TaxTMI 
TaxTMI 
2018 (2) TMI 341
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.... a Director in M/s. Netlink Business Systems Pvt. Ltd. and also proprietor of M/s. JSB Investment, which is managing and developing residential villas at Goa. The AO on the perusal of the balance sheet of M/s. JSB Investment noted that, assessee has shown an amount of Rs. 75,00,000/- as unsecured loans from M/s. Global Solutions Pvt. Ltd. In response to the show-cause notice to justify the said credit, the assessee submitted that the said amount was received through account payee cheque for the booking of one villa in 'White Square Green Project', but instead of advance received against booking of villa, it was shown as unsecured loans due to clerical mistake. The AO made inquires by calling for the balance sheet of M/s. Global Solutions (P....
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....has filed a detailed reply the content of which has been reproduced at page 4 and 5 of the assessment order, which in sum and substance are that; firstly, the outstanding balance of Rs. 75 lacs was on account of double entry and single cheque; and secondly, same is reconcilable with the fact of excess debit of Rs. 75 lacs. The AO however held that such an explanation is after thought and gave very detailed reasoning from pages 5 to 8 of the assessment order whereby he held that the amount of Rs. 75 lacs is nothing but unexplained credit in the books of assessee. 3. Before the Ld. CIT(A), the assessee explained that, firstly, there was a clerical mistake in showing the advance received as unsecured loans and secondly, there was a double ent....
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....enue impact i.e. the accounting error did not result in any kind of cash inflow or any kind of income to the appellant. In such circumstances the excess credit of Rs. 75,00,000/- in the account of M/s Global Solutions Pvt. Ltd. with resulting excess debit in the bank account as per the books of the appellant (which mistake was, as already stated above, rectified in the subsequent year) as on 31.03.2008 cannot be brought to tax as unexplained credit, as done by the A.O. The "bank book" being relied upon by the A.O., which forms part of the assessment order as Annexure-B, is stated to be only a narration of transactions in the appellant's bank account. In this narration of transactions, the cheque no. 007581 received from M/s Global Solut....
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....owever, as held by Hon'ble Courts, when the mistake is only on account of incorrect posting of entries and no funds have been introduced, i.e. there is no revenue impact, no addition to income on this account can be made (even if the explanation initially furnished by the appellant's AR before the A.O. about the credit balance outstanding in the name of M/s Global Solutions Pvt. Ltd. may not have been a completely satisfactory one). Accordingly, the A.O. is directed to delete the addition so made. This ground of appeal is allowed." 4. After hearing both the parties and on perusal of the relevant finding given in the impugned orders, we find that the addition has been made by the AO on account of unexplained credit of Rs. 75 lacs a....