9911796707
TMI Blog2024 (5) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the two companies on the basis that these liabilities are taken over by M/s Vrinda Developers Pvt. Ltd. Thus, the conclusion of failure to explain the source of funds credited during the year in the name of M/s Vrinda Developers Pvt. Ltd. is an erroneous finding. The journal entry had the debit effect on the bank account with the increase in the bank balance and credit effect on the loan account. The assessee has explained that no entry in this regard was effected in the P L Account as a credit effect on the unsecured loan account was reflected in the balance sheet only. We are of the considered view that the opening balances on account of unsecured loans of the two parties and certain amount receivable from M/s Vrinda Developers Pvt. Ltd., being in the background of journal entry, then for the purpose of section 68 it cannot be said to be an unexplained cash credit. The fictitious cash entry in the bank account without any real credit of cash to the cash book cannot give rise to inclusion of the amount of the entry increasing bank balance as unexplained cash credit. Book entry transfer lets transfer only through the respective accounts in the books of the concerns. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an addition on account of cessation of liability u/s 41(1) of Rs. 35 lakhs, then made addition on account of commission expenses being prior period expenses of Rs. 15 lakhs, and third one on account of unexplained cash credits u/s 68 of Rs. 19 lakhs. 2.1 The CIT(A), partly allowed the appeal and confirmed the addition of Rs. 35 lakhs made by the AO u/s 41(1) of the Act, converting the same as u/s 68 of the Act and the addition of Rs. 15 lakhs on account of commission was sustained for which the assessee is in appeal raising the following grounds:- "1. On the facts and circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals)[CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the assessment order passed under Section 143(3) of the Act is bad and liable to be quashed as the same is passed without issue of statutory notice under Section 143(2) of the Act within the time limit prescribed under the Act. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred, both on facts and in law, in passing the order in physical mode despite there being a complete bar on such proceeding, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l consideration to the submissions and the material on record. Ground-wise findings are as follows. 5. Grounds No. 4 and 5 are taken up together as they arise out of same set of facts. The ld. AR has primarily contended that it is mere case of journal entries made for adjustments of loan taken in earlier year. In this regard it comes up that during the year ending 31st March, 2017 an amount of Rs. 9,15,520 was receivable from Vrinda Developers Private Limited, and on the other side, appellant was liable to repay Rs. 30,00,000 and Rs. 5,00,000 to Amaya Overseas Private Limited and SNB Realtors Private Limited respectively, towards repayment of Unsecured Loan. Appellant claims that it was not having an active communication from, the said creditor parties (Amaya Overseas Private Limited and SNB Realtors Private Limited) at that time. So the appellant company and M/s. Vrinda Developers Private Limited, mutually decided, that Vrinda Developers will repay both the Unsecured Loans to both the parties on behalf of appellant. Thus, unsecured loan of Rs. 35,00,000 which was earlier standing in the name of Amaya Overseas Pvt. Ltd (Rs. 30,00,000) and SNB Realtors Pvt Ltd (Rs. 5,00,000) stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt submitted, by the appellant at page No. 45 and 46 of the paper book that M/s. SNB Realtors Pvt. Ltd. and M/s. Amaya Overseas Pvt. Ltd. have been re-paid Rs. 5,00,000/- and Rs. 30,00,000/- by passing a journal entry and the equal amount has been shown credited in the name of M/s. Vrinda Developers Pvt, Ltd. It is not in dispute that the above two companies (SNBRPL and AGPL) are paper companies and their whereabouts are not known to the appellant. These companies have also been de-registered; therefore transaction with them remains unverified and unexplained. It is also noted that Rs. 35,00,000/- has been credited in the books of the appellant during the year under consideration from M/s. Vrinda Developers Pvt. Ltd. The source of the credit shown as unsecured loan, received from M/ s. Vrinda Developers Pvt. Ltd. remains unexplained and therefore, it attracts provisions of Section 68 of the Act. The appellant failed to explain the source of funds credited during the year in the name of M/s. Vrinda Developers Pvt. Ltd, Accordingly, Rs. 35,00,000/- is added u/s. 68 of the Income Tax Act in respect of which tax is to be charged as per the provisions of section 115BBE of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to inclusion of the amount of the entry increasing bank balance as unexplained cash credit. 7.2 The judgment to which the ld. AR has relied for the proposition of law that without there being physical transfer of money, the provisions of section 68 cannot be invoked are applicable to the issue before us. In fact, in ACIT vs. Shri Suren Goel (supra) the Revenue has challenged before the Tribunal the deletion made by the CIT(A). In that case, the balance sheet of the assessee as on 31.03.2007 has revealed that liability increased by Rs. 25 lakhs towards Pritam Goel. The assessee has explained that to maintain credit returns enjoyed by the partnership firm, a journal entry was passed in the books of account of the partnership firm M/s Lyra Industrials wherein assessee's capital account was credited and father Shri Pritam Goel's capital account was debited by an equal amount. The fact of journal entry passed in the books of the firm was duly incorporated in the books of the assessee. The AO had made addition of Rs. 20 lakhs which was deleted by CIT(A) by observing that: "In the case of book entries/adjustments, there is no question of mode of payment or actual receipt of money from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss in the last year. The copy of invoice from M/s Vrinda Developers Pvt. Ltd. is placed at PB Pg. 44 and the ledger account of work-in-progress is placed in PB Pg. 45. The copy of the balance sheet for the year ending 31.03.2016 placed at PB Pg. 48 shows that the amount of Rs. 15,00,000/- was considered as capital work-in-progress. Copy of the ledger account of brokerage placed at PB Pg. 59 shows that this amount has been transferred from the work-in-progress account. Further the sanction for additional place of business on account of the project Splendor Epitome from CBEC are placed at PB Pg. 60-65 which are dated 29.04.2016 and 12.08.2016 which pertains to the year under consideration.
9.2 These evidences make it clear that though the invoice for commission was raised by M/s Vrinda Developers Pvt. Ltd. in the last year, however, the expenditure being related to the project which had started in the year under consideration, the same is allowable in the year under consideration. In the light of the aforesaid, this ground is decided in favour of the assessee.
10. Consequently, the appeal is allowed.
Order pronounced in the open court on 22.05.2024. X X X X Extracts X X X X X X X X Extracts X X X X
|
