Assessment–Addition to income–Difference between incomes disclosed in TDS certificate and declared in return.

Assessment--Addition to income--Difference between incomes disclosed in TDS certificate and declared in return

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Assessment–Addition to income–Difference between incomes disclosed in TDS certificate and declared in return arising due to cash system of accounting followed by assessee.

Facts:

Assessee was a Senior Advocate in High Court. AO alleged that the TDS certificates showed higher gross receipts then what was shown in the return of income and profit and loss account of assessee. Accordingly, AO made addition because of the difference in the gross receipt between the two documents. Assessee assailed the addition contending that AO based on TDS information, assessed the corresponding professional income, on accrual basis, in the relevant year. However, assessee had offered professional receipts for tax on cash/receipt basis as he followed cash system of accounting, therefore, charging of certain professional income on accrual basis amounted to double taxation to the extent of the sum offered on receipt basis in subsequent year.

Held:

Assessee had already offered the income on gross turnover following cash system of accounting. According to the method of accounting if the tax deduction at source has been made by the client on or before 31st March but payment was not received till that date, tax deducted at source was included in the income by assessee. Therefore, according to the method of accounting followed by the assessee, assessing the corresponding professional income, on accrual basis based on TDS information, in the relevant year was unjustified. Thus, AO had made the addition under the incorrect understanding of the accounting treatment and the same was unjustified


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