What did the Tribunal hold?

The Tribunal directed the Assessing Officer to re-adjudicate and verify the facts afresh after providing the assessee with an adequate opportunity of hearing. The delay in filing the appeal was condoned due to the Covid-19 pandemic.

The assessee appealed against an addition of Rs 66,83,383/- made due to discrepancies between TDS deducted as per Form 26AS and the assessee's reported turnover. The ITAT noted that the issue required factual reconciliation at the Assessing Officer's level.

What were the issues?

Whether the addition made on account of discrepancies between Form 26AS and book turnover was justified without proper factual verification. Whether the assessee should be granted an opportunity to present their case before the Assessing Officer.

Netsurf Entertainment LLP vs ITO | ITAT Pune 2022

Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM

For Respondent: Shri Arvind Desai

Hearing: 20.06.2022Pronounced: 11.08.2022

आदेश / ORDER PER S. S. GODARA, JM :

This assessee’s appeal for A.Y. 2016-17 is directed against the CIT(A)-3, Pune’s order dated 22/01/2020 passed in case No. PN/CIT(A)-3/ITO WD.2(2)/200/18-19 involving proceeding u/s. 143(3) of the Income Tax Act, 1961; in short "the Act”. Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex-parte.

Netsurf Entertainment LLP,

The assessee pleads the following substantive grounds in the instant appeal.

“1. On the basis of facts and in the circumstances of the case, the assessee prays to condone the delay of 75 days in filing the present appeal. The appeal fees were paid within 60 days, but the physical submission of Appeal Memorandum could not be filed due lockdown on account of Covid-19.

2. On the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals)- 3, Pune, is not justified in confirming the addition of Rs 66,83,383/- on account of alleged discrepancy between the amounts on which TDS deducted as shown in 26AS form on the web site of Income Tax department and turnover / income shown by the Appellant in its audited annual accounts.

3. On the basis of facts and in the circumstances of the case and as per law, the lower authorities have erred in considering receipts as per AS26 as Gross Receipts of the assessee thereby ignoring the method of accounting followed by the assessee. Such addition is arbitrary and without any basis.

4. On the basis of facts and in the circumstances of the case and as per law, the lower authorities have erred in law as well as in fact in making the addition of Rs. 66,83,383/- being "gross receipt" as such received by the appellant and since only profit element in the same can be subjected to tax, the entire addition of gross receipts is contrary to law and without jurisdiction. The addition is uncalled for hence needs to be deleted.

5. The appellant craves leave to add, alter, omit or substitute any of the grounds at the time of hearing of the appeal.”

Netsurf Entertainment LLP,

Mr. Desai could hardly rebut the clinching fact at the outset that the instant appeal doesn’t require any detailed adjudication on our part since assessee’s sole substantive grievance herein i.e. correctness of both the learned lower authorities action adding the amount in issue of Rs.66,83,383/- on account of difference between TDS figures shown in form 26AS and its book; requires more a factual reconciliation of the corresponding facts at the Assessing Officer’s end only. That being the case, we direct him to re-adjudicate and verify all the necessary facts afresh in consequential proceeding after affording adequate opportunity(ies) of hearing to the taxpayer. Ordered accordingly.

Delay of 74 days in filing of the instant appeal instituted on 09.06.2020 is condoned since falling in covid-19 pandemic outbreak period.

This assessee’s appeal is allowed for statistical purposes in above terms.

Order pronounced in the Open Court on this 11th day of August, 2022.

NETSURF ENTERTAINMENT LLP,PUNE vs. INCOME-TAX OFFICER, WARD 2(2), PUNE

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