AMARTECH CONVERGENCE (INDIA) PVT. LTD.,NEW DELHI vs. ITO, CO. WARD- 1(4), NEW DELHI

We have heard the rival parties.

Ground No. 1 of the appeal is with respect to the additions of Rs. 1550028/- being a difference in the receipt shown in the books and the gross receipt shown in form NO. 26AS. The fact shows that the gross receipt as per Form No. 26As is Rs. 54610892/- whereas the gross receipt as per annual accounts is Rs. 48085947/-. Before the ld AO it was submitted that there is an element of service tax on which tax is not required to be deducted. This explanation was accepted by the ld AO but difference remaining after that of Rs. 1550028/- was added. Before the ld CIT(A) the assessee explained the difference, however, he confirmed the addition for the reason that the assessee has not substantiated the fact that the above sum has been offered to tax in the preceding assessment year. Before us the ld AR explained the business of the assessee and also submitted the reconciliation. As per reconciliation the assessee has shown gross receipt from five customers from BPO business and also shown the income that has been offered in the annual accounts as well as income shown in the form 26AS. On perusal of the above statement it is found that in case of three customers the assessee has shown higher sum in its books of account than shown in 26AS. In case of Bharti Airtel Ltd there is a difference of Rs. 3027777/- from the income declared in the books of account as well as income shown in the form 26AS. The assessee has given a detailed chart to show that the above amount has already been disclosed by the assessee in its return of income for Assessment Year 2013-14. He submitted that there was a delay in finalizing of the agreement with the above company and assessee took the income on the basis of actual use of time and bills are also raised on that basis. However, the customers have took the expenses on estimate basis which is squared off in the subsequent year. The ld CIT(A) has also confirmed the addition for the reason that appellant could not substantiate the income shown by the assessee in preceding assessment year. The assessee has produced before us the copies of the assessment order for the respective years. The assessee also categorically stated that it is not the case that the Page | 2 Amartech Convergence (India) Pvt. Ltd Vs. ITO (Assessment Year: 2011-12) assessee has not shown the income in its books of account. The reconciliation statement shown by the assessee also shows that Bharti Aritel has made a provision. In fact it could be ascertain on what basis Bharati Airtel has made the provision and whether such methodology confirms the accrual of the income in the hands of the assessee for that year. Merely a difference between gross revenue shown in the annual accounts and gross revenue disclosed as per Form 26AS cannot result into an addition in the hands of the assessee. There may be many reasons including the overflow of income in different years in the hands of the respondent. In view of this, we set aside this ground back to the file of the ld AO with a direction to the assessee to show recording of the income in respective years in which the assessee has raised the bills. If the reconciliation is found to be in order the ld AO may delete the addition after verification. Accordingly, ground No. 1 of the appeal of the assessee is allowed with above direction.

Ground NO. 2 is against the disallowance of interest paid on late payment of Employees Provident Fund the assessee submitted that such interest is compensatory in nature and is not penalty. The ld AO disallowed the same. The ld CIT(A) confirmed the disallowance, despite submitting before him that interest is not penal in nature, but for the reason that proof of payment has not been submitted. On careful consideration of the information submitted and the order of the ld AO, it is apparent that the assessee has made payment of EPF along with interest therefore further seeking the proof of the same is not correct. It is not the case of the revenue that that the assessee has not paid such interest. However, the proof of payment has also not been submitted before us. Therefore, we set aside this ground of appeal