submits that he did not raise such invoices and the TDS appearing in 26AS statements does not pertain to him. The contention of the assessee is not acceptable as in his earlier reply dated 08.12.2019, the assessee furnished reconciliation of 26AS statement vis-à-vis receipts declared in his ITR and did not submit that some of the figures do not pertain to me any time. The assessee submitted that he follows cash system of accounting and 5 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT therefore, the receipts will be offered to tax as and when the same is received. This is the first time when the assessee is taking a plea that some of the figures do not pertain to him and therefore, it is nothing but an afterthought. Only writes that e-mails have been sent to persons cannot substantiate the contention of the assessee. 3. The onus lies upon the assessee to prove that the receipts which are reflecting in 26AS statement does not pertain to him or have been accounted for in any next assessment year. In this case, the assessee could not discharge his onus even after several opportunities provided to him. 4. It also cannot be believed that some income has not been received by the assessee even after three years (the case pertains to FY 2016-17 and the assessment proceedings are being finalized in FY 2019-20). 5. It is also very important to note that the assessee has declared no sundry debtor in his balance sheet and nor any provision for bad debts or suspense account has been created. Based on the above reasons the plea of the assessee that he follows cash accounting system and thereby declared amount of Rs. 1,37,53,473/- will be declared when it receives was not accepted. For that assessee neither gave any documentary evidence which proves the less amount shown has been declared in subsequent years nor any other details on which were relied was submitted. Therefore, ld. AO made the addition of Rs. 1,37,53,473/- to the total taxable income of the assessee in the year under consideration. Ld. AO while doing so noted that the assessee shall be eligible to claim corresponding TDS however in subsequent years when he 6 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT offers the same, no expenses shall be allowed to the assessee as he has already claimed all the expenses. 4. Feeling dissatisfied from the above finding so recorded by the ld. AO, the assessee preferred the appeal before the ld. CIT(A) disputing the addition. Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: “5. FINDINGS & DECISION 5.1 I have gone through the assessment order and grounds of appeal. The officer has carried out addition on account of receipts appearing in the 26 AS and the receipts shown under income tax return. Aggrieved Baja assessment order the pilot has failed appeal with multiple grounds of appeal which are disposed off as under: 5.2 As per the assessment order the Ld.AO observed that that receipts shown in ITS data are more than the receipts declared by the assessee in his income tax return filed for the year under consideration. In response thereto, the assessee furnished reconciliation and as per said reconciliation statement the appellant had declared his income short by Rs. 30,73,552/-. On further study of the case the officer found that there are few parties who have shown amount paid to the appellant and TDS was also deposited in favour of the appellant but the appellant has not shown entire income earned from said parties and accordingly the Ld.AO carried out addition of Rs.1,37,53,473/-. Following is the snapshot of said difference. 7 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 5.3 The appellant contested that he is an individual lawyer following cash method of accounting for preparation of books of accounts and offers income to tax on receipt basis, i.e. as and when the income is received. This is a consistent accepted method of accounting by the Income Tax Department and has been assessed as such in previous years also. The appellant further submitted that deductor clients being mostly corporate deduct and deposit TDS on accrual basis i.e. as and when the invoice is received by them or the expenses is entered in their books of accounts as per the provisions of Section 194J of the Act. However, there are clients who have deducted TDS but have not made payment to the assessee. Due to the same, since, assessee has not received the income during FY 2016-17, the assessee has not shown the income in FY 2016-17 following its accepted method of accounting and have carried forward the income and corresponding TDS to future year. 5.4 The appellant also contested that for the FY under consideration the appellant has shown professional receipts of Rs. 8,49,94,886/- in his audited books of accounts by following cash method of accounting and the same has been declared in return of income filed for the assessment year under consideration. The said receipts of Rs 8,49,94,886/- includes professional receipts of Rs 24,25,000 pertaining to previous financial year but received in current financial year and hence shown under the head income from professions in current FY and tax has 8 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT been duly paid. The appellant also filed revised return of income u/s 139(5) on 30/09/2018 and declared revised professional receipts of Rs. 8,56,31,300/-. 5.5 The appellant also filed party wise explanation pertaining to alleged parties mentioned above which is summarized hereunder along with finding thereto. 9 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT Extract from 26AS pertaining to East West Pipeline Pvt. Ltd. 10 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 5.6 The appellant contested that he has followed cash method of accounting which is permitted as per Section 145. However, the appellant did not file sales register depicting that amount invoiced and amount actually received and offered to tax. The appellant filed copies of bank statement but from bank statement the invoices raised by the appellant cannot be correlated and it cannot be established that the alleged receipts are offered to tax. 5.7 In view of the above findings, it is evident that the appellant has claimed that he has offered the receipt on cash basis but has not demonstrated that alleged receipts are offered to tax. This office of CIT(A) has also provided finding against contentions of the appellant. 5.8 In view of the above, I am of the considerate opinion that the appellant has not demonstrated that alleged receipt are offered to tax. Therefore, the addition carried out by the Ld. AO is liable to be upheld. 11 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 5.9 Accordingly, the appeal of the appellant is disposed on merits and based on information/documents available on records.” 5. Aggrieved from the above finding so recorded by ld. CIT(A) the assessee preferred the present appeal on the ground as stated herein above. Against those grounds so raised by the assessee, the ld. AR of the assessee, filed the written submissions which is reproduced herein below: “Brief facts of the case are that assessee is an individual and is a Senior Advocate representing his clients before the hon’ble Supreme Court of India as well as before various high courts and had also worked as Additional Solicitor General of India till May 2014. The Appellant earns income from his legal profession and from investments made out of own funds. The assessee maintains regular books of accounts following cash method of accounting, which are duly audited by qualified chartered accountant. This fact has also been acknowledged by the ld. AO as it is a matter of record that the assessee follows cash method of accounting in preceding years as well as in subsequent years where such method was duly accepted by the revenue authorities even in the proceedings concluded u/s 143(3) in some of the years. For the period under consideration i.e. Assessment year 2017-18, the assessee has filed his return of income u/s 139(1) of the Act on 28th October 2017 while declaring taxable income of Rs. 6,12,66,320/- (APB 01-07) which was subsequently revised on 30th September 2018 filed u/s 139(5) of the Act at Rs. 6,19,02,760/- (APB – 08-14). For the impugned assessment year 2017-18, initially case was taken up for the limited scrutiny vide notice issued u/s 143(2) dt. 13-8-2018 (APB 43-46), based on the original return filed by the assessee on 28-10-2017, following reasons: i. Capital gain/loss u/s 111A ii. Deduction under chapter VIA Thereafter, since the assessee had revised the said return, another notice u/s 143(2) was issued on 27.09.2019 where the reasons for limited scrutiny were increased from Two to Three (APB 50-53), which are as under: i. Increase in TDS in revised return ii. Short Term Capital Gain u/s 111A iii. Deduction from Total Income u/c VIA Various details and information as sought by ld.AO were furnished and after perusing the same, ld.AO was satisfied w.r.t. two aspects, i.e. short term capital gains and deduction u/c VIA, however ld.AO made addition to the tune of Rs. 12 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 1,37,53,473/- by alleging that there was difference between professional fee as reported in Form-26AS and the receipts shown by the assessee as per his books of accounts which were kept and maintained on cash system of accounting. It was alleged by ld.AO that receipts from 6 parties (as stated in assessment order) as appearing in 26AS were not fully disclosed in the return filed by the assessee. It is submitted that details furnished by assessee I the shape of Reconciliation as well as confirmations from such parties along with the bank statements, showing amounts actually received from such parties were simply brushed aside. Assessment was completed by the ld. AO vide order passed u/s 143(3) of the Act whereby the assessee’s income was assessed at Rs. 7,56,56,233/- after making addition of Rs. 1,37,53,473/- to the professional income of the assesse. Aggrieved of the aforesaid additions, the assessee filed the appeal before the ld. CIT(A) who confirmed the order passed by ld.AO and therefore the present appeal is filed before the Hon’ble bench against order passed by ld. CIT(A). With this background, groundwise submission is made as under: Ground of Appeal No.1 to 1.4: In all these grounds of Appeal, assessee has challenged the action of ld. CIT(A) in confirming the addition made by ld. AO of Rs. 1,37,53,473/- on allegation of difference in receipts as per form 26AS and as shown in return of income as made by ld.AO. In this regard, as stated above, at the outset it is reiterated that in notice issued u/s 143(2) of the Act dated 27.09.2019 having DIN no. [ITBA/AST/S/143(2)/2019- 20/1018351104(1)] (APB 50-53) issued on the basis of revised return, it was specifically mentioned that the scrutiny for assessment proceedings had been limited to the examination of (i) Increase in TDS in Revised return, (ii) Capital Gain/loss u/s 111A and (iii) Deduction under Chapter VIA. So far as submission made by assesse on issues regarding capital gains/loss u/s 111A and deduction u/c VIA are concerned, the same stood accepted by ld.AO. However, with regards to the issue of increase in TDS return (which was not there in notice u/s 143(2) dated 13.8.2018), it is submitted that Return of Income was revised to claim TDS credit worth Rs. 6,36,444/-, which was not appearing in from 26AS at the time of filing Original return of Income. Basically some party had delayed in depositing TDS, thus receipt to the extent of Rs. 6,36,444/- was not included in original return and same was duly incorporated by assessee in his revised return by offering additional income of Rs. 6,36,444/- and TDS credit of such amount was claimed simultaneously. Thus, effectively variation in revised return was to the tune of Rs. 6,36,444/- only, however ld.AO made variation of Rs. 1,37,53,473/-to the total income of assesse, which is absolutely arbitrary. As stated above, assesse maintains books on Cash system of accounting, (which is a recognised method of accounting), as has been mentioned at clause 13(a) to the Tax Audit report (APB 26). Your honours would appreciate that as per cash system of accounting, only the cash receipts/ receipts actually credited into the 13 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT bank account are treated as the gross receipts for the purpose of revenue recognition. In order to substantiate income so declared, all the necessary details were furnished by assessee, which were simply brushed aside by ld.AO as well as ld. CIT(A). It is submitted that basically difference amount as has been added ld.AO arose due to the fact that assesse follows ‘cash method of accounting’ whereas some of his clients, majorly corporate clients, follow “Mercantile method of accounting”. As the clients following mercantile system deduct TDS on accrual basis, whereas assesse offers income on Receipt basis, the same is bound to result into difference between receipts as per books and as per Form 26AS. Further, as submitted above, cash method of accounting is being consistently followed by the appellant for computation of income under the head “Profit and Gains from business or profession” and is duly accepted by the department in past assessment proceedings. Moreover, except deviating from the receipt as per 26AS and books of accounts, no other discrepancy was pointed by the ld.AO in the books of accounts. It is thus submitted that, following the principle of consistency and in view of law laid down by various courts, there is no reason to differ from the accepted and consistent method of accounting of the appellant without any substantive reason for the same. In this regard reliance is placed on the following: - 193 ITR 321 Radhasoami Satsang v. Commissioner of Income-tax (SC) - 358 ITR 295 CIT V. Excel Industries Ltd. (SC) It is thus submitted that the assessee had rightly recognised revenue in respect of only those professional receipts, which have been actually received during the year under consideration i.e. Assessment year 2017-18. On the other hand, the clients of the assessee having followed mercantile basis of accounting, have accounted for the payments accrued for the period under consideration wholly and deducted tax at source in respect of entire sum, billed against the legal services taken from the assessee. Due to assessee following Cash system of accounting, TDS deducted in respect of payments accrued but not received are carried forward to the subsequent years and the corresponding TDS has been claimed when the payment against them were received. It is thus submitted that assessee has rightly offered professional receipts as per method of accounting regularly followed by assessee. It is further submitted that during the course of assessment proceedings, the assessee furnished various information as sought by ld.AO and none of the query raised by ld. AO remained unanswered. Details of queries raised, show cause notices issued and response submitted by assessee is as under: - First show cause notice was issued on 8.12.19, it was alleged that assessee has declared professional income short by Rs.30,73,552/- and addition was proposed . In response to the notice , reply was furnished on 13.12.19, wherein it was duly explained that income to the tune of Rs.8,56,31,330/- offered by assssee on receipt basis was duly supported by bank statements. - Second show cause notice was issued by ld.AO on 15.12.2019, whereby it was stated that “On perusal of reply filed against show cause notice dated 08.12.2019. it is noticed that you have furnished written reply but did not furnish any supporting 14 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT details which can substantiate that less amount shown in this year in your income tax return in comparison to Form 26AS has been shown in subsequent years i.e. up to till date. Therefore you are once again requested to furnish documentary evidences which substantiate your earlier contention. Please note as to why difference of Rs.1,37,53,473/- should not be considered your income for the year under consideration and added back to your consideration.”. Assessee was required to furnish reply on or before 18.12.2019, i.e. within 3 days of issuance of notice.In response to such notice, assessee, vide reply dated 18.12.2019 furnished complete details, i.e. Names, addresses, Email Ids, name of Contact persons etc. in respect of all the 6 parties, receipts from which were alleged to be short declared. Also, copies of mails sent to such parties confirming the amount actually paid to assessee were furnished. Since, merely 3 days’ time was allowed for furnishing the details, assessee requested for a weeks’ time for furnishing confirmations. However ld.AO neither considered the documentary evidences so submitted nor made any effort to make direct enquiries by issuing notice u/s 133(6) of the Act and instead passed an order u/s 143(3) of the Act on 20.12.2019, though there were ample time left for the assessment to get time barred. During the course of first appeal proceedings, assessee furnished complete details filed before ld.AO as well as additional evidences in shape of- - copies of duly signed ledger account of assessee in the books of all the 6 parties, - details of receipts shown by assessee in respect of amount received from such parties, - copies of bank statements of assessee evidencing such receipts Such details were furnished by assessee alongwith application u/r 46A to admit the same, which duly substantiated all the receipts, against which additions have been made. However, the same were not considered by the ld.CIT(A), who confirmed the additions made by the ld.AO to be tenable even in the presence of all the requisite documents placed on record. Ld. CIT(A) brushed aside such additional evidences submitted by the assessee, which were crucial in nature and has not commented upon the same. It is a matter of fact that, during the course of first appeal proceedings, hearing was fixed as many as ….times and assessee furnished response to each such notice, wherein it has been very specifically mentioned that assessee has furnished Additional evidences alongwith prayer u/r 46A (APB 142-196). In view of above, it is submitted that there were in fact, procedural irregularities in completion of the assessment proceedings u/s 143(3) of the Act, as well on the part of ld.CIT(A) in confirming the additions without adjudicating upon the issue of additional evidences despite of several reminders regarding furnishing of such evidences and thus proceedings were completed by ld.AO and ld.CIT(A) without affording adequate opportunity of being heard to the assessee. However, as is evident assessee has duly complied with every single notice and furnished every precise detail necessary for adjudication of the issue, which remained unconsidered. It is therefore requested before your honours that since all the facts 15 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT relevant to the appeal under consideration were already filed before ld.AO and ld.CIT(A), appeal may please be decided on merits of the case instead of restoring the same to the file of Ld. CIT(A) as it will cause genuine hardship and only postpone the proceedings. Reliance is placed on the following case laws: Hon’ble Gujrat High Court in the case of ‘Saurashtra Packaging (P.) Ltd v. Commissioner of Income-tax [1993] 204 ITR 443 (GUJ.)’ Section 254, read with section 41(1) of the Income-tax Act, 1961 - Appellate Tribunal – Order of – Assessment year 1984-85 – Assessee-company took over running business of a firm in which it was a partner – During relevant accounting period assessee received refund of sales-tax – ITO held that said refund was assessable as income of assessee – On appeal, Commissioner (Appeals) held that since deduction was allowed to partnership firm, section 41(1) was not applicable and amount was not assessable as income of assessee – Tribunal observed that deed of dissolution was not on record and that it would be necessary to examine relevant provisions of State Sales Tax Act and Rules to know as to who would be entitled to refund – Accordingly, Tribunal remanded matter to Commissioner (Appeals) – However, a copy of dissolution deed was on record, which provided rights and liabilities of assessee – Whether Tribunal could have easily looked into relevant provisions of State Act and Rules, if that was found necessary, and decided appeals – Held, yes – Whether, therefore, Tribunal was not justified in setting aside order of Commissioner (Appeals) and sending matter back to him for a fresh decision holding that it was unable to decide point in controversy finally in absence of relevant materials – Held, yes Zuari Leasing & Finance Corporation Ltd. Vs ITO, 18(4), Delhi (2008) 112 ITD 205 (Del) (Trib.) \"10. It is clear from above that primary power, rather obligation of the Tribunal, is to dispose of the appeal on merits. The incidental power to remand, is only an exception and should be sparingly used when it is not possible to dispose of the appeal for want of relevant evidence, lack of finding or investigation warranted by the circumstances of the case. Remand in a casual manner and for the sake of remand only or as a short cut, is totally prohibited. …………. Having regard to aforesaid principle, it is necessary to look into records to see whether there is sufficient material on record to dispose of the issue on merit and there is no need to remand the issue to provide a fresh inning to the Revenue.\" Shrimanta Shankar Academy Vs. ITO, 2(2), (2007) 107 ITD 99 (Gauhati) (Trib.) \"10. It is true that remand of a matter is discretionary but such discretion is required to be shown to be exercised in a judicial manner In the case of Saurashtra Packaging (P) Ltd vs CIT (1996) 131 CTR (Guj) 40 (1993) 204 ITR 443 (Guj), their Lordships of Gujarat High Court have observed that where matter can be disposed of by the Tribunal on the basis of material already on record, a remand should not be resorted to. It is always necessary to avoid multiplicity of proceeding and to save time.\" With above background, specific submission w.r.t. difference of Rs.1,37,53,473/- as alleged between profession receipts as shown in Form 26AS and that accounted for by assessee in books of accounts is made hereinbelow, prior to which partywise details of such payments is tabulated as under: 16 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT S.No. Name of Party Amount 1. Raghavan Sasi Prabhu 3,39,417/- 2. Rosmerta Autotech private Ltd. 38,30,556/- 3. Rosmerta HSRP Ventures Private Ltd. 67,05,000/- 4. Rosmerta Safety Systems Private Limited 3,23,500/- 5. Address Home Retail Private Limited 80,600/- 6. East West Pipeline Limited (earlier known as Reliance Gas Transport Infrastructure Ltd. Now known as Pipeline Infrastructure Private Limited) 24,74,400/- Total 1,37,53,473/- So far as receipts from M/s Raghavan Sasi Prabhu as appearing at serial no. 1 are concerned, assessee has booked receipts worth Rs. 26,64,750/- in his books as against which receipts in Form 26AS are shown at Rs. 24,54,167/-. Thus, basically assessee has shown receipts higher than that appearing in Form 26AS. It is therefore submitted that there is no short declaration of receipts on account of this client. Further, with regards to receipts from M/s Address Home Retail Private Limited of Rs.80,600/- are concerned, it is submitted that assessee has not provided any services to such party and thus has not received any payment from them. In support of such contention, assessee has filed confirmation from the said party (APB 198), wherein they have duly confirmed that no payment was made by them to assessee and tax was erroneously deducted by them. In the scenario, deduction of tax at source by them may be due to some accounting error on their part and if ld.AO still had any doubt, direct enquiries could have been made, which were not made. On the other hand, assessee has furnished complete bank statements, wherein no receipt from this party is appearing. It is thus submitted that there is no under booking of receipts in respect of this party also. With regards to receipts from East West Pipeline Limited, it is submitted that ld. AO grossly erred in computing difference of Rs. 24,74,000/- as there is actual difference of Rs.19,24,400/- which is computed by alleging that sum of Rs.1,75,64,400/- has been reflected in Form 26AS as against which sum of Rs.1,56,40,000/- only has been declared in return of Income. Thus there is arithmetical error of Rs. 5,50,000/- in the order of ld. AO which should be deleted outrightly. Beside this difference of Rs. 19,24,400/- is on account of fact that TDS of Rs. 1,92,441/- has been deducted on sum of Rs. 19,24,400/- on provisional basis, and same is not included in the receipts by assessee since assessee follow cash basis of accounting and same has not been received by the assessee in the year under consideration. Further assessee in support of his claim enclosed the confirmation of M/s East West Pipeline Private Limited (APB 191), wherein it is clearly mentioned that TDS of Rs. 1,92,441/- has been deducted on provision basis. Thus there is no difference in amount declared by assessee and as per 26AS. 17 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT With regards to balance difference, i.e. Rs.1,08,59,056/- pertaining to Rosmerta Group, it is submitted that Rosmerta is a well known and established group. The flagship company is Rosmerta Technologies Ltd. And it has various group and subsidiary companies. Rosmerta Technologies Ltd. Has been able to win prestigious projects for issuing Hybrid Optical Strip Smart Card Technology based Vehicle registration Certificates (“VRCs”) and Driving Licence (“DLC”) to different states of India. Rosmerta operates from 300 nationwide locations, giving it a national footprint that further enhances its appeal to its customers. It is further submitted that IPO of one of the group company M/s Rosmerta Digital Services Ltd. is due to be launched on18.11.2024. That with regard to difference in income from M/s Rosmerta Autotech Private Ltd., Rosmerta HSRP Ventures Private Ltd. And M/s Rosmerta Safety Systems Private Ltd. are concerned, it is submitted that all these are group companies. At times, due to shortage of funds, service recipients have not made payment to the appellant and the same is made by another group company. In fact, on comparison of ledgers of assessee in the books of Rosmerta Group companies (Page 12 to 15 of the Written Submission) vis a vis details of receipts of assessee as accounted for in books of accounts, it is evident that on overall basis, there is a nominal difference of Rs.5000/- in receipts, which is on account of clerkage. In view of above, it is submitted that assessee has correctly offered income on Cash method of accounting. However, ld. CIT(A) has not accepted submission solely on the observation that appellant did not file sale register depicting that amount invoiced and amount actually received and offered for tax. Ld. CIT(A) has also stated that appellant filed copies of bank statement but from bank statement the invoices raised by the appellant cannot be correlated. In this regard, as stated above, amount actually received and not the invoices raised are relevant for revenue recognition in Cash System of accounting and so far as assessee has offered complete receipts as per bank statements for taxation, the same deserves to be accepted. It is therefore requested that addition of Rs.1,37,53,473/- made by ld.AO and confirmed by ld. CIT(A) deserve to be deleted. Also reliance is placed on the case laws mentioned in Paper Book at APB at 199 to 201.” 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: 18 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that overall consideration of the income is purely verifiable from the records available and for that he relied S. No. PARTICULARS PAGE NOS. 1. Copy of Acknowledgement and Computation of return of income filed u/s 139(1). 01-07 2. Copy of Acknowledgement and Computation of Revised return of income 08-14 3. Copy of Audited Financial statements along with Tax Audit Report. 15-35 4. Copy of Form 26AS 36-42 5. Copy of Notice issued u/s 143(2) of the Income Tax Act dated 13.08.2018. 43-46 6. Copy of Notice issued u/s 142(1) of the Income Tax Act dated 28.06.2019 47-49 7. Copy of Notice issued u/s 143(2) of the Income Tax Act dated 27.09.2019. 50-53 8. Copy of Notice issued u/s 142(1) of the Income Tax Act dated 01.10.2019 54-56 9. Copy of Reply filed before Ld. AO during the Assessment proceedings dated 10.10.2019 57-59 10. Copy of Notice issued u/s 142(1) of the Income Tax Act dated 24.10.2019 60-64 11. Copy of Reply filed before Ld. AO during the Assessment proceedings dated 15.11.2019 65-69 12. Copy of Reply filed before Ld. AO during the Assessment proceedings dated 03.12.2019 70-76 13. Copy of Notice issued u/s 142(1) of the Income Tax Act dated 08.12.2019 77-78 14. Copy of Reply filed before Ld. AO during the Assessment proceedings dated 13.12.2019 79-85 15. Copy of Notice issued u/s 142(1) of the Income Tax Act dated 15.12.2019 86-87 16. Copy of Reply filed before Ld. AO during the Assessment proceedings dated 18.12.2019 88-114 17. Copy of submission filed before Ld. CIT (A) dated 01.06.2023 115-141 18. Copy of prayer for Additional evidence u/r 46A submitted before Ld. CIT(A) dated 01.06.2023 along with additional evidences:- 142-145 a) Confirmation received from Raghavan Sasi Prabhu, along with relevant documents. 146-152 b) Confirmation received from Rosemerta Group along with relevant documents 153-190 c) Confirmation received from East West Pipeline Limited along with relevant documents. 191-196 d) Confirmation received from Address Home Retail Pvt. Ltd. 197-198 19. Gist of case laws submitted before Ld. CIT(A) dated 06.06.2023 199-201 20. Copy of submission filed before Ld. CIT(A) dated 24.07.2023 202-205 21. Copy of submission filed before Ld. CIT(A) dated 11.10.2023 206-209 22. Copy of submission filed before Ld. CIT(A) dated 15.11.2023 210-211 23. Copy of submission filed before Ld. CIT(A) dated 21.02.2024 212-214 24. Copy of submission filed before Ld. CIT(A) dated 24.05.2024 215-217 25. Copy of submission filed before Ld. CIT(A) dated 22.06.2024 218-220 19 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT upon the reconciliation chart prepared by him which is extracted herein below: Table A 20 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT Referring to the above chart, ld. AR of the assessee submitted that the ld. CIT(A) has given the general directions without considering the written submission of the assessee and therefore, the present appeal filed by the assessee seeking the specific relief. The assessee submitted that considering the peculiar facts and case specific directions of allowing tax credit as well as return income filed by the assessee be considered based on the evidence placed on record. All the payments are duly reflected and duly offered for taxation by the assessee. Thus, as it is clear from the above chart that the income is duly offered for taxation by the assessee and the same may be accepted based on the facts presented. 21 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 8. Per contra, ld. DR relied upon the orders of the lower authorities, ld. DR vehemently argued that ld. CIT(A) has categorically held that on the TDS credit requested the explanations from the assessee is required and the verification as to the claim of the assessee for TDS claim vis a vis receipt offered required in depth verification so there is no merit in the appeal so filed by the assessee and lower authority has already considered the all the arguments of the assessee. Considering that fact on record the appeal filed by the assessee is required to be dismissed. 9. In the rejoinder the ld. AR of the assessee submitted that question of mentioning sundry debtors and writing of bad debts will arise only in those cases where the assessee follows mercantile system of accounting whereas in this case, the assessee regularly follows the cash system of accounting. Therefore, there is no merit in the contention so mentioned in the order of ld. Assessing Officer and based on the reconciliation chart submitted above the credit of TDS and addition so made is required to be deleted, as merely solely because of Form no. 26AS no addition can be made. 22 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT 10. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee has raised ground no. 1 to 1.4 all relates to the addition of Rs. 1,37,53,473/- which was made by the assessing officer as detailed herein above: Now we deal with each party wise explanation available on record and the sustainability of the addition so disputed. First entry is of Raghavan Sasi Prabhhu wherein the addition was disputed for an amount of Rs. 3,39,417/-. As is evident from the above record that the assessee has declared more income in the ITR then reflected in the Form 26AS. But the ld. AO noted that out of the income so 23 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT declared Rs. 5,50,000/- was of the billed last year received in this year and thereby he made the addition of difference amount based on the fact that income reflected in Form no. 26AS is more than what is reflected in the accounts. As it was already accepted by the ld. AO that the assessee offers the income on cash basis merely the entry reflected in Form no. 26AS cannot be termed as income of the assessee when the assessee categorically submitted that he is following the cash system of accounting. Even the income declared in the year under consideration is overall higher then in the Form no. 26AS and thereby considering that aspect of the matter we direct the ld. AO to delete that amount of Rs. 3,39,417/-. The second amount disputed is the amount reflected in the Form no. 26AS in the name of Address Home Retail Private Limited for an amount of Rs. 80,600/-. The assessee contended that the assessee has not given any service to that company and relevant confirmation from the said company was filed at page 197 of the paper book so filed. In that letter that company has specifically stated that the TDS has wrongly been reflected and due that mistake on their part it was reflected in Form no. 26AS. Looking that aspect of the matter merely the TDS deducted and thereby without assessee raising any service to the said company there cannot be addition in the hands of the assessee merely on account of the entry appearing in 24 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT the Form no. 26AS and even other wise the assessee filed the details at page 197 to support his contention. Therefore, we direct the ld. AO to delete that addition so made for an amount of Rs. 80,600/-. The third item addition of difference in respect of East West Pipeline Limited. The assessee referring to page 191 being the ledger account of the assessee from the books of that company. The last entry reported by that company shows TDS of Rs. 1,92,441/- the amount of the provision on this amount relates to Rs. 11,85,875/- and Rs. 7,38,525/- [ total Rs. 19,24,400 and TDS Rs. 1,92,441/- ] as per Form no. 26AS. While going through the page 191 filed we note that East West Pipeline Limited made the provision of the amount payable by that company and the assessee following the cash system of accounting that provision made by East West Pipeline Limited cannot be considered as income of the assessee. Therefore, looking that aspect as confirmed by the confirmation filed before the lower authority, we do not find any reason to sustain that addition and therefore, we direct the ld. AO to delete that addition of Rs. 19,24,400/-. The remining amount of Rs. 5,50,000/- also the amount of invoice no. PK/16-17/152-D was not shown as income as the same was not paid and received by the assessee. This fact being confirmed by the third party and the assessee following cash system of accounting he cannot be forced to pay the tax on 25 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT the amount for which he has not received any fees and therefore, considering that confirmation so filed at page 191 of the paper book we do not find any reason to sustain that addition also and therefore, we direct the ld. AO to delete that addition of Rs. 5,50,000/- also, thereby totaling to Rs. 24,74,400/- [ 5,50,000+19,24,400 ]. Now as regards the addition of income for the different entities for which the income offered by the assessee and that of the income reflected in the Form no. 26AS is recited herein below for the sake of the understanding that whether any under reporting of income exist as group or not: Sr. No Name of the Client company Amount as per 26AS contended by AO Payment made as per the confirmations / ledger filed Amount as per books 1 Rosmerta Autotech P. Ltd. 9305000 8243900 4930000 2 Rosmerta Technologies Ltd. 925000 234000 9060425 3 Rosmerta HSRP Ventures P. Ltd. 6705000 5574025 0 4 Rosmerta Safety Systems P. Ltd. 1670000 1399500 1399500 5 Link Autotech Private Limited 350000 358500 358500 Total 18955000 15809925* 15748425* *The reason for the because one payment made by Rosmerta HSRP Ventures Private Limited was inclusive of TDS of Rs. 61,500/-. 26 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT Thus, as is evident from the above chart that the payment shown to have been paid more than what is recorded in the account is less by Rs. 61,500/- so far as it relates to Rosmerta HSRP Ventures Private Limited. For this difference ld. AR of the assessee claimed that payment made was inclusive of TDS. As this contention has not been discussed by the lower authority for that difference of payment and income reported by the assessee the ld. AO is directed to make necessary verification based on the evidence placed on record and decide the issue of Rs. 61,500/- about chargeability of that income. Now so far as the issue of difference between 26AS and payment recorded in the books of account the difference cannot be added for an amount of Rs. 32,06,575/-, but since there is no observation on the overall receipt shown by the assessee and reflected in the 26AS demonstrated herein above, ld. AO directed to verify the overall receipt offered based on the cash system of accounting followed by the assessee and if that receipt if paid by the payer in addition to what has been shown by the assessee the sperate addition may be made else merely based on the difference on account of 26AS amount is higher no addition can be made in the hands of the assessee when the over all group receipt is concerned. Thus, on this issue also addition on account of receipt shown to have been received from 27 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT the Rosmerta Group the issue is restored to the file of the ld. AO, who will verify the contention as discussed above so as to check the overall receipt as a group company as per the overall reconciliation as stated herein above. While doing so if there is no difference as such with the payment made by those companies and receipt shown by the assessee no addition merely based on the 26AS difference can be made in the hands of the assessee. At last, we note that the assessee being higher tax payer sufficient opportunity be given to the assessee while checking the issue in remand and if required ld. AO may exercise to confirm the facts submitted by the assessee as per provision of section 133(6) of the Act and render justice to the assessee in determining the correct income based on the regular method of accounting followed by the assessee. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 22/01/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member 28 ITA No.1004/JP/2024 Paras Kuhad vs. ACIT Tk;iqj@Jaipur fnukad@Dated:- 22/01/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Paras Kuhad, Jaipur 2. izR;FkhZ@ The Respondent- ACIT- 7, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1004/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "