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2011 (12) TMI 7 - AT - Income TaxAddition u/s 68 - Genuineness of the transaction - held that - the loan of Rs. 20 lacs shown from Sh. Pritam Goel father of the assessee was only a journal entry in the books of M/s Lyra Industrials. Since there was no physical transfer of money from the account of Sh. Pritam Goel and only a journal entry was passed the findings of the AO that transaction was sham is baseless the ld. CIT(A) concluded. In the light of these findings of ld. CIT(A) especially when the Revenue have not placed before us any material so as to enable us to take a different view in the matter we are not inclined to interfere. - Decided in favor of assessee.
Issues:
1. Addition of Rs. 20,00,000 under section 68 of the Income Tax Act, 1961 - genuineness of transaction. Analysis: The appeal was filed by the Revenue against an order deleting the addition of Rs. 20,00,000 made by the Assessing Officer (AO) under section 68 of the Income Tax Act, 1961. The assessee, a partner in a firm, had shown an increase in liabilities towards Sh. Pritam Goel in the balance sheet. The AO contended that the assessee failed to establish the genuineness of the transaction regarding the loan amount received. The assessee explained that the transfer of money was genuine and involved a journal entry in the books of the partnership firm, representing a diversion of funds within the family. However, the AO did not accept this explanation and added the amount under section 68 of the Act. On appeal, the ld. CIT(A) deleted the addition, emphasizing that the loan from Sh. Pritam Goel was only a book entry in the firm's books, with no physical transfer of money. The ld. CIT(A) noted that the transaction did not involve any exchange through banking channels or in cash, and as the amount was already available in the books of the firm, there was no case for treating it as an unexplained cash credit. The ld. CIT(A) held that in the case of book entries/adjustments, the mode of payment or actual receipt of money is not a determining factor. The addition under section 68 was deemed unjustified and was consequently deleted. The Revenue appealed against the CIT(A)'s decision. The Tribunal upheld the CIT(A)'s findings, stating that since there was no physical transfer of money and only a journal entry was made, the AO's assertion that the transaction was sham lacked merit. The Tribunal noted that the Revenue did not provide any material to support a different view. As a result, the Tribunal dismissed the appeal, upholding the deletion of the addition of Rs. 20,00,000 under section 68 of the Income Tax Act, 1961. In conclusion, the Tribunal found no reason to interfere with the CIT(A)'s decision, as the transaction involving the loan amount was deemed genuine based on the book entries and the absence of physical transfer of funds. The appeal by the Revenue was dismissed, affirming the deletion of the addition made by the AO under section 68 of the Act.
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