2024 (5) TMI 1117

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....T calculation, however, resulting in no impact on the taxable income and tax. The AO had assessed the income of the assessee at Rs. 74,42,690/-, after making 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 an....

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....r alter any of the grounds of appeal." 3. Heard and perused the record. At the time of argument, the ld. counsel submitted that ground No.1 is general in nature while grounds No.2 and 3 are not being pressed. 4. We have given thoughtful 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 wil....

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....is any sum credited in the books of account and does not mention of any 'cash' being credited. 6. We have given thoughtful consideration to the matter on record and we observe that CIT(A) in para 12.4, while making the addition u/s 68, has observed as follows:- ".....It is evident from the ledger account 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....

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....d certain amount receivable from M/s Vrinda Developers Pvt. Ltd., being in the background of journal entry, then for the purpose of section 68 of the Act, 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. 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 a....