AJIT CHOKSHI,MUMBAI vs. DCIT RG 8(1), MUMBAI

In brief, the relevant facts are that the assessee is an individual deriving income from salaries, being Director of CPL Switches Pvt. Ltd. and income from other sources. In the course of assessment proceedings, assessee was called upon to furnish Balance sheet as on 31/3/2008 and in response assessee furnished a balance sheet, wherein Capital account was shown on the liabilities side at Rs.2,01,59,792/-. It is noticed by the Assessing Officer that subsequently assessee filed another balance sheet as on 31/3/2008, wherein capital account was shown at Rs.2,07,59,338/-, hereby showing a difference of Rs.5,59,546/- . The Assessing Officer noted that in the absence of any reconciliation, the difference was liable to be assessed as unexplained income, accordingly, he added the difference of Rs.5,99,546/- to the returned income. This action of the Assessing Officer has since been affirmed by the CIT(A), against which the assessee is in further appeal before us.

Before us, the short plea raised by the Ld. Representative for the assessee is to the effect that the CIT(A) has rejected the pleas of the assessee on insufficient reasons. It was pointed out that assessee had furnished reconciliation between the difference in the capital account balances in the two balance sheets. However, CIT(A) did not give cognisance of such reconciliation for a feeble reason that it was a new evidence. Ld. Representative for the assessee pointed out that the difference was reconciled and except to the extent of Rs.64,922/-, the difference did not affect the income statement and, therefore, the same should have been accepted. It is also pointed out that assessee had explained that the difference had arisen on account of posting errors committed by the accountant of the assessee and that the entire reconciliation was verifiable from record. In this context, our attention was drawn to the Paper Book wherein is placed a copy of such reconciliation and the notes thereon at pages 2 to 5 of the Paper Book. Ld. Representative for the assessee pointed out that assessee would not have any grievance, even if, the matter is restored back to the Assessing Officer for appropriate verification of the reconciliation.

On the other hand, Ld. Departmental Representative pointed out that the reconciliation statement was not furnished before the Assessing Officer and in that light the CIT(A) considered it to be an additional evidence.

We have considered the rival submissions. The material on record shows that during the course of assessment proceedings, assessee furnished two sets of balance sheets as on 31/3/2008, wherein there were differences on various accounts. Be that as it may, the only point for our consideration is the difference in the Capital account appearing in the two balance sheets. Such difference was to the tune of Rs.5,99,547/-, which has been considered as an unexplained income. In this context, assessee has conceded in the Grounds of appeal itself that a sum of Rs.64,922/- is assessable as income. For the balance of the amount, it has been contended that the difference does not have an impact on the assessable income as the same is on account of posting errors. It is pointed out that certain entries had been wrongly made in the books of account which have been corrected in the second balance sheet filed during the course of assessment proceedings. In this context, we have also perused the material which was before the CIT(A), wherein assessee has canvassed that the difference, except Rs.64,922/-, does not impact the income assessable. So, however, in the absence of any verification of the reconciliation furnished by the assessee itself, we deem it fit and proper to restore the matter to the file of the Assessing Officer. Accordingly, the matter is set-aside to the file of Assessing Officer for verification of the reconciliation furnished by the assessee and thereafter pass an order afresh on this limited aspect. Needless to mention, the Assessing Officer shall provide a reasonable opportunity of being heard to the assessee before passing an order afresh on the aforesaid limited aspect.

In the result, appeal of the assessee is allowed for statistical purposes, as above.