TMI Blog2022 (3) TMI 1281X X X X Extracts X X X X X X X X Extracts X X X X ..... be seen in present case that the Ld. AO had observed from the books of accounts that the entry was fictitious and was reversed immediately in next FY on 1/4/2014, without any actual cash flow. But Ld AO was carried away by morality of accounting practices by holding that there is no concept like notional entries in the preparation of books of accounts and to which more pragmatic view was taken by the Ld FAA by accepting the plea of assessee and observing in para 11 of its order that the entire story is one of series of entries passed with a view of shoring up its current ratio for showing the same to the bank for better interest on loans raised onus on the assessee was discharged with the explanation that there was no actual flow o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny and statutory notice u/s 143(2)of the Act was issued. The partners of the assessee had issued capital of ₹ 2 crore each in the firm for which explanation was sought to explain the source of the amount of ₹ 4 crores introduced by the partners in the firm. The assessee informed the Ld. AO that amount was introduced by way of cheques by the two partners but the cheques could not be cleared and were returned by the assessee within two days. The assessee also submitted that this exercise was done to improve the bank ratio to satisfy the bankers of the assessee from which credit facilities were obtained. 2.1 However, the Ld. AO observed that the explanation is not acceptable as there is no concept of such notional entries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee in respect of the credit by both partners. 3. That the order of ld. CIT(A) be set aside and that of the A.O. be restored. 5. Heard the Ld. Sr. DR for the revenue / appellant and counsel for the assessee. On behalf of the revenue the Ld. Sr. DR submitted that the findings of ld. AO are relied as Ld. AO has taken into consideration the fact that amount was introduced in the form of capital and which stood thereby at the closing of year on 31.03.2014 was considered unexplained. 5.1 On the other hand, Ld. Counsel for the assessee submitted that as for the banking norms and for improved current ratio the partner s capital was increased by ₹ 4,00,00,000/- and on 01.04.2014, the entries of ₹ 2 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly in case of fictitious entries where there is no actual flow of cash, the Coordinate Bench in ITO Vs Zexus Air Services Pvt. Ltd . (ITAT Delhi) Appeal Number : ITA No.2608/Del/2018 vide order dated 23/04/2021 has observed; 12.1 We find, the Delhi Bench of the Tribunal in the case of ACIT vs. Shri Suren Goyal (ITA No.1767/Del/2011, order dated 1st December, 2011; has held that where the assessee has received loan of ₹ 20 lakhs from his father through a journal entry in the books of account and there was no physical transfer of money from the account of his father, addition of the same u/s 68 of the Act is not justified and accordingly the Tribunal dismissed the appeal filed by the Revenue against the order of the CIT(A) dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee actually arises. Where the books of accounts on its own establish that the entry was fictitious and sham for window dressing , then as such the initial burden on the revenue is not discharged to shift onus on the assessee to explain further identity, capacity and genuineness of the source. 8 It can be seen in present case that the Ld. AO had observed from the books of accounts that the entry was fictitious and was reversed immediately in next FY on 1/4/2014, without any actual cash flow. But Ld AO was carried away by morality of accounting practices by holding that there is no concept like notional entries in the preparation of books of accounts and to which more pragmatic view was taken by the Ld FAA by accepting the plea of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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