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of <h1>Tribunal Upholds CIT(A)'s Decision on Cash Payment and Business Purchases</h1> <h3>ITO, Ward 33 (2), New Delhi Versus Indo Scottish</h3> The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision on both issues. The cash payment to the partner was deemed genuine and duly ... Addition on cash paid to partner Shri Sukhdev Singh - Held that:- We find that the basic facts in this case are not in dispute. The assessee firm has paid ₹ 16.5 lacs to its partner Shri Sukhdev Singh and the necessary entries were passed in the regular books of account of the assessee firm. The cash entry of ₹ 16.5 lac was reflected in the ledger account of Shri Sukhdev Singh in the books of account of the assessee firm, copy of which has been filed by the assessee before the CIT(A). The CIT(A) in these facts held that AO did not properly appreciate the facts of the case and that the entries were explained and addition was deleted. The cash payment made by the assesee firm to its partner was genuine and duly reflected in the accounts book of assessee firm and was fully explained and therefore no case of addition of this amount as income in the hands of the assessee firm is made out by the revenue and there being no merit in the ground No. 1 of the revenue, the same is dismissed. - Decided in favour of assessee. Addition on account of purchase made for non business purpose - CIT(A) deleted the addition - Held that:- CIT(A) has given a finding that there is no basis for holding by the AO that these transactions of purchases were not for business purposes of the assessee. The purchases were supported by the purchase bills produced by the assessee. The complete postal address of the seller parties were furnished to the AO. The CIT(A) has recorded that during the relevant year the assessee has diversified and started the business of supplying construction material and entered into the MOU with M/s. Pushan Properties and Developers Pvt. Ltd. and therefore the finding of the AO that the purchase transactions were for the purpose of non business was not correct. There being no mistake in the order of the CIT(A) on this issue. - Decided in favour of assessee. Issues:1. Addition of cash payment to a partner2. Deletion of addition for non-business purpose purchasesIssue 1: Addition of cash payment to a partnerThe appeal was against the CIT(A)'s order deleting the addition of Rs. 16,50,000 made by the Assessing Officer on account of cash paid to a partner. The Department argued that the amount was paid in cash to the partner, who then gave it as an unsecured loan to another entity, with no documentary evidence of the payment. The assessee contended that the cash payment was reflected in the books of account, and the CIT(A) agreed that the entries were explained and genuine. The Tribunal found that the cash payment was duly reflected in the accounts, supported by entries in the books, and deemed genuine. Therefore, the addition as income in the hands of the assessee firm was unwarranted, and the appeal ground was dismissed.Issue 2: Deletion of addition for non-business purpose purchasesThe second ground of appeal related to the deletion of an addition of Rs. 14,69,061 made by the Assessing Officer for purchases made for non-business purposes. The Department argued that the assessee failed to prove the genuineness of the purchases as notices to parties were returned unserved. The assessee contended that the purchases were reflected in the books, and the sales and closing stock figures were accepted by the AO. The CIT(A) found no basis for the AO's conclusion that the purchases were non-business related, noting the supporting purchase bills and seller details provided. The CIT(A) also highlighted the assessee's new business activities in supplying construction material. The Tribunal upheld the CIT(A)'s decision, emphasizing that the purchases were for business purposes and dismissing the revenue's appeal.In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision on both issues. The cash payment to the partner was deemed genuine and duly recorded, while the purchases in question were found to be for business purposes, supported by proper documentation and business activities.
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