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

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.

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.

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.

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.”

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.