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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal o f the assessee is dir ected against the order dated 25.06.2025 of ld. C IT(A)/NFAC, Delhi passe d u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made in assessment order dated 16.03.2024 was confir med and the appeal was dismissed.
Facts in brief as culled out from the order of authorities below are that the applicant is an individual who is partner and director in various fir ms and companies dealing in manufacturing and sale of inverters, batter ies and other components and appellant also provide consultancy services to a company. Appellant filed return income on 30.11.2022, computing total income at Rs.1,09,61,530/-. The retur n was duly accepted vide intimation u/s 143(1) dated 02.12.2022. The case o f the assessee was selected for scrutiny asse ssment vide notice u/s 142(1) dated 02.06.2023. In pursuance of complete scrutiny assessment pr oceedings, a notice u/s 142(1) of the Act was issued fo llowed by show-cause notice dated 25.01.2024 proposing various additions w hich w as replied vide letter dated 01.02.2024. Final Assessment order was passed on 16.03.2024 making addition o f Rs. 2,41 ,750/- on account of differe nce in GST return. It w as observed by the AO that, on perusal of the GSTR, it w as noticed that to tal sales done amounted to Rs.45,40,750/- but on perusal of the IT R, it is noticed that the assessee has admitted 50% of sectio n 194JB receipts of Rs.39,60,000/- as per 26AS which amo unts to Rs.19,80,000/- u/s 44ADA. It w as further observed that whe n Rs.45,40,750/- is taken as turnover, Rs.22,70,375/- i.e. 50 % of the sales as per GST of Rs.45,40,750/- would be the professional income. Hence, the difference of Rs.2,90,375/-was deter mined to be added to the total income of the assessee. Accordingly , the total income was assessed at Rs.1 ,12,51,910/- against the returned income of Rs.1 ,09,61,530/-. T hus, making an addition o f Rs.2,90,375/-.
Aggrieved by the said asse ssment order, the assessee filed appeal before the ld. CIT(A) . The material ground Nos. 2, 2.1 and 3 which related to the ad dition of Rs. 2 ,90,375/-, were dismissed by the ld. CIT(A) vide observation made in para 6.3 of the impug ned order extracted below as under:
“6 .3. Gr ound no. 2, 2.1 & 3 are related to addition of Rs.2,90,375/- as inc ome from c onsult anc y busi ness not disclosed by the appellant. Gr ound no. 2 & 2.1 are rela ted to appellant’s cont ention that the addition m ade by Ld. AO was bad i n law as AO fai led to c onsi der rental income i n GST turnov er. In Ground no. 3 appellant s tated tha t GS TR -1 t urnove r of Rs. 45,40,750/- was i ncor rectly considered by AO whereas correct gross rec eipt reported in GSTR -1 by the appellant was Rs. 42,01,750/-. Appellant filed copy of a nnual GS TR-1 for FY 2021-22 duri ng the cour se appellate proceeding. Appellant furt her argued that total consult ancy receipt was Rs. 39,60,000/- for year and rental income was Rs. 2,41,750/- total of both was reported i n GSTR -3B as Rs. 42,01,750/-. Repl y submit ted by the appella nt i n suppo rt of hi s mai n ground of appeal was perused and considered. It was observ ed t hat appel lant has s ubmitted same ar gument along with GSTR -1 Copy and GSTR - 3B Copy befor e Ld. AO i n r esponse t o show caus e notice dat ed: 25.01.2024. AO has consider ed app ellant’s reply and accepted i t also by dropping proposal of ot her additi ons as raised in s how cause noti ce. AO has not considered appellant ’s reply in respec t of addition form consultancy i nco me of Rs. 2 ,90,375/- and disc uss this issue in para 7 .4 (page no. 23 to 25) of t he Ass essme nt Order. AO has stated t hat he has r eceived i nformation from Insight Data which was coll ect ed from t he GST ret urns of other parties, who has d eclared the amount in their GST Return as co nsult anc y payme nt made to appellant duri ng t he year A Y 2022-23. Ld. AO observed tha t appell ant r eceived t otal cons ul tancy payment from 12 parties tot alling Rs. 45,40,750/- i n which he has rec eiv ed Rs. 44,7 7,500/- from a company OKA YA P ower Pvt. Ltd. havi ng PAN no. AADCA7106P. This information was co nfronted to appel lant through s how cause but appellant has not gi ven cogent r eply to Ld. AO’s questi on. Ld. AO the refore observed that assessee’s submissi on was no t acceptable and added Rs. 2,90,375/-only as 50% of 5 ,80,750/- u/s 44ADA (Rs. 45,40,750-39,60,000). Appellant submitted similar re ply in appellate proceeding al so and submi tted same d ocume nt whic h was already consider ed by the Ld. AO the ref ore, it appears t hat appellant has not hi ng to add in s upport of his argument and appellant has no o ther doc ument to rely upon. Appellant failed to explai n how rental i nco me of Rs. 2,41,750/- can be a part o f cons ultancy r eceipt shown i n GSTR-1. Furt her, appellant has not explain that AO has taken t otal consultancy rec eipt from the GSTR -1 Retur n of 12 different perso ns and concluded that GSTR consultancy turno ver declared by appellant is i ncorrect. Out of 12 pe rso ns appellant rec eived consultancy fee of Rs. 44,77,500/- fro m OKA YA Power Pv t. Ltd. and Rs. 63,250/- from other 11 parti es but appellant has not furnished any evidence against the AO’s fi ndi ng. Appellant failed to furnish a ny ki nd of ce rtificat e from these 12 parti es. Therefore, appellant submission can’t be acc ept ed on meri t. Additi on made by AO is upheld. He nce, Ground of Appeal no. 2, 2.1 & 3 are dismissed.”
Aggrieved by the dismissal of the appeal on that acco unt, the assessee is in appeal before us and has raised the fo llow ing grounds of appeal:
“1 . That on the facts and in the circumstanc es of t he case, t he disallowanc e and/OR deni al of claims and/OR relie f, impositi on of tax and i nterest with r eferenc e thereto, the quantificati on of tax liability, has been grossly unj us tifie d, erroneo us and unsust ai nabl e and nec essary directi on may be given to the (‘Ld. AO ’) to give appr opriat e relief i n accordance with law.
2.That on the facts and in the circumstanc es of t he case, the order passed by Ld. AO is illegal, perver se and bad i n law. 2.1 That the Ld. AO has erred i n iss uing notice u/s 143(2 ) of the Ac t witho ut complyi ng to the CBD T Instructi ons whi ch are bi ndi ng in nature and henc e rend eri ng the enti re ass ess ment pr oce edi ng u/s 143(3) of the Ac t is void ab initio.
3.That on the facts and in the circumstanc es of t he case, the L d. A O has grossly erred in not c onsi dering rent al inc ome in comparison with GST turnov er. 3.1 That on the fact s and in the circ umstanc es of the cas e, the Ld. AO has gr ossly er red in c onside ri ng wr ong amount of GST tur nover as Rs .45,40,750/- i nst ead of Rs. 42,01,750/-.
4.That on the facts and in the circumstanc es of t he case, t he L d. A O has gr ossly erred i n l evyi ng fees u/s 234F of t he Act.
5.That on the facts and circ umst anc es o f t he case, appellant shoul d be allowed consequential relief for inte rest levied u/s 234Bof the Act. 6. That the appellant craves t o add, ame nd, m odify, res cind, suppleme nt, OR alt er any of the gro unds s tated here -in-above, either befor e O R at the time of heari ng of this appeal.”
On perusal of the ground, we have noticed that the ground No. 3 is the material ground pertaining to the addition of Rs.2,90,375/- subject matter of the appeal. O ther grounds are the consequential grounds w ith regard to the interest u/s 234F of the Act.
We have heard the ld. AR and the ld. DR. The ld. AR at the very outset submitted that the ld. AO has gr ossly erred in considering wrong amount of GST turnover as Rs.45,40,750/-instead of Rs.42,01,750/-. It was further argued that the ld. CIT(A) has failed to consider the said ano maly and witho ut appreciat ing the submissions made by the assessee/appellant has confirmed the said addition made by the AO witho ut considering the material/evidence on the ground that appellant has not furnished any evidence against the AO's finding. The ld. AR therefore submitted that in view of the finding of the ld. CIT(A) that the appellant has failed to furnish any evidence against the AO' s finding and has not furnished any kind of certificate from 12 parties, there fore, an opportunity be given to the asse ssee to file the necessary details before the ld. AO in the larger interest of justice.
The ld. DR has left it to the discretion of the court of the Tribunal to consider the said submissions and has raised no objectio n to the restoring the matter to the file of the AO for deciding afresh.
We have considered the rival submissions. We have noticed that it was claimed by the assessee before the ld. CIT(A) that the amount of gross receipts as per GSTR-1 considered by the ld. AO amo unting to Rs. 45,40,750/- was not correct because the gross receipts reported in GSTR-1 by appellant is Rs. 42,01,750/-. It is further submitted that the copy of the annual G STR-1 for financial year 2021 -22 relevant to asse ssment year 2022-23 hig hlighting the said amount was attached as an Annexure-2. It is further stated that the ld. AO made the addition without considering the fact that in return of income filed by the appellant, the rental receipts were also shown under income from house property in return of income amounting to Rs.2,41 ,750/- which was also part of the GST gross rece ipts. It was therefore submitted that the AO has erroneously made the addition of Rs.2 ,41,750/- pertaining to the rental income consider ing the receipts shown under the income from ho use property and wrongly co nsidering receipts as per GSTR-1. In view of the above facts, the ld. AO is directed to consider all the aspects while deciding the matter afresh and also affording an opportunity to the assessee to furnish all necessary evidence alongwith certificate from 12 parties from whom appellant has received consultancy fee of Rs.44,77,500/- from OKAYA Pow er Pvt. Ltd. and Rs.63,250/-from other 11 parties. Hence the end of justice shall be met in case the matter is restored to the file o f the Assessing Officer for deciding the issue afresh by affording an effective opportunity of hearing and considering the submissions to be made by the appellant/assessee. The asse ssee/appellant is also directed to make the necessary submissions/ detailed material before the Assessing Officer within the period of 6 0 days of this order.
In the result, the appeal of the assessee is allowed for statistical purposes.