Protective addition on capital balance mismatch deleted after substantive reconciliation in the prior year.

Protective addition for assessment year 2014-15 could not be sustained once the related capital balance difference had been examined substantively in assessment year 2013-14 and reconciled. Because the addition for 2014-15 was made only on a protective basis against the opening and closing capital balance mismatch, the later substantive assessment removed the foundation for continuing that addition. The protective additions for assessment year 2014-15 were deleted in favour of the assessee.

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Issues: Whether the protective addition made in the assessment for assessment year 2014-15 survived after the related capital balance issue was examined on substantive basis in the preceding assessment year and reconciled.

Analysis: The addition for assessment year 2014-15 was made only on a protective basis because of the difference between the opening capital balance of that year and the closing balance of the immediately preceding year. The related issue was subsequently examined on substantive basis in the assessment for assessment year 2013-14, and the capital balance stood reconciled. In view of the later substantive assessment, the basis for sustaining the protective addition for assessment year 2014-15 no longer remained available.

Conclusion: The protective additions for assessment year 2014-15 were deleted in favour of the assessee.

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