LINTAS INDIA P. LTD.,MUMBAI vs. ADDL/JT/DY/CIT/ACIT/ITO- NATIONAL E-ASSESSMENT CENTRE, , DELHI

order

: 24.01.2023 O R D E R

Per Rahul Chaudhary, Judicial Member:

16 On the facts and circumstances of the case, and in law, the learned AO has erred in making an addition of INR 28,42,537/- to the total income on the basis of details reflected in reconciliation of income as per books vis-a-vs Form 26AS.

3. The relevant facts in brief according to the Assessing Officer during the assessment proceedings the Appellant could not reconcile 6 entries reflected in Form 26AS with the income offered to tax as per the books of accounts. Therefore, the Assessing Officer proposed addition of INR 28,42,537/- in the Draft Assessment Order, dated 30.03.2021, holding that the Appellant had under-reported income by not crediting to the Profit & Loss Account income of INR 28,42,537- reflected in Form 26AS. The objections filed by the Appellant before DRP on this issue were rejected. The DRP noted that the Appellant had failed to reconcile the amounts even after extra-time was granted by the DRP. Further, similar disallowance was made in the case of the Appellant for the Assessment Year 2015-16. Being aggrieved, the Appellant is now in appeal before us.

4. The Ld. Authorised Representative for the Appellant submitted that Appellant is in advertising agency engaged in activities of releasing advertisement on behalf of its clients and production of Assessment Year: 2016-17 advertisements for the clients. The income earned by the Appellant is in the form of commission or service income. The income is only specified percentage of the gross billing. However, the parties, at times, reflect the gross amount paid to the Appellant (which includes media costs as well as income component) as income of the Appellant. This results in mismatch in the income reflected in Form 26AS and the income offered to tax as per the books of accounts of the Appellant. This is a recurring issue in nature. The Tribunal has in the earlier years deleted identical additions made by the Assessing Officer. In this regard, the Ld. Authorised Representative for the Appellant placed reliance on the order dated 12.06.2019 passed by the Tribunal in ITA No. 1156/Mum/2015 for the Assessment Year 2010-11 and common order dated 07.08.2019, disposing off, inter alia, ITA 2075/Mum/2016 (Assessment Year 2011-12), ITA No. 1762/Mum/2017 (Assessment Year 2012-13) and ITA No. 890/Mum/2018 (Assessment Year 2013-14).

“9. Ground No.3 raised by the assessee in its appeal is with regard to the action of the ld. DRP in confirming addition of Rs.8,25,869/- on account of non-reconciliation on certain amounts reflected in Form 26AS with the return of income of the assessee. 9.1. The brief facts of this issue are that during the course of assessment proceedings, the assessee was asked to reconcile the AIR statement. On perusal of the re-conciliation submitted by the assessee, the ld. AO found that there were many receipts entries as per form 26AS but which were not reported in the books of accounts of the assessee. The ld. AO accordingly made an addition for the difference in the sum of Rs.8,25,869/- in the assessment. This action of the ld. AO was upheld by the ld. DRP. 9.2. Aggrieved, the assessee is in appeal before us. 9.3. We have heard rival submissions and perused the materials available on record. We find that the details of reconciliation statement submitted by the assessee are enclosed in pages 1053,1055,1071 of the paper book wherein we find that assessee had reconciled certain specific client balances such as ITC Limited, Tata Global Beverages Limited etc., The ld. AR contended before us that assessee is an advertisement agency and is engaged in activities of releasing advertisements on behalf of clients and production of advertisement for clients. The assessee earns revenue either in the form of commission or fees. The income in the case of commission is only a specified percentage of the gross billing, accordingly, the assessee reports only the commission portion as its income in its P & L account and not the gross receipts. Hence, there is always bound to be Assessment Year: 2016-17 difference with regard to the amounts reflected in the Form 26AS vis-a-vis books of accounts of the assessee with regard to this aspect of the transaction. 9.4. We also find that assessee had identified the difference in amounts with respect to various parties which are detailed in pages 84 & 85 of the appeal set. The assessee does not deny having transactions with these parties. It is only the amount which is reflected in Form 26AS against the names of said parties which the assessee was not able to reconcile. We find that the explanation given by the assessee is reasonable and it is highly impracticable for reconciling the same in this scenario. We are inclined to accept argument of the ld. AR that income offered by the assessee is much more than what is reflected in Form 26AS. 9.5. We also place reliance on the decision of the Hon‟ble Jurisdictional High Court in the case of CIT vs. S. Ganesh in ITA No.1930/2011 dated 18/03/2014 wherein on similar facts, the Hon‟ble Jurisdictional High Court had agreed with the view of the Tribunal and held that no substantial question of law arises in this case. For the sake of convenience the said order is reproduced hereunder:-

“1. Having heard Ms.Bharucha, learned counsel appearing on behalf of the Revenue and perusing the order passed by the Income Tax Appellate Tribunal, we are of the opinion that the Tribunal did not commit any error of law or perversity in partly allowing the appeal of the respondent assessee.