Consultancy Professional Faced Income Tax Addition Over GST Turnover Mismatch; ITAT Orders Fresh Review, Noting Rental Income might be Mistaken as Professional Receipts

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has provided relief to taxpayer Arush Gupta by sending his case back to the AO for fresh examination.

The dispute was with regard to Assessment Year 2022-23. Mr. Gupta filed income tax return declaring an aggregate income of Rs.1, 09,61,530. His GST turnover was checked against the professional receipts declared in his income tax return by the Income Tax Department and discrepancies were noticed.

As per the Assessing Officer, the consultancy receipt as per the GST records was Rs.45,40,750 whereas Mr.Gupta had declared professional receipt of Rs.39,60,000 under the presumptive taxation scheme of Section 44ADA. Aa a result, AO made addition of Rs 2,90,375.

Mr. Gupta challenged the addition before the CIT(A). He argued that the AO had wrongly taken the GST turnover as Rs . 45 ,40 ,750 instead of Rs . 42 ,01 ,750. He also contended that rental income of Rs. 2 ,41 ,750, which was already shown under the head “Income from House Property,” had been included in the GST turnover and was therefore incorrectly treated as professional income. However, the CIT(A) upheld the AO’s action.

The appellate authority observed that the assessee had not produced sufficient evidence to rebut the findings of the AO. It was also noted that information obtained from GST records of various parties indicated consultancy payments totaling Rs. 45 ,40 ,750 to the assessee, including Rs . 44 ,77 ,500 received from Okaya Power Pvt. Ltd.

The assessee before the ITAT reiterated that the GST turnover was wrongly taken and the rental income was wrongly included in the computation of professional receipts. The assessee requested another opportunity to furnish supporting documents and confirmations from the parties involved.

The Departmental Representative did not object to the matter being restored to the AO for fresh verification. After considering the facts, the Tribunal found some strength in the contention of the assessee that some aspects require proper verification.

The Bench said the alleged GST turnover and inclusion of the rent income of Rs. 2,41,750 had to be thoroughly looked into. Accordingly, the ITAT set aside the issue and remanded the matter to the Assessing Officer for fresh adjudication.

The AO has been directed to provide the assessee with a proper opportunity of hearing and consider all supporting evidence, including confirmations from the 12 parties from whom consultancy fees were allegedly received. The Tribunal also directed the assessee to submit all necessary documents and explanations before the AO within 60 days of the order.