Unsigned Balance Sheets are not admissible as Evidence: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT), has held that the unsigned balance sheets by Auditor or the Director of Company cannot be treated as reliable evidence.

The Assessing Officer, during the assessment proceedings, noted that in the balance-sheet of the assessee-Company, as on 31/03/2011, the amount of general reserve was increased by ₹ 2,02,27,914/- by transferring the amount from the ‘trade payables’ to general reserve. He also found that an advance of ₹ 45,00,000/- (which was offered as an advance in earlier years by the assessee) was adjusted with the ‘trade payables’ resulting into a net increase of ₹ 2,02,27,914/- to the general reserve.

While concluding the assessment proceedings, the AO treated the above amount as income in terms of section 41(1) of the Act.

In support of their contentions, the assessee-Company submitted its balance sheet for various assessment years.

The Tribunal noted that all these are unsigned balance sheets, i.e., not signed either by the Auditor or by the Director of the company. The assessee has also filed a financial statement for the financial year 2010-11 relevant to assessment at 2011-12 but the notes to accounts have not been appended.

“We find that various balance-sheets filed by the assessee are neither signed by the Auditor nor by the Director and, therefore, the same are not reliable. The assessee has failed to produce any confirmation to the effect that the assessee received payment from M/s. Omax as an interest-free unsecured loan. The assessee has neither filed an agreement for obtaining an unsecured loan from said party. In the facts and circumstances of the case and in the substantial interest of the justice, we feel it appropriate to restore this matter to the file of the Assessing Officer with the direction to the assessee to produce following documents and direction to the Assessing Officer to carry out inquiries deemed fit and then decide whether the remission of the liability in question is liable to be income under Section 41(1) of the Income Tax Act,” the Tribunal said.