Book entry

Hi Abhinav,

Since their is no actual transfer of funds, A.O. cannot add back the same to the income of the company.

Also, the same has been accepted by the Co. that the transaction is a mere book entry....just to adjust the accounts.

Regards.

But Prateek , isnt Sec 68 applicable here..

Cant he say this is a bogus investment??

Firstly, it is a bogus investment. 

But, the nature of the transaction is that of a Loan Transaction. There doesnt arise any profit or income to the assessee company.

Also, i guess, person XYZ is a closely related person, so getting hold of a confirmation of account wouldnt be a huddle.

So i think the A.O. will not consider the same for any addition

If the AO knows this that the investments are bogus then isnt AO has the right to do anything?

Yeah AO has every right to add it back.

Its upto the CA to dodge it in the assessee's favour.

Plus, The Ao always looks for Suppression of income  or short payment of tax, which is not the case here.

Regards.