2021 (2) TMI 174 - ITAT CHENNAI - Income Tax

Head Note / Extract:
Unexplained cash credit u/s 68 - addition made towards non-existing liability on account of loans availed - HELD THAT:- Assessee has reconciled difference in loan liability shown in its books of account in the name of M/s. Sundaram Finance Ltd., and has passed necessary entries to rectify the duplicate entries passed towards loans with corresponding debit in work-in-progress account and has explained the difference in loan account as per books of account and loans confirmed by the creditor. The said discrepancy is due to the fact that the assessee by inadvertent error had twice accounted loan [old cleared loans and newly availed loans] in the books of account of the assessee, whereas the creditor M/s. Sundaram Finance Ltd., has confirmed only new loan amount which telescope the aforesaid transactions including loans squared up during the year. AO as well as the ld.CIT(A) without considering reconciliation filed by the assessee along with necessary evidences including confirmation letter from M/s. Sundaram Finance Ltd., has made addition towards difference in liability u/s.68 of the Act, although said liability was non-existing liability, but continued to live in the books of account of the assessee due to inadvertent error. Therefore, we direct the AO to delete addition made towards non-existing liability on account of loans availed from M/s. Sundaram Finance Ltd. Appeal filed by the assessee is allowed.