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.
Want to Read the Complete Judgment?
You have read the free case summary. Unlock the full judgment, the detailed judicial reasoning and the downloadable PDF, along with every other premium judgment on TaxGuru.
Already subscribed? Log in
One subscription covers the entire premium judgment library, not just this case.
