Unexplained investment u/s. 69B of the Income Tax Act

The Income Tax Appellate Tribunal allowed an appeal by M/s. Chinmay Agricultural Housing, overturning an addition of Rs. 1,27,44,095 made under Section 69B for unexplained investment. The Tribunal found that the mistake was not in the assessee's financial statements but in the tax audit report, which had incorrectly stated the opening balance of the partner's capital account. A reconciliation statement and an affidavit from the tax auditor supported this finding.

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C‘ BENCH MUMBAI
BEFORE: SHRI VIKAS AWASTHY, JUDICIAL MEMBER
&
SHRI M.BALAGANESH, ACCOUNTANT MEMBER
ITA No.6253/Mum/2017 (Assessment Year :2012-13)

M/s. Chinmay Agricultural Housing C/o. Reena Acharekar,

1st Floor, Prof. J.L. Shirsekar Marg, Govt. Colony,

Nr. Chetna College, Next to BKC, Bandra (E) Mumbai – 400 051

PAN/GIR No.AAGFC09736K

vs

ITO-21(1)(3) 106,

Piramal Chambers Lalbaug,

Mumbai – 400 012

Assessee by Shri Tarun Ghia
Revenue by Ms. Shreekala Pardeshi
Date of Hearing 09/08/2021
Date of Pronouncement 30/08/2021

O R D E R

The first issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the addition made in the sum of Rs.1,27,44,095/- u/s.69B as unexplained investment in the facts and circumstances of the instant case.

2. At the outset, we find that there is absolutely no mistake in the financial statements of the assessee i.e. audited balance sheet for the year ended 31/03/2012. The mistake apparently had happened only in the tax audit report filed for the A.Y.2012-13 wherein the opening balance of partner’s capital account had been wrongly reported by the tax Auditor

3. We find that reconciliation statement submitted by the assessee before the lower authorities had been conveniently ignored by both the lower authorities, which had prompted the Chartered Accountant to file an affidavit before us. As stated supra, we would like to reiterate that there is absolutely no mistake in the financial statements of the assessee firm. The mistake had crept only in the tax audit report while reporting the opening balance figure which fact is also reasoned out in the affidavit of the Tax Auditor.

4. In the result, appeal of the assessee is allowed. Order pronounced on 30/08/2021 by way of proper mentioning in the notice board.

Please find attached the enclosed file for the full judgement