2017 (6) TMI 826 - AT - Income Tax

Addition on unexplained credit - opening entry to the credit - no supporting evidence was furnished by the assessee - Held that - The whole addition is on the premise that the assessee could not file confirmation from M/s Jade Investment and Leasing Pvt. Ltd. However in para 4(c) of the assessment order there is specific mention that this is a credit from the said party i.e. M/s Jade Investment and Leasing Pvt. Ltd. The assessee produced the books of accounts/audited account before the Assessing Officer to explain the amount. It is evidently clear that the impugned amount is opening balance and even before the Tribunal, the Ld. DR has clearly admitted that even the CIT(A) accepted the explanation of the assessee that this entry was on the basis of evidence at that time and directed the Assessing Officer to delete the addition made in the original assessment order, meaning thereby, the evidence was available during original assessment proceedings, which clearly proves that the amount was in the name of M/s Jade Investment and Leasing Pvt. Ltd. The assessee has duly explained that the opening entry to the credit of M/s Jade Investment and Leasing Pvt. Ltd. is only carried forward balance as on 31/03/1991, which is fortified by the copy of the audited balance sheet of the accounts of the assessee, thus, the opening balance cannot be treated as undisclosed income - Decided in favour of assessee.

Summary

Issues:
Confirmation of addition of opening balance as unexplained credit in the name of M/s Jade Investment and Leasing Pvt. Ltd.

Analysis:
The judgment involves the aggrieved assessee challenging the confirmation of the addition of ?4,15,000 claimed as an opening balance, considered an unexplained credit in the name of M/s Jade Investment and Leasing Pvt. Ltd. The Tribunal's order directed the assessee to provide supporting evidence, which the Assessing Officer rejected despite the assessee's efforts to comply. The Tribunal acknowledged the destruction of the assessee's records due to floods and allowed the assessee another chance to present evidence before the CIT(A) to substantiate the genuineness of the entry. The Tribunal emphasized the assessee's burden to prove the authenticity of entries but granted leniency due to the exceptional circumstances of record loss. Consequently, the CIT(A) was directed to reevaluate the case with the additional evidence provided by the assessee.

The Tribunal considered the peculiar circumstances of the case, where the assessee lost records in floods after the Tribunal's initial order for fresh assessment. Despite the Assessing Officer's rejection of the explanation, the Tribunal found merit in the assessee's claim that the entry was a carried forward balance as per the audited balance sheet, not undisclosed income. The Tribunal referenced previous orders and accepted the assessee's explanation based on available evidence during the original assessment proceedings. Citing legal precedence, the Tribunal allowed the assessee's appeal, emphasizing that the opening balance cannot be treated as undisclosed income. The Tribunal's decision favored the assessee, highlighting the importance of presenting evidence to support claims and the Tribunal's role in ensuring fair assessment proceedings.

In conclusion, the Tribunal's judgment revolved around the assessee's challenge regarding the addition of an opening balance as an unexplained credit. The Tribunal considered the assessee's efforts to comply with previous orders, the impact of record loss due to floods, and the authenticity of the entry based on available evidence. By allowing the assessee another opportunity to present evidence, the Tribunal upheld principles of justice and fairness in assessment proceedings. The decision ultimately favored the assessee, emphasizing the importance of substantiating claims with supporting documentation and legal precedent to ensure a just outcome in tax matters.