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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
This appeal by the assessee is directed against order dated 15.06.2023 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, Delhi (in short Ld. CIT(A)) for assessment year 2016-17, raised following grounds:- 1. On the facts and in the circumstances of the case and in law and Hon’ble CIT(A) erred in confirming the addition of 84,06,734/- made by the Ld. AO u/s 68 of the Act without appreciating that assessee was not maintaining books of account which is a pre requisite condition for invoking account which is a pre requisite condition for invoking account which is a pre requisite condition for invoking provisions of section 68 of the Act. provisions of section 68 of the Act.
2. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) erred in wrongly upholding the addition law the Hon'ble CIT(A) erred in wrongly upholding the addition law the Hon'ble CIT(A) erred in wrongly upholding the addition of Rs. 84,06,734/ of Rs. 84,06,734/- made the Ld AO without appreciating the made the Ld AO without appreciating the fact that the excess exempt income claimed in the return of fact that the excess exempt income claimed in the return of fact that the excess exempt income claimed in the return of income was due to income was due to inadvertent mistake of the accountant and inadvertent mistake of the accountant and the reason assigned for doing so are wrong and contrary to the reason assigned for doing so are wrong and contrary to the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under. the provision of Income Tax Act and rules made there under. the provision of Income Tax Act and rules made there under.
3. Your appellant craves leave to add to, amend alter or Your appellant craves leave to add to, amend alter or Your appellant craves leave to add to, amend alter or delete any of the above grounds of appea delete any of the above grounds of appeal
on or before the l on or before the date of hearing. date of hearing.
2. Briefly stated facts of Briefly stated facts of the case are that the assessee the case are that the assessee filed his return of income on 25.07.2016 declaring total income on 25.07.2016 declaring total income on 25.07.2016 declaring total income at Rs. 17,02,174/-. The return of income filed by the assessee was he return of income filed by the assessee was he return of income filed by the assessee was selected for scrutiny and the stat scrutiny and the statutory notices under the Income utory notices under the Income Tax Act, 1961(In short ‘the Tax Act, 1961(In short ‘the Act’) were issued and complied and complied with. During scrutiny proceedings uring scrutiny proceedings, the Assessing Officer Assessing Officer observed that assessee in the return of income had sessee in the return of income had shown exempted shown exempted share of profit from the partnership firm from the partnership firms at Rs. 97,17,502/ at Rs. 97,17,502/-, however on verification under 133 (6) of the Act from those partnership firms, it verification under 133 (6) of the Act from those partnership firm verification under 133 (6) of the Act from those partnership firm was found that the share of profit from those partnership firm was found that the share of profit from those partnership firm was found that the share of profit from those partnership firm was only of Rs. 13,11,128/ only of Rs. 13,11,128/-, which was exempted in the hands of the in the hands of the assessee. On being pointed n being pointed out, the assessee explained explained that it was a typographical error by the clerical staff of its tax consultant and typographical error by the clerical staff of its tax consultant and typographical error by the clerical staff of its tax consultant and actual share of profit actual share of profit was of Rs. 13,11,128/- only. The contention of he contention of the assessee was not accepted by the Assessing O s not accepted by the Assessing O s not accepted by the Assessing Officer and he treated the difference amount treated the difference amount of Rs. ( 97,17,502 – 13,11,128) = Rs. 13,11,128) = Rs. 84,06,374/- as income u/s 68 of the Act observing as under: as income u/s 68 of the Act observing as under: as income u/s 68 of the Act observing as under:- 2.4 The reply of the assessee is considered and not acceptable. 2.4 The reply of the assessee is considered and not acceptable. 2.4 The reply of the assessee is considered and not acceptable. The assessee has revised the entire share of profits from the The assessee has revised the entire share of profits from the The assessee has revised the entire share of profits from the above firms. Typographical error may occur in typing the figures above firms. Typographical error may occur in typing the figures above firms. Typographical error may occur in typing the figures i.e. escaping or incorporating digits and thereby not reworking i.e. escaping or incorporating digits and thereby not reworking i.e. escaping or incorporating digits and thereby not reworking the entire amounts of share of profits The assessee has revised the entire amounts of share of profits The assessee has revised the entire amounts of share of profits The assessee has revised the share of profits only after the notices u/s 133(6) were issued the share of profits only after the notices u/s 133(6) were is the share of profits only after the notices u/s 133(6) were is and reply received from the partnership firms. The figures of and reply received from the partnership firms. The figures of and reply received from the partnership firms. The figures of share of profit from the firms which are not subject to Audit have share of profit from the firms which are not subject to Audit have share of profit from the firms which are not subject to Audit have been substantially decreased. The assessee states that firms at been substantially decreased. The assessee states that firms at been substantially decreased. The assessee states that firms at Sr. No. 2,3 & 4 are not subject to Audit and the returns are filed Sr. No. 2,3 & 4 are not subject to Audit and the returns a Sr. No. 2,3 & 4 are not subject to Audit and the returns a u/s 44AD and hence no details have been provided except copy u/s 44AD and hence no details have been provided except copy u/s 44AD and hence no details have been provided except copy of return of income and partnership deeds. of return of income and partnership deeds. 2.5 From the above facts, it 2.5 clear that the assessee in the 2.5 From the above facts, it 2.5 clear that the assessee in the 2.5 From the above facts, it 2.5 clear that the assessee in the return of income has claimed higher exempt income and has return of income has claimed higher exempt income and has return of income has claimed higher exempt income and has increased his capita increased his capital. Such capital may be used for the purpose l. Such capital may be used for the purpose of investments, giving loans or advances etc in future for of investments, giving loans or advances etc in future for of investments, giving loans or advances etc in future for generating his incom Hence, the very purpose of showing higher generating his incom Hence, the very purpose of showing higher generating his incom Hence, the very purpose of showing higher exempt income in the return of income from the partnership firms exempt income in the return of income from the partnership firms exempt income in the return of income from the partnership firms is to increase his capita is to increase his capital to introduce unaccounted money. l to introduce unaccounted money. 2.6 In view of the above facts, it is stated that the assessee has 2.6 In view of the above facts, it is stated that the assessee has 2.6 In view of the above facts, it is stated that the assessee has shown exempt profit of 97,17,502/ shown exempt profit of 97,17,502/- in the return of income and in the return of income and during the assessment proceedings furnished exempt profit of during the assessment proceedings furnished exempt profit of during the assessment proceedings furnished exempt profit of Rs. 13,11,128/ Rs. 13,11,128/- only and thus the profit is reduced by Rs. he profit is reduced by Rs. 80,06,374/-. The asses has not explained the excess exemption . The asses has not explained the excess exemption . The asses has not explained the excess exemption claimed in the return of income with support documents. Hence, claimed in the return of income with support documents. Hence, claimed in the return of income with support documents. Hence, an amount of Rs. 84,06,374/ an amount of Rs. 84,06,374/- claimed on account of excess claimed on account of excess exemption 10(2A) of the Act remains unexplain exemption 10(2A) of the Act remains unexplained and therefore ed and therefore denied and treated as income u/s 6 the Income Tax Act, 1961. denied and treated as income u/s 6 the Income Tax Act, 1961. denied and treated as income u/s 6 the Income Tax Act, 1961.
On further appeal the Ld.CIT(A) also sustained the addition On further appeal the Ld.CIT(A) also sustained the addition On further appeal the Ld.CIT(A) also sustained the addition observing as under:- 5.3 The contention Appellant Grounds of appeal the statement The contention Appellant Grounds of appeal the statement The contention Appellant Grounds of appeal the statement facts submissions the appellant a facts submissions the appellant and the case laws relied upon nd the case laws relied upon and the order have been considered The appellant's explanation and the order have been considered The appellant's explanation and the order have been considered The appellant's explanation that was a typographical of the clerical staff his tax consultant that was a typographical of the clerical staff his tax consultant that was a typographical of the clerical staff his tax consultant not convincing Typographical can be considered human error at not convincing Typographical can be considered human error at not convincing Typographical can be considered human error at best one such mistake; it cannot be best one such mistake; it cannot be done systematically, as in done systematically, as in the instant case, where exempt income has been increased the instant case, where exempt income has been increased the instant case, where exempt income has been increased substantially. It is difficult to comprehend how such a big substantially. It is difficult to comprehend how such a big substantially. It is difficult to comprehend how such a big difference in figures reported could go unnoticed. Also, the difference in figures reported could go unnoticed. Also, the difference in figures reported could go unnoticed. Also, the appellant revised the share of profits only after t appellant revised the share of profits only after the notices u/s he notices u/s 133(6) were issued and reply received from the partnership 133(6) were issued and reply received from the partnership 133(6) were issued and reply received from the partnership firms. Moreover, the figures of share of profit from the three firms firms. Moreover, the figures of share of profit from the three firms firms. Moreover, the figures of share of profit from the three firms which were not subject to Audit have been substantially which were not subject to Audit have been substantially which were not subject to Audit have been substantially decreased, subsequently by the appellant It is correct that had decreased, subsequently by the appellant It is correct th decreased, subsequently by the appellant It is correct th the incorrect figures remained undetected, the appellant would the incorrect figures remained undetected, the appellant would the incorrect figures remained undetected, the appellant would have claimed higher exempt income in the return of income an have claimed higher exempt income in the return of income an have claimed higher exempt income in the return of income an consequently, increased his capital without paying taxes. consequently, increased his capital without paying taxes. consequently, increased his capital without paying taxes. Therefore, find no reason to interfere with the AO's observation Therefore, find no reason to interfere with the AO's observation Therefore, find no reason to interfere with the AO's observation that the amount of Rs. 84,06,374/ at the amount of Rs. 84,06,374/- claimed on account of excess claimed on account of excess exemption u/s 10(2A) of the Act remained unexplained In view exemption u/s 10(2A) of the Act remained unexplained In view exemption u/s 10(2A) of the Act remained unexplained In view the above discussion, the appeal on ground Nos. 1 & 2 are the above discussion, the appeal on ground Nos. 1 & 2 are the above discussion, the appeal on ground Nos. 1 & 2 are dismissed.
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. relevant material on record. The issue in dispute The issue in dispute is whether the error in claiming the share of profit from partnership firms at higher error in claiming the share of profit from partnership firm error in claiming the share of profit from partnership firm value in the return of income filed as compare in the return of income filed as compared to the actual share to the actual share of profit from the partnership firm from the partnership firms, results into unexplained cash nexplained cash credit u/s 68 of the Act. A credit u/s 68 of the Act. According to the Assessing O to the Assessing Officer, this difference is taxable in the hands of the assessee for re taxable in the hands of the assessee for re taxable in the hands of the assessee for reason that the assessee might utilize utilize this income in the garb of exempted share of garb of exempted share of profit from the partnership firm profit from the partnership firm. But the assessee admitted the ut the assessee admitted the same as inadvertent typographical error committed by the staff of same as inadvertent typographical error committed by the staff of same as inadvertent typographical error committed by the staff of the tax consultant and immediately rectified the share of the the tax consultant and immediately rectified the share of the the tax consultant and immediately rectified the share of the exempted income earned earned by the assessee. We agree with contention by the assessee. We agree with contention of the Ld. Counsel for for the assessee of possibility of human error in see of possibility of human error in typing the share of profit at higher value as compared to the actual typing the share of profit at higher value as compare typing the share of profit at higher value as compare value because for the reason that there was no tax liability the reason that there was no tax liability the reason that there was no tax liability in view of share of the profit of the profit being exempted and therefore the mistake and therefore the mistake went unnoticed till pointed out by the Assessing O ll pointed out by the Assessing Officer fficer. Evidently, assessee has not taken taken any benefit of said mistake in the financial mistake in the financial statements and no where it is shown where it is shown by the Assessing Officer that by the Assessing Officer that as credited in the books of account and further said amount was credited in the books of account and further as credited in the books of account and further shown to have been have been utilized for any investment. The apprehension he apprehension of the Ld. Assessing Officer of the Ld. Assessing Officer are based only the presumption and no are based only the presumption and no such any wrong doing such any wrong doing has been noticed leading to evasion of tax. I has been noticed leading to evasion of tax. In such circumstances such circumstances, the contention of the assessee that t the contention of the assessee that the mistake occurred due to typographical due to typographical error, cannot be rejected. In cannot be rejected. In view of the aforesaid view of the aforesaid, we set aside the orders of lower authorities of lower authorities and the grounds raised by the assessee raised by the assessee are allowed. allowed.
In the result, appeal of the assessee is allowed. In the result, appeal of the assessee is allowed. In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on unced in the open Court on 09/11 /11/2023.