When reversal of transactions in books is certified by Chartered Accountant onus is on Revenue to prove it otherwise: Madras High Court [Read Order]

The Madras High Court held that when reversal of transactions in books is certified by Chartered Accountant ( CA ) onus is on Revenue to prove it otherwise if they are not willing to accept certificate or evidence.

The Petitioner, Tvl.Madura Coats (P) Ltd. had entered into certain sale transactions, some of them were reversed and they had erroneously shown the same in their sales return.

There was also variation in value as set out in the export documents and what was found in their books of account. The number of export transactions made by the assessee tallies. The quantum of goods as mentioned in the documents also tallies.  The dollar value as mentioned in the bill of lading and in the books of account also tallies. For the subsequent years, the petitioner gave an explanation that the difference was on account of the fluctuation in the foreign exchange and that this is quite normal in the export business.

The explanation of Petitioner for concerned year not accepted by Respondent on the ground that documents like Bank Reconciliation Statement had not been furnished for variation.

The learned counsel appearing for the petitioner points out that for the subsequent years, the petitioner gave an explanation that the difference was on account of the fluctuation in the foreign exchange and that this is quite normal in the export business.

The single judge bench of Justice G.R. Swaminathan said that when the assessing authorities could accept the explanation of the assessee on variance for the subsequent years, there is no reason for them to take a different stand in the instant year.

As regards sales return, the court noted that the petitioner has enclosed the certificate issued by the Chartered Accountants along with their  explanation.  The Chartered Accountants have certified that the transactions in question were executed by the assessee and that they had been reversed in their books of account.  In other words, the transactions became unfructified sales.

“When the petitioners deny the sales in question, they cannot do anything more.  If the assessing authority is of the view that this is a false statement, the onus is on the authority.  The petitioner cannot be expected to prove the negative,” the Court said.