CPC added income because Form 26AS shows more receipts than my 44AD turnover. Can they do that?
Not on the 26AS entry alone. Form 26AS is a third-party information source and is subject to error; here the deductor had reported the TDS against the wrong PAN, so the figure evidenced no receipt at all. An adjustment made without verifying the underlying transaction was deleted.
Decided by the ITAT (Income Tax Appellate Tribunal, Jaipur Bench (members not named on the pages consulted)) on 2025-08-06, reported as ITAT Jaipur, order dated 6 August 2025 (ITA number not stated on the sources consulted). It bears on section 44AD, section 143(1), section 139 of the Income Tax Act 1961, in Assessment & Scrutiny and Evidence & Burden of Proof matters.
CPC adjustments on a 26AS mismatch against a presumptive return are common and are usually issued without anyone looking behind the database entry. This order gives you the framing: the onus is not discharged by pointing at the database, and a s.143(1) prima facie adjustment is a narrow jurisdiction that cannot be used to resolve a disputed question of fact. What carried the case was proof of the deductor's error plus the fact that no TDS credit had been claimed on the disputed amount.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee carried on a lighting and decoration business and filed his return for assessment year 2017-18 on 20 March 2018 under the presumptive scheme in s.44AD, declaring turnover of Rs. 9,01,460 and income of Rs. 3,46,310. Processing the return under s.143(1), CPC Bengaluru raised an adjustment of Rs. 5,97,156 on the footing that receipts reflected in Form 26AS against s.194C exceeded the turnover declared in Schedule BP. The intimation recorded an 'inconsistency' between the 44AD figure and the 26AS receipts. The mismatch in fact arose because Urban Improvement Trust, Kota, had reported the TDS against the wrong PAN in its TDS return. The assessee produced evidence of the rectification and had claimed no TDS credit for the disputed amount.
The addition was deleted. Form 26AS is only a third-party information source and is subject to error; an addition made solely on the strength of a 26AS entry, without independent verification of the underlying facts, cannot be sustained.
The entries in Form 26AS (and, on the same logic, in the AIS) are generated by deductors and reporting entities, not by the assessee, and are only as accurate as the reporting. Where the deductor has quoted a wrong PAN, the resulting figure is not evidence of any receipt by the assessee at all. The onus on the Revenue is not discharged by pointing to the database; the Assessing Officer or CPC must verify the underlying transaction before treating the difference as income. The assessee's conduct corroborated his case — he claimed no TDS credit referable to the disputed receipts and produced proof that the deductor had rectified the reporting. A prima facie adjustment under s.143(1) is in any event a narrow jurisdiction and cannot be used to resolve a factual dispute of this kind. The addition therefore failed.
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Handle my notice → Ask a CA on WhatsAppNot on the 26AS entry alone. Form 26AS is a third-party information source and is subject to error; here the deductor had reported the TDS against the wrong PAN, so the figure evidenced no receipt at all. An adjustment made without verifying the underlying transaction was deleted. This was decided by the ITAT (Income Tax Appellate Tribunal, Jaipur Bench (members not named on the pages consulted)) and bears on section 44AD, section 143(1), section 139 of the Income Tax Act 1961. It is reported as ITAT Jaipur, order dated 6 August 2025 (ITA number not stated on the sources consulted). CPC adjustments on a 26AS mismatch against a presumptive return are common and are usually issued without anyone looking behind the database entry. This order gives you the framing: the onus is not discharged by pointing at the database, and a s.143(1) prima facie adjustment is a narrow jurisdiction that cannot be used to resolve a disputed question of fact. What carried the case was proof of the deductor's error plus the fact that no TDS credit had been claimed on the disputed amount. If it applies to you, the first step is this: Trace the mismatch to the deductor and get the TDS return corrected, then file the proof, which is what actually decided this case.
The assessee carried on a lighting and decoration business and filed his return for assessment year 2017-18 on 20 March 2018 under the presumptive scheme in s.44AD, declaring turnover of Rs. 9,01,460 and income of Rs. 3,46,310. Processing the return under s.143(1), CPC Bengaluru raised an adjustment of Rs. 5,97,156 on the footing that receipts reflected in Form 26AS against s.194C exceeded the turnover declared in Schedule BP. The intimation recorded an 'inconsistency' between the 44AD figure and the 26AS receipts. The mismatch in fact arose because Urban Improvement Trust, Kota, had reported the TDS against the wrong PAN in its TDS return. The assessee produced evidence of the rectification and had claimed no TDS credit for the disputed amount. The matter was decided on 2025-08-06 by the ITAT (Income Tax Appellate Tribunal, Jaipur Bench (members not named on the pages consulted)). On those facts the ITAT held as follows. The addition was deleted. Form 26AS is only a third-party information source and is subject to error; an addition made solely on the strength of a 26AS entry, without independent verification of the underlying facts, cannot be sustained.
The entries in Form 26AS (and, on the same logic, in the AIS) are generated by deductors and reporting entities, not by the assessee, and are only as accurate as the reporting. Where the deductor has quoted a wrong PAN, the resulting figure is not evidence of any receipt by the assessee at all. The onus on the Revenue is not discharged by pointing to the database; the Assessing Officer or CPC must verify the underlying transaction before treating the difference as income. The assessee's conduct corroborated his case — he claimed no TDS credit referable to the disputed receipts and produced proof that the deductor had rectified the reporting. A prima facie adjustment under s.143(1) is in any event a narrow jurisdiction and cannot be used to resolve a factual dispute of this kind. The addition therefore failed.
It was decided by the ITAT on 2025-08-06 and is reported as ITAT Jaipur, order dated 6 August 2025 (ITA number not stated on the sources consulted). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 44AD, section 143(1), section 139, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The addition was deleted. Form 26AS is only a third-party information source and is subject to error; an addition made solely on the strength of a 26AS entry, without independent verification of the underlying facts, cannot be sustained. It arises in Assessment & Scrutiny and Evidence & Burden of Proof matters, on section 44AD, section 143(1), section 139 of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, Jaipur Bench (members not named on the pages consulted). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show that no TDS credit was claimed against the disputed receipts, since that conduct corroborates that the money was never yours. Object specifically that a contested question of fact cannot be settled through a prima facie adjustment under s.143(1).
Still good law. A separate search for later treatment found no appeal or reversal reported, and found the same principle applied in parallel 2025 decisions (including an ITAT Ahmedabad ruling that a Form 26AS mismatch alone is insufficient for an addition and a taxscan-reported decision that additions cannot stand where receipts recorded in books exceed the 26AS figure). That finding was checked against a published source, which is linked on this page, on 2026-08-25. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order could not be found in a subscription case-law database: three searches were run there - the full party name (many records, none this order), the name with 'Kota' added, and the deductor 'Urban Improvement Trust Kota' with the assessee's surname - and none returned it. There is no reporter citation to search on. So the appeal number, the bench members and the date remain unconfirmed against the order, and no citator check is possible; nothing in this entry is the Tribunal's own language. The sentence formerly presented as a quotation - that Form 26AS is not gospel truth - comes from a commentary site's rendering of the order and has not been matched to any paragraph of it, so do not attribute it to the Bench. More importantly, the research found no High Court authority on the evidentiary weight of an AIS entry as distinct from Form 26AS, so do not present the AIS extension of this reasoning as settled; it is an inference from the same logic, not a decided point. The ITA number, the bench members and the assessment-year-wise figures beyond those recited were not confirmed. No High Court authority squarely on the evidentiary weight of an AIS entry (as distinct from Form 26AS) was located; the e-Verification Scheme 2021 notified under s.135A was found but no judicial decision testing it. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The addition was deleted. Form 26AS is only a third-party information source and is subject to error; an addition made solely on the strength of a 26AS entry, without independent verification of the underlying facts, cannot be sustained.
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