G M S OFFSHORE SERVICE PRIVATE LIMITED,KALYAN THANE vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1, KALYAN

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: K (SMC) BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA 8455/MUM/2025 िनधा�रण वष�/Assessment Year:2019-20) G M S OFFSHORE SERVICE DEPUTY COMMISSIONER OF PRIVATE LIMITED INCOME TAX CIRCLE 1 301, Sai Paradise, Gupte Road, Mohan Plaza, Near Poddar Vishnunagar S O Kalyan, Thane, School, Vaile Nagar, Vs. 421202, Thane Maharashtra Khadakpada Kalyan West, 421202 Kalyan-Dombivali Maharashtra 421301 अपीलाथ� Appellant ��थ� Respondent Permanent Account Number of Assessee: AAQCS3684R

अपीलाथ� �ारा/Appellant represented by: Shri Sumit Mantri C.A. ��थ� �ारा/Respondent represented by: Shri Ajay Kr. Sr. A.R. सुनवाई की तारीख/Date of conclusion of hearing: 30-Jun-2026 घोषणा की तारीख/Date of pronouncement: 07-Jul-2026 आदेश / ORDER Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’) for Assessment Year 2019-20, date of order 26.09.2025. The impugned order emanated from the order of Assessment Unit Income Tax Department, order passed under section 147 r.w.s. 144B of the Act date of order 21.03.2024.

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED 2. Brief facts of the case are that assessee has not filed return under section 139(1) of the Act in the impugned assessment year. On the basis of information flagged, it is seen that the total income chargeable to tax amount of Rs. 1,50,30,589/- as escaped assessment within a meaning of section 147 of the Act. The Ld. AO issued notice under section 148A. The assessee filed return under section 148 and declared the fee received for professional or technical service amounting to Rs. 98,94,611/-. The Ld. AO found that there is difference between gross receipt received by the assessee amount of Rs. 1,50,30,589/- as reported in Form no. 26AS. The assessee participated in the reassessment proceedings and stated that the assessee is a company incorporated in the year 2011 and running the business as service to cater offshore construction, vessel/DP crew, controlling crew, driving crew, official personal and all time of manpower for offshore and onshore project. During the impugned assessment year the assessee’s Form No-26AS was reflected the excess amount of Rs. 38,64,216/- in comparison to the receipt declared in the return of income. The Ld. AO issued show cause notice to explain the difference amount declared in profit and loss account and gross receipt reported in Form no. 26AS. The assessee contended that the three bills related to M/s Larsen and Toubro Hydor Carbon view against work order no. LTHE/NRD/LOI/7400021762 dated 09.08.2017 was related to the earlier A.Y. 2018-19. The assessee had declared this amount in profit and loss account and in the Form no. GSTR-1, return filed as per the Goods and Services Tax Act, 2017. But the deductor has deducted the TDS in impugned assessment year so the said amount is reflected in the Form No-26AS in impugned assessment year. The Ld. AO rejected the assessee’s plea and made the following observations noted in impugned assessment order which are reproduced as below:

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED “1. Assessee has not furnished copy of GSTR-1 for year under consideration.

Thus, assessee has explained contract receipts of Rs. 319670/-, no variation is found on this issue and it is treated as included by the assessee in its total sales/total turnover mentioned by it in the ITR.

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED LTHE/NRD/LOI/7400021762 Dated 09/08/2017, which is submitted along with this reply letter as annexure 4. 2. Assessee has stated that out of Rs. 98,94,611 / as appearing in 26AS 3 invoices amounting to Rs. 3864216/- were issued by us on 31.03.2018 which The Company has already booked and reported in ITR filled for AY 2018-19 but L&T deducted and reported TDS on these invoices in AY 2019-20 instead of AY 2018-19. But the assessee has not furnished documentary evidence regarding these three invoices amounting to Rs. 3864216/- declared by it in the ITR for AY 2018-19, hence, its claim cannot be checked and verified, hence, not acceptable. The same is added to its income for the AY 2019-20 under the head other sources. Addition: Rs. 38,64,216/-.” 3. The Ld. AO added back the amount of Rs. 38,64,216/- with total income of the assessee. Aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) had considered the assessee’s submission and called remand report under Rule 46A of the Income Tax Rule 1962 (in short ‘Rules’). Observations of the Ld. CIT(A) contended in the following paragraphs which are reproduced as below:

“6. DECISION:

6.1 The appellant has submitted the documents on 25.07.2025 under the Rule 46A as additional evidences. The said evidences are examined by the undersigned. The invoices raised and the GSTR 1 showing the invoice values are also perused. In this regard, it is pertinent to point out that the Tax deduction by the Deductor, M/s L&T Hydrocarbon Ltd has taken place in the FY 2018-19 relevant to the AY 2019-20 and the same is evident from the Form 26AS submitted by the appellant / available in the database. Further it is clearly seen that the appellant has not filed the Return of Income for the AY 2018-19 and hence the said amounts have not been subjected to tax in the relevant AY viz., 2018-19. Further, the Deductor has also deducted the tax on the same in the FY 2018-19 relevant to the AY 2019-20. Therefore, the Ld AO has correctly brought the said amounts to tax in the AY 2019-20.

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED 6.2 Considering the facts of the case, the detailed discussion in the assessment order, the Statement of Facts and the Grounds of appeal filed by the appellant and the discussions in the above paragraphs and after examining the additional evidences filed by the appellant, wherein it is clear that the appellant, though claims and has submitted certain documents to show that the said bills were raised in the FY 2017-18, on the very last date of the relevant FY 2017-18, i.e. 31.03.2018, however, he has failed to prove that the said amount were offered to tax in the AY 2018-19 as the appellant has not filed the Return of Income for AY 2018-19, and hence the said amount have not been subjected to tax. I, therefore do not find any reasons to differ with the findings of the Ld AO and hence, the appeal of the appellant is dismissed accordingly.”

“We would like to inform you that M/s GMS Offshore Service Pvt. Ltd. is under legal disputes since December 2018 and all the bank accounts are freeze, office close and the above case in running at NCLT Diary No 2709138015862020 Dated of filing 18th June 2022. And we have also requested to NCLT Mumbai via Diary No 2709138008152022 dated 13th Feb 2022 to allow us to pay all the outstanding government statutory dues as on today, but only further hearing dates are given as on today. And we are requesting to the Additional Directors Mr. Mukesh Kumar Pandey and Mrs. Reeta Singh to come and windup the company by paying all the statutory outstanding dues. We request to kindly co ordinate with above both director and send them individual letters for the same.”

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED 5. The Ld. AR submitted that the dispute is confined to three invoices raised on M/s. L & T Hydrocarbon Ltd. pertaining to F.Y. 2017-18. It was contended that the assessee had already accounted for the corresponding turnover in its books of account for A.Y. 2018-19. In support of this contention, the Ld. AR invited our attention to the financial statements for F.Y. 2017-18, relevant to A.Y. 2018-19, placed at pages 2 to 10 of the APB-1. The total turnover declared by the assessee for A.Y. 2018-19 was Rs.1,11,13,861/-, which included the disputed amount of Rs.38,64,216/-. It was further submitted that the aforesaid three invoices were duly reported in GSTR-1 (Table 4QE, APB- 1 Pages 20 to 25) for the relevant period. Therefore, since the turnover had already been offered to tax in the earlier assessment year, the same could not again form part of the income for the impugned assessment year.

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED “8. I have heard the rival submissions. It is clear from the orders of the Revenue authorities that the impugned addition has been made purely on the basis of difference between income as reflected in Form 26AS and income as reported in books of accounts. As far as the Assessee is concerned, the receipts of rents as recorded in the books of accounts is in consonance with the agreement between the assessee and the lessee. No defect whatsoever has been pointed out by the Revenue authorities in the books of accounts of the assessee. In such circumstances, the impugned addition cannot be sustained as held by the ITAT, Mumbai Bench in the case of TUV India (P.) Ltd. (supra). The Tribunal on an identical addition made to the total income on the basis of mismatch of receipts as per Form 26AS and the receipts shown by the Assessee firstly held that the assessee has done all what best it could do to discharge its onus/burden which lay under the provisions of the 1961 Act by submitting reconciliation statements as well explaining the reasons for differential between the income as is reported in Form No. 26AS information as per the data base maintained by the Income-tax Department and the income as is reflected in its books of account. The assessee has discharged its primary onus/burden and the assessee could not be asked to do impossible. Secondly the Tribunal held that there could be differences in the accounting policy followed by the taxpayer and its clients who have deducted Income-tax at source on behalf of the taxpayer as well wrong mention/punching of the permanent account number of the tax payers by the clients while filing the TDS returns with the Department. One of the reasons for differential could be that the clients have deducted TDS on the gross amount inclusive of service tax while the income is reflected by the taxpayers exclusive of service tax. Thirdly, the tribunal held that the assessee has no control over the data base of the Income- tax Department as is reflected in Form No. 26AS and at best the assessee could do is to offer bona fide explanations for these differential which the assessee did in this case during the appellate/remand proceedings. Fourthly, it held that the Income-tax Department has all the information and data base in its possession and control. The learned Commissioner of Income-tax (Appeals)/Assessing Officer ought to have conducted necessary enquiries to unravel the truth but asking the assessee to do impossible is not warranted. The tribunal finally concluded that no additions to the income are warranted in the hands of the assessee owing to differential in income

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED based on Form No. 26AS and the income as is reflected in the books of account maintained by the assessee.

“It is well established, that, even in respect of a disputed right, if the assessee had adopted a mercantile method of accounting and if the right has legally accrued to him, the right should be deemed to have accrued in the relevant year even though the dispute as to the right is settled in a later year, either by the court or otherwise.

It is also equally well settled that once the income has accrued, the accrual is not suspended till the right is quantified. In Commissioner of Income-tax v. K.R.M.T.T. Thiagaraja Chetty & Co. [1953] 24 ITR 525; [1954] SCR 258 (SC) their Lordships of the Supreme Court had expressed the view that it is a fallacy to say that profits do not accrue unless and until they are actually computed, that computation of profits whenever it may take place cannot possibly be allowed to suspend their accrual, and that quantification is not a condition precedent to the accrual of the right. In E.D. Sassoon & Co. Ltd. v. Commissioner of Income-tax [1954] 26 ITR 27, 54 (SC) the Supreme Court again reiterated the same principle. In that case there was an assignment of the managing agency agreement on December 1, 1943. The commission payable to the managing agents under the agreement for the calendar year 1943 was made up and paid to the assignee in 1944. The question was whether in the assessment year 1944-45, the assignee was liable to pay tax on the accrual basis on the whole of the commission or whether tax was payable on a proper apportionment being made between the assignee and assignor of the amounts received by the assignor. The Supreme Court observed: 8

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED

"It is no doubt true that the accrual of income does not depend upon its ascertainment or the accounts cast by the assessee. The accounts may be made up at a much later date. That depends upon the convenience of the assessee and also upon the exigencies of the situation. The amount of the income, profits or gains may thus be ascertained later on the accounts being made up. But when the accounts are thus made up the income, profits or gains ascertained as a result of the accounts are referred back to the chargeable accounting period during which they have accrued or arisen and the assessee is liable to tax in respect of the same during that chargeable accounting period...........

What has however got to be determined is whether the income, profits or gains accrued to the assessee and in order that the same may. accrue to him it is necessary that he must have acquired a right to receive the same or that a right to the income, profits or gains has become vested in him though its valuation may be postponed or though its materialisation may depend on the contingency that the making up of the accounts would show income, profits or gains.”

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED reflected in Form No. 26AS. Accordingly, the Ld. AO noticed a difference of Rs.38,64,216/- between the gross receipts recorded in the assessee's books of account and those appearing in Form No. 26AS, and treated the same as undisclosed income. The assessee explained that the disputed amount pertained to three invoices raised on M/s. L & T Hydrocarbon Limited during F.Y. 2017-18, relevant to A.Y. 2018-19. Although the assessee had not filed its return of income for A.Y. 2018-19, the said receipts had been duly accounted for in the Profit and Loss Account for F.Y. 2017-18. The financial statements for the said year reveal that the assessee had disclosed gross receipts of Rs.1,11,13,862/-, which included the disputed amount of Rs.38,64,216/-. It was further demonstrated that these three invoices had also been duly reported in GSTR-1 for the relevant period. We find merit in the contention of the assessee. Admittedly, the assessee had not filed returns of income for either A.Y. 2018-19 or A.Y. 2019-20. However, the material placed on record clearly establishes that the three disputed invoices pertain to F.Y. 2017-18 relevant to A.Y. 2018-19 and were duly reflected in the books of account as well as in GSTR-1 for that year. Therefore, merely because the corresponding receipts were reflected in Form No. 26AS during the impugned assessment year, the same cannot, by itself, constitute a valid basis for making an addition without examining the year in which the income had actually accrued and been accounted for. We respectfully follow the ratio laid down by the Hon'ble Madras High Court in T.N.K. Govindarajulu Chetty (supra) and the Coordinate Bench of the ITAT, Bangalore, in D.M. Estate (P.) Ltd. (supra), wherein it has been held that a mere mismatch between Form No. 26AS and the books of account cannot justify an addition if the income has already been accounted for in the correct assessment year. The Revenue cannot subject the same income to tax twice merely because of a mismatch in the reporting of TDS. Although there is nothing on record to indicate whether any assessment or

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED reassessment proceedings were initiated for A.Y. 2018-19, the undisputed fact remains that the receipts represented by the three invoices raised on M/s. L & T Hydrocarbon Limited were duly accounted for in the books of account and reported in GSTR-1 for F.Y. 2017-18. Consequently, the addition of Rs.38,64,216/- made by the Ld. AO in the impugned assessment year would result in double taxation of the same income, which is impermissible in law. Accordingly, the addition is directed to be deleted.

Order pronounced in the open court on 07th July 2026 Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, िदनांक/Dated: 07/07/2026 ANKIT, PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai

ITA 8455/MUM/2025 G M S OFFSHORE SERVICE PRIVATE LIMITED 5. गाड�फाइल/Guard file. TRUE COPY

ASSISTANT REGISTRAR / I.T.A.T., MUMBAI