Income Tax - Highlights / Catch Notes

The ITAT Delhi addressed an addition u/s 41(1) converted from ...

ITAT Delhi held that u/s 68, journal entries alone don't constitute unexplained cash credit.

May 24, 2024

Case Laws Income Tax AT

The ITAT Delhi addressed an addition u/s 41(1) converted from u/s 68, focusing on whether there was actual receipt of money or just journal entries for account adjustments. The AR argued that the entries were for loan adjustments from a prior year. The tribunal found the CIT(A)'s conclusion erroneous as there was no actual receipt of money, only journal entries reflecting borrowed funds and liabilities transferred to M/s Vrinda Developers Pvt. Ltd. The tribunal held that the journal entry did not constitute unexplained cash credit u/s 68, as it was a book entry transfer without a real cash credit. Citing a similar case, the tribunal emphasized the need for actual flow of funds to trigger the explanation requirement. Additionally, the tribunal allowed the expenditure related to a project started in the relevant year, despite the invoice being raised in the previous year. The decision favored the assessee based on project-related expenditure evidence.

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The ITAT Delhi addressed an addition u/s 41(1) converted from ...

ITAT Delhi held that u/s 68, journal entries alone don't constitute unexplained cash credit.

May 24, 2024

Case Laws Income Tax AT

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