Nawla Ispat Pvt. Ltd. Vs DCIT (ITAT Delhi)
Undated Trial Balance Entry Cannot Sustain Sections 68 or 69A Addition; Opening Balance Requires Proof of Transaction Year Before Taxation; Third-Party Seized Document Without Transaction Nexus Is Insufficient; ₹2.57 Lakh Addition Based Solely on Opening Balance Deleted: ITAT Delhi
The Delhi ITAT “G” Bench has held that a solitary opening balance appearing in a trial balance seized from a third party cannot be treated as the assessee’s unexplained income without first establishing the date, nature, mode & actual year of the underlying transaction. Even if the entry is assumed to be correct, an opening balance as on 01.04.2018 cannot automatically be taxed in AY 2019-20. The addition of ₹2,57,115, initially made u/s 68 & subsequently sustained u/s 69A, was accordingly deleted.
Facts of the case
The assessee, Nawla Ispat Pvt. Ltd., was engaged in manufacturing M.S. Ingots & M.S. Runner Risers.
For AY 2019-20, the assessee filed its return on 27.09.2019 declaring nil income, though tax was paid under the MAT provisions.
A search & seizure operation u/s 132 was conducted on the premises of the World Window Group on 25.06.2018.
During the search, the Department allegedly found a parallel cash book & trial balance bearing the title “Overseas Commission 04-05”. The document reflected a credit balance of ₹2,57,115 in the name of the assessee.
