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2022 (9) TMI 1182 - AT - Income TaxAddition u/s 68 - unexplained cash credit - identity, genuineness and creditworthiness of the persons proved or not? - HELD THAT:- AO was satisfied on the basis of positive replies received to the notices issued u/s 133(6) of the Act and also successful cross-verification of such transactions and AO has specifically observed that the advances were received for the partnership firm M/s. City Live Construction. So, identity, genuineness and creditworthiness of the persons advancing the said sum is not in dispute. The addition has been made merely for the observation that when the said advance was a liability of the partnership firm why it was standing in the books of the assessee. Even, CIT(A) has also confirmed the addition on the basis of this observation of ld. AO. We find no merit in the finding of CIT(A) as he failed to appreciate the simple accounting entry that when the assessee’s proprietorship concern received a sum on behalf of the partnership firm then such sum will stand on the liability side of the balance sheet of the sole proprietorship concern and when the said sum is repaid back the credit balance is squared off. There is no other mechanism to reflect such entry in any other way as has been shown by the assessee. Since the assessee has rightly disclosed the said transaction in the books of account as an advance received on behalf of the firm on the liability side of the balance sheet and since genuineness of the sum so received is not in dispute at the end of Revenue parties, we hereby set aside the finding of CIT(A) and delete the addition made by ld. AO u/s 68 - Thus, the effective ground raised by the assessee is allowed.
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