I.T.O WD - 7(2),KOLKATA, KOLKATA vs. MR ADEEL HASAN, KOLKATA

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ITA 1937/KOL/2013Status: DisposedITAT Kolkata03 June 2016AY 2009-104 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the deletion of the addition, agreeing that the revised balance sheet, supported by auditor confirmation and evidence of payment, correctly identified the amount as sundry creditors and not a lease liability. The Tribunal found no infirmity in the CIT(A)'s order.

What were the facts?

The Assessing Officer (AO) added Rs. 46,30,564/- to the assessee's income as unexplained cash credit, treating a lease asset liability shown in the balance sheet as bogus. The assessee later submitted a revised balance sheet showing this amount as sundry creditors, not a lease liability.

What were the issues?

Whether a liability shown in the original balance sheet, later corrected in a revised balance sheet, can be treated as unexplained cash credit. The validity of accepting revised audited accounts to correct a perceived error.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA

Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

1.

This appeal by the Revenue is arising out of order of Commissioner of Income Tax (Appeals)-VIII, Kolkata in appeal No.346/CIT(A)-VIII/Kol/11-12 dated 26.03.2013. Assessment was framed by ITO Ward-7(2), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 28.12.2011 for assessment year 2009-10.

2.

Only issue raised by Revenue is that Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs.46,30,564/- on account of leased assets liability u/s. 68 of the Act.

3.

Briefly stated facts are that assessee is an individual and engaged in the business of printing and publishing. During the course of assessment proceedings, AO found that assessee has shown a liability for lease assets under head “current liabilities ITO Wd-7(2) Kol. v. Mr. Adeel Hasan Page 2 and provision” in its balance-sheet for an amount of Rs 46,30,564/-. At the time of hearing assessee filed revised balance-sheet where such liability was not recorded and AO sought clarification from the assessee for the above said difference of Rs.46,30,564/-. But the assessee failed to substantiate its claim for the such alleged difference. Therefore, AO treated it as bogus liability and taxed as unexplained cash credit u/s. 68 of the Act.

4.

Aggrieved, assessee preferred an appeal before Ld. CIT(A). Before Ld. CIT(A) the assessee submitted that the balance sheet filed at the time of assessment proceedings contained some wrong figure about the liability for lease assets due to some software problem and some erroneous figure was incorporated in its balance- sheet. Subsequently, assessee asked the auditor to re-verify the account and requested to give revised audited accounts. As a result the figure of Rs.46,30,564/- which was originally shown as liability for lease asset in actuality it was not the liability for lease assets but this was the figure of sundry creditors. Considering this, Ld. CIT(A) deleted the addition by observing as under:- “….In its original audited accounts the assessee had shown a liability of Rs.46,30,564.00 for leased assets. However this was found to be bogus in the assessment proceedings. In the appellate proceedings the assessee has submitted erroneous figures were incorporated in the balance sheet. The assessee has filed revised audited accounts. The Auditors were issued notice and have confirmed the revised audited accounts. However the confirmation of the auditor is not sufficient to explain the revised accounts. The assessee’s explanation that due to software glitch the incorrect figures got wrongly reflected as the audited accounts and in fact there was no liability for leased assets is an afterthought. Though the assessee has demonstrated that the entire payment of Rs.46,30,564.00 was made by the account payee cheques ad no amount was due this itself does not explain the revision of the accounts. The assessee produced the revised accounts and the same were examined. This could have been done in the assessment stage but was not done, the department misled to complete assessment o the audited accounts filed by the assessee and then the assessee turned back to submit that the audited accounts submitted by them along with the return was incorrect. The assessee has relied on the decision of he Calcutta High Court to support its stand that there is no doctrine of estoppels is applicable against the statute. If a particular income is either liable to tax under the taxing statue or it is not. This is in principle correct however the assessee has failed to explain how this applies to its case. Thus the revised accounts should not be accepted and considered and the addition of Rs.46,30,564.00 should be confirmed.”

“I find that the appellant had filed revised audited accounts. The Assessing Officer had verified the same and also confirmed the same from auditor. The ITO Wd-7(2) Kol. v. Mr. Adeel Hasan Page 3 revised accounts show no liability for the machine. The appellant had demonstrated that payment for machinery was duly paid and only a sum of Rs.1,80,000/- was due on such account. No defect in the revised accounts has been found. The Calcutta High Court in the case of Modern Malleables Ltd. Vs CIT dated 29 April, 2011, ITA 112 of 2004 has held that even if there was wrong ent5ries in the books of account of the assessee it is the duty of the Income-tax authority to find out the real nature of the transactions behind the said entry and to pass appropriate order of assessment in accordance with law. Merely because an assessee as made a wrong or even fictitious entry in the accounts, such fact cannot be a ground for accepting such wrong or fictitious entry. It is well-known that the doctrine of estoppels is not applicable against the statue. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppels or any other equitable doctrine. Equity is out of place in tax law; a particular income is either liable to tax under the taxing statute or if it is not, the Income Tax Officer has no power to impose tax on the said income. The ratio of the Calcutta High Court I squarely applicable to the case of the appellant. The appellant had filed revised audited accounts and in the said accounts the said liability of Rs.46,30,564/- of leased assets is not shown and in the remand proceedings no defect has been found in the same. In view of the said facts I have no hesitation in deleting the addition of Rs.45,30,564/-.”

Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us.

Shri Miraj D Shah, Ld. Authorized Representative appearing on behalf of assessee and Shri Niloy Baran Som, Ld. Departmental Representative appearing on behalf of Revenue.

5.

Before us Ld. DR submitted that assessee failed to substantiate the difference between the liability shown under head “lease asset liability” at the time of original assessment proceedings in the original balance sheet and the revised balance-sheet. Therefore the revised balance sheet should not be accepted for granting the relief to the assessee. He vehemently relied on the order of AO and left the issue to the discretion of the Bench.

On the other hand, Ld. AR filed both original balance-sheet and revised balance-sheet duly audited by Chartered Accountant and submitted that there was some typographical error in the figure of the balance sheet. Ld. AR submitted the copy of invoice for the lease assets purchased which is placed on record. The ld. AR also submitted that all the payments for the purchase of lease asset were paid through banking channel and in ITO Wd-7(2) Kol. v. Mr. Adeel Hasan Page 4 support of its claim the ledger copy of the supplier also placed. The ld. AR relied on the order of ld. CIT(A).

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