NIKAD INDIA BUSINESS SOLUTIONS PRIVATE LIMITED,BENGALURU vs. THE INCOME TAX OFFICER- WARD 5(1)(1), BENGALURU

Briefly stated facts of the case are the assessee is engaged in providing manpower services, filed its return of income on 31.10.2023 admitting Nil income and claiming a refund of Rs.77,20,310/- for the Assessment Year 2023-24. The assessee later revised the return of income on 22.12.2023 by admitting Nil income with a refund claim of Rs.72,32,440/-. The case was selected for scrutiny due to low net profit reported in relation to the turnover and the presence of significant loan transactions out of banking channels. A notice under section 143(2) of the Act dated 19.06.2024 and several notices under section 142(1) of the Act was issued and served on the assessee. The assessee made a partial response to the notices issued. Subsequently the learned AO issued a show cause notice dated 21.02.2025 seeking reply on or before 26.02.2025. The learned AO, after perusing the submissions of the assessee, partly accepted the issue on penalty on GST of Rs.13,06,640/-. On the other issues, the learned AO observed that assessee has not filed relevant documents / details to substantiate the claim. Therefore, the learned AO added an amount of Rs.22,77,650/- being the difference between the turnover declared in Form 26AS amounting to Rs.2,27,76,505/- @ 10%. The learned AO also made an addition on interest on OD account amounting to Rs.16,62,871/-.

On being aggrieved by the Order of the learned AO, assessee filed an appeal before learned CIT(A). The learned CIT(A) considered the explanation provided by the assessee that the difference arose because of timing mismatches between the accounting of sales and reporting of the TDS by deductor reflected in Form 26AS. The learned CIT(A) being not satisfied with the reconciliation statement, GST return, bank statements and supporting invoices as sufficiently not being satisfactory, upheld the Order of the learned AO by partly allowing the appeal of the assessee.

On being aggrieved by the Order of the learned CIT(A), assessee is in appeal before us by raising the following grounds:

The learned AR also filed a petition for admission of additional grounds which reads as follows:

The difference between the turnover declared and the receipts reflected in Form 26AS being attributable to income deferred to and offered in A.Y. 2024-25, with the corresponding tax deducted at source carried forward under Rule 37BA read with section 199 of the Act, no addition survives in A.Y. 2023-24. and the addition of Rs. 22,77,650 amounts to double taxation of the same amount.

The main issue emanating from the above grounds is with respect to addition of Rs.22,77,650/- sustained by the learned CIT(A). The learned AR also filed an application under Rule 29 of the Income Tax Rules, 1963, and stated that the assessee is submitting the additional evidence in the form of computation of income for the Assessment Year 2024-25 along with the copy of the acknowledgement for the Assessment Year 2024-25. The learned AR submitted that the documents submitted will go to the root of the matter and therefore prayed for its admission. On the issue of addition of Rs.22,77,650/-, the learned AR submitted that the revenue declared in the return of income for the Assessment Year 2023-24 is Rs.31,17,26,781/- whereas the revenue reflected in Form 26AS is Rs.33,45,03,286/-. He further submitted that the difference of Rs.2,27,76,505/- was declared during the subsequent Assessment Year and the corresponding TDS were also carried forward to the subsequent Assessment Year. He further submitted that the addition made by the learned AO during the impugned Assessment year will result in taxing the same amount twice. He therefore prayed that the addition made by the learned AO be deleted.

Per contra, the learned DR submitted that the assessee has not submitted full reconciliation of the turnover difference between the accounted turnover and the turnover reflected in Form 26AS. He therefore prayed for upholding the Order of the learned CIT(A).

We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee has declared a turnover of Rs.31,17,26,781/- as against the turnover of Rs.33,45,03,286/- reported in Form 26AS. 4 The learned AO, on being not satisfied with the reconciliation provided by the assessee, estimated 10% of the difference as income in the hands of the assessee during the impugned Assessment Year. The learned AR has also filed additional evidence under Rule 29 of the Income Tax Rules, 1963, wherein it was stated that additional evidence contains data relating to admission of difference amount in the subsequent Assessment Year. The learned AR also contended that these evidences were not produced before the lower authorities. The submission of the learned AR is to remit back the issue to the file of the learned CIT(A) for verification of additional evidence and adjudicate the appeal in accordance with the documentary evidence in the form of additional evidence afresh. We find merit in the argument of the learned AR that additional evidence go to the root of the matter and hence in our opinion it needs to be examined by the lower authorities. We therefore remit the matter back to the file of the learned CIT(A) to consider the additional evidence submitted by the learned AR before us. Thus, the Order of the learned CIT(A) is set aside on this issue. We also direct the assessee to submit the additional evidence before the learned CIT(A) and co-operate with the Appellate proceedings without seeking unnecessary adjournments. Accordingly, the grounds raised by the assessee are partly allowed statistical purposes. The other grounds are not adjudicated since the issue has been remitted back to the file of learned CIT(A).

In the result, appeal of the assessee is partly allowed for statistical purposes.