Kailash Dayanand Punjabi Vs ITO (ITAT Pune)
Journal Entries ≠ Undisclosed Income- ITAT Gives Fresh Life to ₹51 Lakh Additions
The Pune ITAT granted relief to a poultry farm owner by holding that additions merely arising from journal entries, reclassification of investments, or old property advances require proper verification before being taxed as unexplained income. The Tribunal restored the matter back to the AO after admitting crucial additional evidence.
The assessee was subjected to additions of ₹5 lakh u/s 68 and ₹45.98 lakh u/s 69. The AO treated a long-pending property advance and certain credits to the capital account as unexplained income and unrecorded investment, mainly because the transactions appeared unusual and were reflected belatedly in the books.
Before the Tribunal, the assessee produced additional evidence showing that the payments for the Pune flat were actually made through banking channels between 2009 and 2017, and that the disputed entries were merely accounting adjustments and reclassification entries rather than fresh unexplained investments. The assessee also explained that the ₹5 lakh entry related to an old advance given in 2006 which was later adjusted through journal entries with the developer.
The ITAT observed that these additional evidences went to the root of the matter and therefore deserved proper examination. Accepting the plea in the interest of justice, the Tribunal admitted the fresh evidences and restored the issues to the AO for fresh adjudication after granting due opportunity to the assessee.
FULL TEXT OF THE ORDER OF ITAT PUNE
