The Income Tax Appellate Tribunal (ITAT), Mumbai, held that the differences in the accounting policy followed by the taxpayer and its clients, who have deducted TDS, could explain the TDS Return differential.
The Tribunal consisting of Shri. Mahavir Singh, and Shri. Ramit Kochar clarified this while disposing of the case, TUV India Pvt. Ltd v. DCIT 15(3)(1).
The appellant here is a service provider engaged in the certification work. The assessing officer noted an additional amount in the income of the assessee on account of mismatch of TDS between the books of accounts maintained by the assessee and Form No. 26AS per income tax department database.
The tribunal ruled that the differences in the accounting policy as well wrong mention/punching of the PAN number of the taxpayers by clients while filing TDS returns with the department could reason for the difference. The Tribunal further noted that, “One of the reasons for differential could be that clients have deducted TDS on the gross amount inclusive of service tax while income is reflected by tax-payers exclusive of service tax”.
The Tribunal stressed that since the assessee has no control over the database of the Income-tax department, at best the assessee could do is to offer bonafide explanations for the differential.
The Tribunal ruled that since the lower bodies did not point to any defect in the book or rejected the books of account, and also due to the absence of any cogent incriminating material, it was the duty of the CIT(A)/AO to conduct necessary enquiries to unravel the truth. The court also pointed out that the authorities failed to dislodge/rebut the contentions of the assessee
The tribunal ruled that, “The learned CIT(A)/AO ought to have conducted necessary enquiries to unravel the truth but asking the assessee to do impossible is not warranted”.
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