Tribunal allows appeal, directs deletion under Section 68 emphasizing financial record verification

The Tribunal allowed the appeal, directing the deletion of the addition made under section 68 of the Act. The judgment emphasized the significance of verifying financial records and recognizing inadvertent mistakes during return filing, resulting in a favorable outcome for the assessee.

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Issues:
1. Addition made by Assessing Officer and confirmed by CIT(A) under section 68 of the Act.
2. Justification of discrepancies in the return of income by the assessee.

Issue 1: Addition made under section 68 of the Act
The appeal was filed by the assessee challenging the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2013-14. The Assessing Officer observed discrepancies in the balance sheet, particularly regarding the capital introduced during the year. Despite the assessee filing a revised return to rectify the errors, the Assessing Officer treated the amount as unexplained income under section 68 of the Act and added it to the total income. The CIT(A) upheld this addition, considering the explanations provided by the assessee as insufficient to justify the discrepancies.

Issue 2: Justification of discrepancies in the return of income
The assessee claimed that the discrepancies in the return of income were due to mistakes made by the tax practitioner while filing the return. An affidavit was submitted stating that the errors were unintentional and that the assessee, being a person of limited means, could not have introduced such high capital. The CIT(A) was not convinced by these submissions, considering them an attempt to mislead the Revenue. However, the Tribunal found that similar mistakes were made by the tax practitioner in other cases as well, where the Assessing Officer accepted the real income after cross-verification. The Tribunal noted that the errors were inadvertent and directed the Assessing Officer to delete the addition made under section 68 of the Act, as the discrepancies were not reflective of the actual capital and investments of the assessee.

In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the deletion of the addition made under section 68 of the Act. The judgment highlighted the importance of verifying financial records and considering inadvertent mistakes made during the filing of returns, ultimately leading to a favorable decision for the assessee.

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