The Mumbai bench of the Income Tax Appellate Tribunal recently confirmed the deletion of addition made by the assessing officer on account of unaccounted sales on the basis of diary entries.
While quashing the assessment order, the tribunal observed that it is not justifiable since it was levied merely on the basis of the diary entries which is not a valid proof withosut any corroborative evidence.
Coming to the facts of the case, in consequent to a search conducted on the place of the assessee, the assessing officer passed an order making addition on account of unaccounted sales on the basis of entries in the diary seized during the search action.On appeal, the Commissioner of Income Tax (Appeals) deleted the addition on ground that there was no valid evidence to prove that the assessee has suppressed sales.Therefore, the Revenue impugned the order before the Appellate Tribunal.
The Tribunal upheld the order of the first appellate authority by observing that each and every entry in the diary seized during the course of search proceedings could not be treated as unaccounted sales especially when the assessee has duly explained each and every entry in the diary as estimates worked out with respect to various customers’’ queries by the assessee as he is in the business of painting, art work and interior decoration work. In the absence of any other materials found by the search team which corroborate the entries to be unaccounted sales, the Tribunal confirmed the deletion of addition made in the assessment order.
Read the full text of the order below.
