Law:

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Section 143 of Income-tax Act, 1961 - Assessment - Additions to income Where addition was made as there was discrepancy between accounts of one 'PI' Ltd. in assessee's accounts and accounts maintained by 'PI' Ltd. and according to assessee difference arose on account of fact that an amount was debited by 'PI' Ltd. but a corresponding entry was not made by assessee, assessee's explanation being reasonable, addition was to be deleted [In favour of assessee] [Assessment year 1998-99] CIT v. Heynon India Ltd. [2009] 315 ITR 281 (Delhi) The Assessing Officer made an addition on account of a discrepancy between the accounts of 'PI' Ltd. in the assessee's account and the accounts maintained by 'PI' Ltd. 'PI' Ltd. maintained one account of the assessee in its books of account, while the assessee maintains three different accounts - two under the head 'Sundry Creditors account' for FBD and Pump Division and one unsecured loan account. According to the assessee, the difference arose on account of the fact that the amount was debited by 'PI' Ltd. but a corresponding entry was not made by the assessee. The Commissioner (Appeals) was of the view that even if the assessee was associated with 'PI' Ltd., it was possible for such a discrepancy to arise in the normal course of dealings between the parties. The Commissioner (Appeals) was satisfied with the explanation of the assessee and held that it had been able to reconcile the difference in the balance as pointed out by the Assessing Officer. Accordingly, the addition was deleted by the Commissioner (Appeals). The Tribunal upheld the deletion of addition. Held that the view taken concurrently by the Commissioner (Appeals) and the Tribunal was a reasonable view based on the explanation tendered by the assessee and was not vitiated by any perversity. Thus, no question of law arose. Section 143 of Income-tax Act, 1961 - Assessment - Additions to income Where it was found that a decrease in stock of Rs. 1.09 crores was partly due to sale of finished goods at lower than cost and partly due to diminution in value of closing stock, explanation of assessee being reasonable, addition on account of difference between reduction in value…

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