ITAT Quashes Rs 2.93 Crore Income Tax Addition Arising from GST Return and Book-Purchase Difference

The ITAT Hyderabad allowed the PVV Infra Limited’s appeal for statistical purposes by deleting the Rs 2.93 crore addition made on the grounds of the difference in purchases between the books of account of the assessee and the GST returns and remanding the case back to the tax department. The tribunal held that the additional evidence submitted by the assessee was important to be properly considered in relation to the present case.

The assessee’s case was selected for complete scrutiny under the e-Assessment Scheme; thereafter, a notice was issued under Section 143(2) of the Income Tax Act, 1961. During the assessment proceedings, the tax authorities had noted a difference in purchases as reflected by the assessee in the books of account and those reported in the GST returns. The assessee was shown the cause behind this difference and also furnished all supporting evidence.

However, in the absence of satisfactory evidence, the tax authorities made this difference of Rs 2.93 crore as an addition to the assessee’s income and completed the assessment under section 143(3) r.w.s. 144B, declaring the assessee’s total income at Rs 3.09 crore. When approached, the Commissioner of Income Tax (Appeals) [CIT(A)] sustained the impugned addition on the grounds of insufficient supporting evidence.

The aggrieved assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Hyderabad, challenging the CIT(A)’s decision of upholding the Rs 2.93 crore addition. The assessee also furnished certain additional evidence in support of its case in the form of ledger accounts, a purchase register, and a credit note register.

During the personal hearing, the assessee claimed that it had received a debit note of Rs 2.93 crore from a party, namely CTIL E Housing Private Limited. However, due to an unintentional mistake, instead of debiting the said amount to the purchase account, the same was credited to the assessee’s sales account.

When the tribunal analysed the case, it observed that the additional documents furnished by the assessee were important in relation to the present case; hence, they are necessary for proper adjudication of the dispute. Consequently, in the interest of justice and noting the unintentional mistake made by the assessee, the tribunal decided to remand the case back to the tax authorities for fresh consideration. Accordingly, the impugned addition of Rs 2.93 crore was deleted.