Rajeev Surana Vs ITO (ITAT Mumbai)
Typo or Tax Evasion? ITAT Says ‘Clerical Mistake’, Not Cash Credit- When a Balance-Sheet Blunder Became a ₹7.86 Cr Addition- ITAT Mumbai Rescues Assessee from ‘Clerical Error’- Addition u/s 68 for Clerical Mistake in Return Remanded for Re-Examination-
Assessee, an individual engaged in proprietary business & partner in several firms, filed return showing proprietor’s capital at ₹9.18 crores for AY 2018-19 as against ₹1.23 crores in AY 2017-18. AO observed this steep rise & treated ₹7.86 crores as unexplained cash credit u/s 68.
Assessee explained that the increase was a clerical error- the overdrawn balances from partnership firms (totalling ₹8.25 crores) were wrongly clubbed under proprietor’s capital instead of being shown as liabilities. Confirmation letters & reconciliations from the firms were furnished.
However, AO rejected the explanation & made addition u/s 68, observing that the revised claim was an afterthought & no revised return u/s 139(5) was filed. CIT(A) upheld AO’s action, holding that the explanation lacked verifiable evidence (no PANs, ITRs, or bank trails of creditors) & that Assessee failed to discharge the onus under s.68.
Before Tribunal, Assessee reiterated that total sources of funds increased only marginally from ₹11.23 cr (AY 2017-18) to ₹12.21 cr (AY 2018-19); the apparent rise in proprietor’s capital arose purely due to regrouping error between capital & unsecured loans.
