IN INCOME TAX APPELLATE TRIBUNAL BENCH, CHENNAI, [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER] . I.T.A.No.924 Mds 2016 Assessment year : 2007-08 Shri R. Ramesh Vs. Income Tax Officer C-3, Ansari Apartments Non-Corporate Ward 2(3) 7 30 Madley Road Chennai T. Nagar, Chennai 600 017 [PAN AIMPR 1927 R] ( Appellant) ( Respondent) Appellant by : Shri G. Baskar, Advocate Respondent by : Shri Shiva Srinivas, JCIT Date of Hearing : 19-09-2016 Date of Pronouncement : 23-09-2016 ORDER PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER This appeal of assessee is directed against order of Commissioner of Income-tax (Appeals)-2, Chennai, dated 29.2.2016 for assessment year 2007-08. 2. only issue arises for consideration in this appeal is addition of `19,98,262 - made by Assessing Officer. 2 I.T.A. No.924 16 3. assessment was completed in this case by order u s 143(3)of Act dated 31 12 2009 assessing total income at `29,46,169 -. Assessing Officer made addition of `19,98,262 - due to difference in TDS receipts in Form 16 and receipts admitted in returned income. appeal is instituted against impugned addition made by Assessing Officer in assessment order. All grounds of appeal are related to addition made by Assessing Officer on above issue. assessee went in appeal before CIT(A) and CIT(A) confirmed addition holding that assessee failed to explain transaction. Hence appeal filed by assessee before us. 4. During hearing, Ld.AR submitted that asseessee has received gross receipts of `1,12,19,558 - and admitted same in return of income. However, assessee also received TDS receipts for amount of `.1,32,17,820 - and payer has deducted TDS on total receipts. difference amount of `.19,98,262 - were explained to be advances received from payer and shown as advances received. During assessment proceedings Assessing Officer has called for reconciliation which was submitted before him. Assessing Officer has called for books of accounts and assessee could not produce books of accounts since assessee adopted 3 I.T.A. No.924 16 estimation of income as per section 44AD of Act in subsequent year. Before Ld. CIT(A), assessee has submitted proof regarding filing of return of income admitting said receipts as income in subsequent assessment year. CIT(A) has called for remand report and Assessing Officer submitted remand report stating that assessee has not produced books of accounts for A.Y.2008-09 with intention to curtail tax payment for A.Y 2007-08. CIT(A) confirmed addition holding that assessee has failed to discharge onus cast up on him and failed to produce evidence to verify genuineness of transaction. Further assessee also placed alternative plea before CIT(A) stating that entire receipts cannot be assessed as income and requested for estimation of income. alternative plea also rejected by CIT(A) and dismissed appeal. AR vehemently argued that CIT(A) has committed error in considering that advances do not form part of income since expenditure related to advances was not accounted by assessee. Further, ld.A.R argued that CIT(A) also committed error in considering alternative plea. 5. On other hand, ld.DR argued that assessee has failed to furnish evidence regarding admission of 4 I.T.A. No.924 16 income in subsequent year and did not produce books of accounts before Assessing Officer during assessment and remand proceedings, therefore, Assessing Officer has rightly made addition. CIT(A) confirmed addition since transaction was not properly explained and held that with intention to evade tax assessee admitted receipt in subsequent A.Y. ld.DR also invited our attention to Section 198 of Income tax Act. ld. DR vehemently supported orders of lower authorities. 6. We have heard rival submissions and perused material placed before us. assessee submitted TDS certificate disclosing payments of `1,32,17,820 - and admitted gross receipts of `1,12,19,558 - and there was difference of `19,98,262 -as per Form 26AS and TDS certificate. Assessing Officer has asked for explanation and assessee has explained it as advances received. Assessing Officer has asked for evidence in form of books of accounts of subsequent A.Y and return of income, but aaseessee failed to produce same. books of accounts could not be produced since assessee has adopted estimation of income as per section 44AD of Act and did not maintain books of accounts. return could not be furnished for subsequent A.Y i.e A.Y 2008-09 because return was not filed 5 I.T.A. No.924 16 by time assessment was completed. assessee has furnished return of income and produced evidence before CIT(A), but CIT(A) confirmed addition holding that assessee has made attempt to reduce taxes by shifting receipt to A.Y.2008-09. Both CIT(A) and Assessing Officer were of opinion that assessee has booked entire expenditure relating to A.Y.2007-08 and alternate plea to estimate income was also rejected. assessee explained that difference amount of `19,98,262 - represented advances received but not income relating to A.Y.2007-08. assessee has admitted income in A.Y.2008-09 and produced necessary evidence. When assessee is following mercantile system of accounting receipts may overlap for different A.Y. since income has to be admitted as per system of accounting. assessee has claimed difference as advances and Assessing Officer has not proved that difference amount of receipts was accrued as income for relevant A.Y under consideration. Assessing Officer solely made addition relying on Form26AS which is not correct approach, since deductor has to deduct TDS on entire payments including advances as per provisions of TDS. Therefore, difference needs to be explained with reconciliation statement which assessee has 6 I.T.A. No.924 16 complied. Assessing Officer has not given any finding to controvert claim of assessee to prove that receipts do not represent advances by making necessary enquiries. Similarly Assessing Officer has not made out case that expenditure relating to advances were accounted for and claimed in A.Y.2007-08. Therefore, we are of considered opinion that there is no case for making addition and set aside orders of lower authorities and delete addition. 7. In result, appeal of assessee is allowed. Order pronounced in open court on 23rd September, 2016, at Chennai. Sd - Sd - (N.R.S. GANESAN) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 23rd September, 2016 RD Copy to: 1. Appellant 4. CIT 2. Respondent 5. DR 3. CIT(A) 6. GF R. Ramesh v. Income-tax Officer, Non-Corporate Ward 2(3), Chennai