Incorrect tax audit report entry cannot sustain an addition once the revised report corrects the factual mistake.

An addition made under section 143(1) on the basis of an incorrect entry in the tax audit report could not be sustained where the report was subsequently revised to correct the factual mistake. The addition had been maintained by the lower authorities by relying on the original erroneous reporting, without giving effect to the corrected factual position. Once the revised audit report was on record, the foundation for the adjustment disappeared and the addition was directed to be deleted in favour of the assessee.

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Issues: Whether the addition made under section 143(1) of the Income-tax Act, 1961, on the basis of an incorrect entry in the tax audit report, could be sustained after the report was revised to correct the factual mistake.

Analysis: The disputed amount had been reflected wrongly in the original tax audit report, and the revised report corrected the mistake. The addition sustained by the lower authorities was founded on the erroneous original reporting, without giving effect to the corrected factual position.

Conclusion: The addition could not be sustained and was directed to be deleted, in favour of the assessee.

Ratio Decidendi: An addition resting solely on an inadvertent factual error in the tax audit report cannot survive once the error is duly corrected and the revised factual position is brought on record.

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