Addition made during survey for difference construction expenses between tally accounting package and manual register deleted by ITAT
ABCAUS Case Law Citation
ABCAUS 3477 (2021) (04) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition made on the basis of survey conducted u/s 133A of the Income Tax Act, 1961 (the Act).
The appellant assessee was a partnership firm and derived income from the business of civil construction.
A survey u/s 133A of the Act was conducted at the business premises of the assessee during the relevant assessment year.
During the course of the survey, a register and vouchers were found in which expenditure on wages and labour payment and other construction related expenditure were recorded.
However, in the Tally accounting package the expenses on the said heads were substantially more than the said register.
A Statement of the partner of the assessee firm was recorded, wherein, he could not explain the non-availability of the vouchers for the excess expenditure as per the tally package in the computer and agreed to pay advance tax treating the excess as unaccounted expenditure.
However, in the return of income, the assessee claimed refund of the advance tax paid. The Assessing Officer required the assessee to explain as to why the excess expenditure should not be added to the total income of the assessee due non-availability of bills and vouchers.
In reply, the assessee submitted that during the course of survey, the partner, under coercion and duress, had agreed to pay advance tax.
The AO rejected the contention of the assessee and made the impugned addition. The CIT(A) confirmed the addition.
The assessee contended the survey team gave the figure which was in variation between the amount shown in the tally package and register maintained manually. It was stated that the amount recorded in the computer was automatically added to the total running amount whereas in the manual maintained register, the entries were done peacefully by considering all the available papers and the information on the table of the accountant.
Thus, it was said that but when the total amount claimed by the assessee on both the heads at the end of the year is much higher than the amount shown in the computer and maintained register manually, then no addition could be made in the hands of the assessee by taking difference between the tally shown in P&L account and items shown in the manually maintained register. Hence, obviously, it would amount to making double addition in the hands of the assessee.
The Tribunal noted that undisputedly in the audited books of account and financial profit and loss account the assessee has incurred expenses towards wages and labour charges, which was much higher than the amount shown by the computer tally and manually maintained register on the date of survey.
The Tribunal stated that it is a fact of knowledge of a man or ordinary prudent that entries done in the computer tally gives an element of fact to the total amount on respective heads immediately whereas when the same entries are made in the register that takes much time and space for maintained by person/accountant.
The Tribunal stated it is also obvious fact that the survey team comes suddenly without prior notice, therefore, the difference between the amount shown by the computer tally and manually maintained register is also obvious and consequent of circumstances in which these two have been maintained.
The Tribunal observed that in the instant case, the factual position was that in the profit and loss account, the assessee had claimed much higher amount on both the heads and this fact had not been controverted.
The Tribunal opined that if the AO is allowed to make addition on the basis of differential amount shown by the computer tally and manually maintained register on the date of survey, then it would certainly amount to double addition in the hands of the assessee when it was clearly discernible that the assessee had shown and claimed higher amount on both the heads.
Accordingly, the Tribunal held that the addition made was unjustified and deleted the same. The appeal was allowed in the favour of the assessee.
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