Gopaal Bhagwandas Ahuja Vs ACIT (ITAT Mumbai)
Assessee, a real estate trader & proprietor of Ahuja Traders, had recorded a ₹4.27 crore transaction in his books via journal entry. AO noted that Mrs. Prerna Ahuja had only ₹3,434 income that year & doubted her creditworthiness to give such a loan. Assessee explained that this was not a loan, but merely a journal reclassification of an escrow arrangement involving Komal Exotic Spices Pvt. Ltd., in which both his wife & daughter-in-law were directors.AO treated the entry as unexplained & added it as income u/s 68.
CIT confirmed the addition.
Tribunal noted that evidence produced included MOU & assignment deed relating to a lease in Aamby Valley, Board resolution & bank statements showing Komal Exotic paid the amount, which was temporarily held by Assessee as escrow & Ledger entries & confirmations showing the transaction was non-cash, fiduciary in nature, & later reversed.
Tribunal found that no actual loan or cash inflow was received from Mrs. Prerna Ahuja. AO & CIT(A) failed to recognise the escrow nature of the transaction & relied on inconsistent reasoning. Journal entry without cash movement cannot attract Section 68 if backed by proper evidence. There was no allegation of round-tripping or sham transactions between related parties.
