AMIT GANDHI,GWALIOR vs. BPL-W-(41)-(91), GWALIOR

The only issue to be decided in this appeal is as to whether the Learned CITA was justified in confirming the addition of Rs 6,50,000 made under Section 68 r.w.s. 115BBE of the Act as unexplained cash credit in respect of loans received from two parties in earlier years.

We have heard the rival submissions and perused the materials available on record. During the course of assessment proceedings, the Learned AO sought Page | 1 details of unsecured loans outstanding as at the end of the balance sheet date. The Assessee completely enclosed the bank statements of 24 persons of unsecured loan creditors together with their confirmations, income tax returns before the Learned AO. The Learned AO picked up unsecured loans from two parties i.e. Ram Kukreja in the sum of Rs 3 lakhs and Dinesh Jethwani in the sum of Rs 3.5 lakhs and sought to add the same as unexplained cash credit under Section 68 r.w.s. 115BBE of the Act and completed the assessment. This action of the Learned AO was upheld by the Learned CITA. But we find that a sum of Rs 3.5 lakhs received from Dinesh Jethwani was already lying as outstanding in the balance sheet of Assessee as opening balance as on 1.4.2021, which is evident from the confirmation given by the party. Further, we also find that the sum of Rs 3 lakhs representing unsecured loan from Ram Kukreja was already outstanding as on 31st March 2019 in the balance sheet of the Assessee. Hence, it is very clear that both the sums of Rs 3.5 lakhs and Rs 3 lakhs were not received during the year under consideration. Hence, in our opinion, the provisions of Section 68 of the Act per se could not be made applicable. Since the said sums were not received during the year, we have no hesitation in directing the Learned AO to delete the addition of Rs 6.5 lakhs under Section 68 of the Act. Accordingly, the ground raised by the Assessee is allowed.

In the result, the appeal of the Assessee is allowed.