Typographical error in tax audit carrying forward prior loans not unexplained cash credit u/s 68 if verified by affidavits and financials.

Per : Narender Kumar Choudhry, Judicial Member:

This appeal has been preferred by the Revenue against the order dated 12.07.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2016-17.

2. In the instant case, during the assessment year under consideration, the Assessee before the Assessing Officer (AO) submitted the tax audit report, wherein the Assessee has taken substantial loans from different persons totaling to Rs.1,96,78,827/- and therefore the AO called for the details qua genuineness of the loan transactions. The Assessee before the AO though submitted that the loans are not taken in the previous year but due to some clerical error, the loan amount of closing balance is taken in transaction for the year under consideration. The Assessee to substantiate its claim also furnished statement reflecting movement of loans from F.Y.2011-12 to 2015-16 along with audited balance sheets for A.Y. 2012-13 to A.Y. 2016-17 and also submitted the bank statement, wherein no transactions related loan taken or repaid during the year under consideration have been reflected. However, the AO still made the addition of Rs.1,96,78,827/- u/s 68 of the Act as unexplained cash credits on the reasons that the Assessee has failed to establish the genuineness of the transaction and creditworthiness of loan lenders or individual who advanced such money.

3. The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner by filing first appeal and during the appellate proceedings filed the affidavit of the CA, who had signed the Form-3CD as well as the balance sheet along with sub schedules starting from A.Y. 2011-12 to A.Y. 2016-17. On verifying the aforesaid documents, the Ld. Commissioner found the claim of the Assessee as correct and consequently deleted the addition by holding “that indeed there is no fresh loans during the impugned assessment year and by considering the affidavits of the CA and the director of the Assessee company. It is an inadvertent typographical error and thus the addition made by the AO as per the provisions of section 68 is deleted”.

4. The Revenue Department, being aggrieved, is in appeal before us.

5. Heard the parties and perused the material available on record. The Ld. Commissioner before coming to the conclusion for deletion of the addition in hand, not only perused the financials along with sub schedules starting from A.Y. 2011-12 to 2016-17 but also the affidavits of the CA and Director of the Assessee Company, wherein the inadvertent typographical error has been established. Even otherwise we do not find any material and/or reason to contradict the finding of the Ld. Commissioner in deleting the addition under consideration; hence on the aforesaid analyzations, the decision of Ld. Commissioner in deleting the addition is affirmed.

6. In the result, the appeal filed by the Revenue stands dismissed.