The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has delivered an important decision in Arush Gupta v. Income Tax Officer, dealing with the reconciliation of GST turnover and professional receipts disclosed under the Income-tax Act. The Tribunal examined whether an addition made under Section 44ADA solely on the basis of GST-related information was sustainable when the assessee claimed that the GST turnover also included rental income and that the turnover adopted by the Assessing Officer was incorrect.
In the present case, the Assessing Officer compared the turnover reflected through GST data with the professional receipts declared by the assessee under Section 44ADA and made an addition after finding a difference between the two figures. The assessee contended that the Assessing Officer had adopted an incorrect GST turnover and had failed to exclude rental income that had already been offered under the head “Income from House Property.” The Commissioner (Appeals) upheld the addition on the ground that sufficient supporting evidence had not been produced.
Before the Tribunal, the assessee submitted that the annual GSTR-1 reflected a lower turnover than that considered by the Assessing Officer and argued that the GST figures included rental receipts. It was further requested that an opportunity be granted to produce supporting documents and certificates from the parties who had made consultancy payments. The Revenue did not object to restoration of the matter for fresh examination.
The ITAT observed that the controversy required proper verification of the GST returns, rental receipts and consultancy income before arriving at any conclusion. Since the reconciliation exercise had not been adequately examined and the assessee sought to furnish further documentary evidence, the Tribunal restored the matter to the Assessing Officer for fresh adjudication after providing an effective opportunity of hearing. The assessee was also directed to submit all necessary evidence, including supporting certificates from the concerned parties, within the stipulated period. Accordingly, the appeal was allowed for statistical purposes.
The ruling highlights that differences between GST returns and Income-tax records cannot automatically justify additions without a proper reconciliation of the underlying transactions. Where an assessee demonstrates that GST turnover includes receipts assessable under different heads of income or disputes the turnover adopted by the tax authorities, the matter requires a detailed factual examination supported by documentary evidence.
Professionals, Chartered Accountants, tax practitioners and businesses should note the importance of maintaining proper reconciliation between GST returns, Form 26AS, books of account and Income-tax returns. The decision also reiterates that where material evidence is capable of resolving factual disputes, the principles of natural justice require that an effective opportunity be provided before sustaining additions.
Key Takeaways
- The ITAT emphasised the need to reconcile GST turnover with Income-tax disclosures before making additions.
- Differences between GST data and ITR figures require factual verification rather than automatic addition.
- Rental income included in GST turnover may require separate consideration where it has already been offered under another head of income.
- Supporting evidence and confirmations from customers or clients can play a crucial role in reconciliation disputes.
- The matter was remanded to the Assessing Officer for fresh examination after granting adequate opportunity to the assessee.