TaxTMI 
TaxTMI 
2021 (9) TMI 135
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.... on record. We find that assessee is a partnership firm engaged in the business of developer and builder. The partnership firm deed dated 29/04/2010 has been constituted comprising of the following partners:- 1. Shri Prasadam Realtors Pvt. Ltd., - 50% 2. M/s. Chinmay Agriculture and Housing Pvt. Ltd., - 50% 3.1. The assessee firm filed the return of income for the A.Y.2012-13 on 28/09/2012 declaring total income of Rs. 5,17,530/-. The assessee filed copy of audited financial statements for the year ended 31/03/2012 together with the tax audit report with its annexures before the ld. AO. The assessee was asked to produce its financial statements for the year ended 31/03/2011 together with tax audit reports thereon. From the perusal of the financial statements of 31/03/2011 and 31/03/2012, the ld. AO observed that the partner's balance as appearing in the books of the assessee firm as on 31/03/2011 was different from those adopted in the tax audit report in Form 3CD. Accordingly, the ld. AO proceeded to make an addition of Rs. 1,27,44,095/- being the difference between closing balance and opening balance as unexplained investment u/s.69B of the Act as under:- ....
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.... (iii) If assessing officer want to disallow any amount then he has to go to earlier year and verify earlier year's transaction and pass order in earlier year and not current year. (iv) Opening balance difference has got nothing to do with current year's transaction. (v) The assessing officer has ignored reconciliation statement and full evidences like bank account of Chinmay Agriculture and Housing Pvt Ltd and Shri Prasadam Roaltors Pvt Ltd and other persons which clearly shows that all payments made between assessee and partners were reflecting in bank accounts of each other. This evidence was ignored totally. (vi) Chinmay Agriculture and Housing Pvt Ltd & Shri Prasadam Realtors Pvt Ltd are partners of the assessee firm and all the payments are reflected in bank accounts of both the persons. There is no gain to assessee by showing incorrect opening balance. (vii) Ledger accounts of both the entities were submitted which was totally ignored by the AO. (viii) All evidences like bank statements, ledger account showing confirmation was totally ignored by the AO. (ix) Reconciliation statement submitted for difference wa....
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....ed without altering the other figures of the balance sheet of A.Y.2011-12 and A.Y.2012-13. The ld. CIT(A) also observed that no reconciliation statement or justifiable reason has been presented before him for changes or otherwise in the alteration of figures of the balance sheet. With these observations, he upheld the action of the ld. AO. 3.6. At the outset, we find that there is absolutely no mistake in the financial statements of the assessee i.e. audited balance sheet for the year ended 31/03/2012. The mistake apparently had happened only in the tax audit report filed for the A.Y.2012-13 wherein the opening balance of partner's capital account had been wrongly reported by the tax Auditor. There is absolutely no mistake or discrepancies in the balance sheet of the assessee firm for the year ended 31/03/2012. In fact the opening balance of partner's capital account as on 01/04/2011 and closing balance of partner's capital account as on 31/03/2012 matched paise to paise with the corresponding investment made by the respective partners in the assessee firm. This fact is very much evident from the aforesaid table. We find that an affidavit dated 18/06/2021 has been filed by th....
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....nding that such reconciliation statement was submitted by me nor he has considered the said reconciliation statement. 2. I THEREFORE NOW SPECIFICALLY STATE ON AFFIDAVIT AS FOLLOWS: A. The mismatch in the figures of partners' capital balances in the preceding year balance sheet vis a vis in the tax audit report in the column of preceding year as referred above was due to my mistake as a tax auditor cum chartered accountant. Thereafter, I have revised the relevant Annexure I, Part B of the tax audit report and thereby have corrected the mistake. B. I had submitted revised Annexure 1, Part B of the tax audit report to Ld. AO during the course of remand process. However, both Id. AO as well as Ld. C1T-A have not receded in their finding nor they have considered at all the said revised Annexure. C I had submitted before both the Id. authorities, the reconciliation statement showing by which entries the mismatch had arisen and the balance sheet was revised. However, as both the Id. authorities did not consider the same, therefore, I am once again submitting the same before Hon'ble ITAT and would pray for its due consideration so that the justice is d....
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....explained by supporting documents. Admittedly, partner's capital account is reflected in the liability side of the balance sheet, for which, even if there is any discrepancy, there cannot be any addition towards unexplained investment in the hands of the assessee firm u/s.69B as made by the lower authorities. Hence, we have no hesitation to delete the addition made on account of unexplained investment u/s.69B in the sum of Rs. 1,27,44,095/- in the facts of the instant case. Accordingly, the ground Nos. 1a to 1c raised by the assessee are allowed. 4. The ground No.2 raised by the assessee is with regard to disallowance of expenditure of Rs. 3,39,000/- u/s.40(a)(ia) of the Act. 4.1. We have heard rival submissions and perused the material available on record. The ld. AO observed that the assessee had deducted tax at 1% on payment of Rs. 16,50,000/- made to M/s.Revitt Engineering and had claimed the balance amount of Rs. 3,39,000/- being purchase of sand was covered by sale of goods Act and hence, no TDS provisions would be applicable for the same. Since, there was no proper explanation in this respect, the ld. AO treated the assessee as assessee in default u/s.194C of the Act a....