Affidavits of Typist and CA Admitting Typographical Error are Not Enough to Delete Addition for Unaccounted Purchases

Case Details: ACIT v. Kantilal Exports Surat - [2023] 150 taxmann.com 172 (SC)[20-04-2023]

Judiciary and Counsel Details

• • M.R. Shah and C.T. Ravikumar, JJ.  
  • N. Venkatraman, A.S.G., Raj Bahadur Yadav, AOR, V. Chandrashekhara Bharathi, Rupesh Kumar and Sundeep Padhani, Advs. for the Appellant.

Facts of the Case

On appeal, CIT(A) deleted the additions. The Tribunal relied upon the entire material on record including the affidavit of a typist and a Chartered Accountant stating that it was a typographical error in the audit report confirmed the additions. Aggrieved-assessee preferred an appeal to the High Court, and considering the affidavits filed, the High Court deleted the additions.

The matter then reached the Supreme Court of India.

High Court Held

The Apex Court held that during the assessment proceedings, except for the statement of the assessee, no further material was produced before the AO stating that the figure was a typing mistake. Considering the figure of yield in different assessment years, the AO came to the conclusion that the percentage of the yield in the year under consideration was much higher than other assessment years.

Further, it was noticed that a search operation was conducted in the case of the assessee and its group. In the course of search proceedings, duplicate cash book, ledger and other books showing the unaccounted manufacturing and trading arrived at by the assessee in diamonds were found. Thus, it was detected that the assessee was maintaining the books of accounts outside the regular books.

In the instant case, it is noticed that the High Court solely relied upon the statements of the Typist and the Chartered Accountant and reversed the findings of AO and the Tribunal. The High Court has also not properly appreciated and considered the fact that the affidavits were filed for the first time before the Tribunal

Considering that the AO and Tribunal confirmed the additions based on all the information available, the Supreme Court quashed the judgment passed by the High Court and affirmed the additions made by the AO.