Recently, the Hon’ble Income-tax Appellate Tribunal (‘ITAT’) bench - Jaipur in the case of M/s Shri Jeen Mata Buildcon Pvt. Ltd vs. the ITO has passed a verdict on 8 March 2022 in favour of the assessee and deleted the addition made based on mere reflection of higher income in Form 26AS of the assessee.

 

In this case, the Hon’ble ITAT has held that mere reliance on the income in (reflected on higher side than income as per books) cannot be a reason to make additions to the returned income offered by the assessee where income is recognized based on accounting standard followed by the assessee and adequate reconciliation / explanation of differences in income as per books vis-à-vis Form 26AS has been duly submitted by the assessee during the course of assessment proceedings.

 

The aforesaid ruling would be relevant in case of taxpayers who are engaged in the business of provision of goods/ performance of services under contractual obligations wherein there might be timing difference between recognition of revenue by recipient and corresponding recognition of expense by the payer. It may also be relevant in cases where advance payment is received for goods / services supplied by the assessee.

 

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