Case Law Details
Hasmukhrai Amrutlal Jobanputra Vs ITO (ITAT Rajkot)
This detailed analysis aims to provide insights into the legal intricacies of the case, emphasizing the need for a robust assessment process, reliance on verified financial statements, and the alignment of penalties with sustained quantum additions.
Admittedly, there was the difference in the amount of cash balance shown in the cash book viz a viz audited financial statement as on 31 March 2011 amounting to ₹ 3,12,325.00 which was treated by the authorities below as unexplained/unaccounted income of the assessee.
Before we dwell upon the issue raised by the assessee, it is pertinent to appreciate whether the difference in the cash balance between the cash book viz a viz audited financial statement as on 31 March 2011 gives rise to the taxable income of the assessee. To our understanding, merely observing the difference in the manner as discussed above does not give any authority to draw an inference that there was unaccounted/undisclosed income of the assessee. The income cannot be determined merely on the basis of documents/papers until and unless it is corroborated by the tangible materials. There can be numerous reasons for the difference in the cash balance as discussed above but that difference does not lead to draw any adverse inference against the assessee. For example, there was the advance received by the assessee in cash which was entered in the cash book but the same was not incorporated in the balance sheet. Such advance received cannot be categorized as income of the assessee. Likewise there can be receipt of money from the debtors which can again not be categorized as income of the assessee. In nutshell, we are not in agreement with the basis adopted by the authorities below to draw an inference that there was unaccounted income/undisclosed income of the assessee until and unless it is based on some tangible materials. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
Penalty under section 271(1)(c cannot survive with respect to additions which have been deleted
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