Balance Sheet Sufficient for Income Tax Assessment for S.69, No Supporting Evidence for S.80 Deduction: ITAT Partly Allows Appeal [Read Order]
ITAT partly allows appeal as assessment could be completed with the balance sheet and other documents provided and the claim for deduction cannot be made without supporting evidence.
The Income Tax Appellate Tribunal (ITAT),Hyderabad Bench, held that a balance sheet is sufficient for assessment under Section 69. However, there had been no supporting evidence to claim deduction under Section 80 of the Income Tax Act, 1961.
The facts of the case state that the assessee is in the business of retail sale of liquor and wines in the name of Uma Sangameshwara Wines. The assessee failed to produce the books of accounts, the bills and vouchers in respect of the expenditure claimed. AO estimated income at 3% of the stock put to sale. AO made an addition under Section 69A during the demonetization period to the tune of INR 72,45,860/-.
The assessee, through their counsel, argued that the Assessing Officer (AO) had erred in rejecting the books of account under Section 145(3) of the IT Act without appreciating the facts judiciously. The counsel also argued that after estimation, no other addition can be made by the AO. It was also submitted that the assessee has shown cash in bank as shown in the balance sheet is matching with the closing balance in the bank account of the assessee as on 20.03.2017.
On the other hand, the departmental representative (DR) submitted that the assessee has failed to explain the source of deposit in the bank account during Specified Bank Notes (SBNs).
The CIT(A) confirmed the addition as the assessee could not produce evidence to explain the source of deposit. The tribunal observed that the profit and loss account and the balance sheet reflect the business transactions and ITAT holds that the AO ignored undisputed facts of the sales which is not justified.
The bench, comprising Manjunatha G (Accountant Member) and Vijay Pal Rao (Vice President) deletes the additions made. However, in absence of any documentary evidence in support of the claim of deduction under Section 80C, the tribunal dismissed the ground raised. Conclusively, the appeal is partly allowed.
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