2013 (5) TMI 909 - AT - Income Tax

Addition on account of non reconciliation of AIR information - Held that - We find that the assessee had shown higher income than the income reported in the report received by the AO. It reconciled all the accounts wherever ledger entries were made available to it. Only in one case he could not reconcile the entries. From the RR of the AO it is evident that the facts narrated by the FAA (para 2.2) are correct and based on sound footings. FAA had upheld a portion of addition where assessee had failed to reconcile the figure. In our opinion in these circumstances his order does not suffer from any factual or legal infirmity. Therefore confirming his order we decide Ground against the AO. Disallowance u/s.40(a)(ia) - short deduction of TDS - Held that - DR fairly admitted that issue was decided in favour of the assessee. AR relied upon the order for the earlier year. We find that in the above referred order to which one of us was party Tribunal had held that provisions of section 40(a)(ia) were not applicable in matters of short deduction of TDS. While deciding the issue Tribunal had placed reliance on the decision of M/s. Chandabhoy and Jassobhoy (2011 (7) TMI 956 - ITAT MUMBAI).

Summary

Issues:
1. Addition of amount for non-reconciliation of AIR information.
2. Disallowance under section 40(a)(ia) for short deduction of TDS.

Analysis:

Issue 1: Addition of amount for non-reconciliation of AIR information
The Assessing Officer (AO) added an amount for non-reconciliation of AIR information in the case of the assessee-company engaged in the transport business. The AO directed the assessee to reconcile the receipts in light of information received from AIR, finding a shortfall of a specific amount. The First Appeal Authority (FAA) considered the Remand Report (RR) and found that the assessee had reconciled most figures except for one case. The FAA upheld a portion of the addition and deleted the balance amount. The Appellate Tribunal noted that the assessee had shown higher income than reported in the AIR, reconciled accounts where ledger entries were available, and upheld the FAA's decision. The Tribunal found no factual or legal infirmity in the FAA's order and dismissed the AO's appeal on this ground.

Issue 2: Disallowance under section 40(a)(ia) for short deduction of TDS
The AO disallowed an amount for short deduction of TDS under section 40(a)(ia) after finding a discrepancy in the assessee's TDS details. The FAA referred to a previous ITAT order in the assessee's case, which held that section 40(a)(ia) was not applicable in cases of short TDS deduction. The Appellate Tribunal, in line with the earlier decision, upheld the FAA's order, deciding against the AO on this ground as well. Consequently, the appeal filed by the AO was dismissed, and the orders of the FAA and ITAT were upheld.

In conclusion, the ITAT Mumbai upheld the FAA's decision on both issues, dismissing the AO's appeal and confirming the deletions and disallowances made by the FAA. The judgment was pronounced on 24th May 2013 by the ITAT Mumbai.