THE ACIT-4(1)(1), MUMBAI V. M/S BBH COMMUNICATION INDIA PRIVATE LIMITED , MUMBAI

MA 624/MUM/2023

AI Insights

The case revolves around a dispute concerning the reconciliation of income as reported in the Profit & Loss account and Form 26AS for the assessment year 2012-13. The Assessing Officer (AO) initially found discrepancies amounting to Rs.3,95,29,233 between these two records and made additions to the assessee's income. The CIT(A) later deleted these additions after the assessee provided a satisfactory reconciliation, explaining that some income was reported in different assessment years and that service tax was included in Form 26AS. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's Miscellaneous Application which argued that the reconciliation was inconsistent and lacked proper documentary evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26454 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H.M. BHATT
• Assessee Lawyers: HITEN CHANDE
• Keywords: TDS; FORM 26AS

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH MUMBAI BEFORE: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER MA No.624/Mum/2023 (Arising out of ITA No.09/Mum/2023 (Assessment Year :2012-13) ACIT, Circle-4(1)(1) Room No.649, 6th Floor Aayakar Bhavan Mumbai -400 020 Vs. M/s. BBH Communications India Pvt.Ltd. 28, Dr. Earnest Borges Road, Parel Mumbai – 400 012 PAN/GIR No.AADCB7259E (Appellant) .. (Respondent) Assessee by Shri Hiten Chande Revenue by Shri H.M. Bhatt Date of Hearing 06/09/2024 Date of Pronouncement 29/01/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid Miscellaneous Application has been filed by the Revenue against order dated 27/03/2023 passed in ITA No.09/Mum/2023. 2. In the Miscellaneous Application, the Revenue has stated that there are various discrepancies with respect to re- conciliation of statement of income as per Form 26AS. The facts which have been culled out that ld. AO had observed that there was a difference of Rs.3,95,29,233/- as per the MA No. 624/Mum/2023 BBH Communication India Pvt. Ltd. 2 income declared in the profit and loss account and the gross income have been declared as per Form 26AS. Before the ld. AO, assessee had filed reconciliation statement which ld. AO had rejected it and found that the assessee’s contention was that sum of Rs.2,82,98,438/- was offered to tax in the A.Y.2011-12 which was also rejected on the ground that assessee has claimed full TDS in the present year and has offered to tax on a lesser amount. The ld. CIT(A) has deleted the said addition that assessee was able to explain the difference as some of the amount was offered as income in the A.Y.2011-12 as well as in the A.Y.2013-14, it was reflected in Form 26AS in A.Y.2012-13. 3. After going through these evidences and verifying the records, the ld. CIT(A) held that discrepancies have been duly explained. The Tribunal after considering the facts and material brought on record and the finding of the ld. CIT(A) has confirmed the order of ld. CIT(A) holding as under:- “6. Considered the rival submissions and perused materials placed on record. We observe from the record that the basic reasons in the addition made by Assessing Officer is the amount declared by the assessee in the Profit & Loss Account and form 26AS. the major difference brought out in the submissions and paper book submitted before us that the assessee records the net income in its Profit & Loss Account excluding service tax whereas the gross income declared in form 26AS consists of service tax The major difference is to the extent of 2,82,98,438/-, which is relating to service tax. It has also been brought to our notice that apart from difference in service tax, the assessee has recorded the difference on account of income offered in returned income of the preceding year and also certain income relevant to A.Y. 2013-14. However, the same were reflected in the gross income declared MA No. 624/Mum/2023 BBH Communication India Pvt. Ltd. 3 in form 26AS. The assessee has clearly filed a detailed reconciliation statement before the Ld. CIT(A) and after considering the detailed reconciliation, we do not see any reason to disturb the findings of the Ld. CIT(A). Accordingly grounds raised by the Revenue are dismissed.” 4. Now the ld. AO in his Miscellaneous Application has stated that Rs.2,82,98,438/- which was treated as ‘service tax’ is factually incorrect and the finding of the Tribunal is based on the finding of the ld. CIT(A) itself was not correct. The reason cited is that the re-conciliation which was filed before the ld. CIT(A) and before the ld. AO during the assessment proceedings were different and he has tried to highlight the difference in the following manner:- Items of reconciliation Reconciliation statement filed before AO Reconciliation statement filed before CIT(A) Income as per Profit & Loss account 21,13,37,370/- 21,14,39,191/- Difference on account of service tax 2,34,40,524/- 2,11,55,899/- Difference on account of income offered during the year under consideration but reflecting In Form 26AS of the next year (i.e 2013-14) (-)9,01,498/- (-)1,10,35,765/- Difference on account of income offered in R01 of the preceding year (i.e. 2011-12) or in the subsequent year (i.e 2013-14) but reflecting in Form 26AS of the year 2,82,98,438/- 4,00,30,600/- MA No. 624/Mum/2023 BBH Communication India Pvt. Ltd. 4 Difference on account of income offered to tax in ROI for the year but not reflecting in Form 26AS of the year (-)1,11,56,408/- (-)1,11,56,408/- Difference due to miscellaneous reasons 5,84,910/- Income as per Form 26AS 25,10,18,426/- 25,10,18,424/- Thus, as can be seen from the table above, the assessee has not furnished proper/complete reconciliation of income before the AO. Further, during the appellate proceedings, the assessee has furnished Form 26AS of the year in support of its claim that the major reason for mismatch, In the income as recorded in the books of account and income as per Form 26AS, is service tax. The noteworthy point here is that Form 26AS can only give information regarding receipts/income received during a particular year and TDS deducted thereon. Hence, the claim of the assessee, that difference to the tune of Rs. 2,11,55,899/-is on account of service tax, cannot be verified merely on the basis information available in Form 26AS. Therefore, during the remand proceedings, the AO has correctly submitted that the assessee has not furnished documentary evidences supporting it reconciliation statement. In view of the above, the reliance of the Hon'ble ITAT on the finding of the Ld. CIT (A) is not justifiable as the reconciliation statement submitted by the assessee needs in depth examination in the light of the relevant documentary evidences. 3.3 Without prejudice to the above, in the reconciliation statement submitted by the assessee before the first appellate authority, the assessee has claimed that difference to the tune of Rs. 4,00,30,600/- (In income as per the financials and Income as per Form 26AS) is on account of income offered to tax in ROI of the preceding year (ie 2011-12) or in the subsequent year (ie 2012-13) but reflecting in Form 26AS of the year. The assessee further claimed that the corresponding TDS MA No. 624/Mum/2023 BBH Communication India Pvt. Ltd. 5 credit on the said income claimed in the A.Y under consideration. In this regard, it is submitted that the corresponding TDS claim of the assessee on the income of Rs. 4,00,30,600/- is in contravention to the law laid down in Section 199 r.w.r 37BA(3) of the Act. The provisions of this Section makes it clear that the credit for tax deducted and paid to the credit of the Central Government is allowed to the assessee for the assessment year in which the income is assessed to tax. TDS credit cannot be postponed to a different A.Y based on the reporting by the deductor. The relevant part of the said Section is reproduced as under for ready reference:- \"(3) (i) Credit for tax deducted at source and paid to the Central government, shall be given for the assessment year for which such income is accessible.\" Thus, although the Hon'ble ITAT has upheld the order of the Ld. CIT (A) of deleting the addition of Rs. 3,95,79,233/-made by the AO on account of difference in income as per Form 26AS and as shown in the return, the TDS claim of the assessee should have been restricted to the income offered for taxation in the year under consideration.” 5. After hearing both the parties and on perusal of the records and the point which has been highlighted it appears that the Revenue has challenged the reconciliation filed before the ld. AO and re-conciliation filed before the ld. CIT(A) to show that there is a difference. However, one important fact is that once this re-conciliation was filed before the ld. CIT (A) stating that there is a difference in the amount offered during the year under consideration, because same has been offered in the A.Yrs. 2011-12 to 2013-14 which was reflected in Form 26AS. The ld. CIT (A) has verified this re-conciliation and without pointing out as what is the defect in such reconciliation in the order of the CIT(A), ld. AO cannot MA No. 624/Mum/2023 BBH Communication India Pvt. Ltd. 6 challenge the said order merely on the ground that there is a difference in the re-conciliation filed before him and filed before the ld. CIT(A). Apart from that what is relevant is whether income during the year has been duly disclosed by the assessee or not; and if part of the income was either disclosed in the earlier year or in subsequent year, then ld. AO cannot make the addition simply because the said income was reflected in Form 26AS differently. 6. We do not find any infirmity in the order of the Tribunal wherein the Tribunal has confirmed the order of the ld. CIT(A) after considering the re-conciliation statement which was filed before the first appellate authority and no discrepancy has been pointed out by the ld. AO, accordingly, we do not find any merits in the Miscellaneous Application filed by the Revenue and the same is dismissed. Without prejudice argument taken in Miscellaneous Application that the TDS credit should be restricted to the income offered for taxation for the year under consideration, it is seen that this was not the case of the ld. AO, who has simply made addition on the basis of details of income in the Form 26AS without even verifying the contention of the assessee that part of the income were duly disclosed in A.Y.2013-14 and in the earlier year. Here in this case, it has been pointed out that there were some income reflected in Form 26AS and not in the books and some income reflected in Form 26AS but not accounted in the books. Thus, there is only minor difference and this aspect has been duly explained and submitted before ld. CIT(A) who had even called for the remand report from the MA No. 624/Mum/2023 BBH Communication India Pvt. Ltd. 7 ld. AO. After considering the remand report ld. CIT (A) has given finding which has been upheld by the Tribunal. Accordingly, all the contentions raised by the Revenue in the Miscellaneous Application has been dismissed. 6. In the result, Miscellaneous Application is dismissed. Order pronounced on 29th January, 2025. Sd/- (NARENDRA KUMAR BILLAIYA) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 29/01/2025 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "