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2022 (8) TMI 513 - AT - Income TaxAccrual of income - Difference between the receipts as per books and form No.26AS as revenue receipt liable to tax in this year - difference as being on account of the assessee not booking the relevant invoices in its books as sales either for the reason that it had reflected the same was WIP or had booked the same in the subsequent year, and had also explained the reason for doing so, and substantiated the same also with the copy of ledger account of the parties - CIT-A has rejected the explanation, primarily for the reason that since the assessee followed the accrual method of accounting, and the job was completed and bill raised by the assessee, the corresponding sales should have been booked in the impugned year only - HELD THAT:- Even as per the accrual system of accounting, the income is said to have been accrued only when the other party accepts its liability with respect to the bills raised on it. Until then no income is said to be accrued. Even going by the logic of the ld.CIT(A) we find that the assessee had rightly booked income on account of bills which he had demonstrated, were accepted by the CONCORD Biotech Ltd. in the subsequent year. This, income accrued to the assessee in the subsequent year only when the bills were passed and accepted by the CONCORD Biotech Ltd.. With regard to these bills, therefore, the assessee had rightly booked the amounts in the subsequent year, and no addition was called for to be made to the income of the assessee in respect of these bills in the impugned year. As for remaining amounts relating both the Apple Wood Estate Ltd. and CONCORD Biotech Ltd. which the assessee had explained that it had booked this amount in its WIP and not as sales of the year,we find that it had substantiated its explanation by producing copy of its ledger account reflecting the same. We see no reason to reject this explanation of the assessee. Nothing has been pointed out by the Revenue as to why the assessee was wrong in booking these amounts, as its WIP. In view of the same, the addition on account of this difference pertaining to Apple Wood Estate Ltd. and CONCORD Biotech Ltd. is also not sustainable. In any case had reflected sales from these parties from Apple Wood Estate Ltd. and CONCORD Biotech Ltd.. Difference noted was to the extent of Rs.3.31 lakhs in the case of Apple Wood Estate Ltd. which is not even one percent of the total sales booked from the Apple Wood Estate Ltd. and Rs.21.93 lakhs in the case of CONCORD Biotech Ltd. which is approximately 20% of the sales. Assessee has shown turnover of Rs.10.09 crores, declaring GP at 9.16% and Net Profit of 3% during the year. Having disclosed such huge turnover, and disclosed appropriate net profit and having duly explained the difference in the turnover, as reflected in its books and in Form No.26AS there is no reason to believe that the assessee had wrongly not disclosed sales on these very small amount of Rs.3.00 lakhs and Rs.21 lakhs (approximately) from the aforesaid two parties. In view of the above, we direct the deletion of addition on account of difference in sales as reflected in the books of the assessee, and that in Form 26AS The ground of appeal of the assessee is allowed.
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