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of <h1>High Court rules in favor of partnership firm in tax dispute, overturning additions to income for assessment year 2007-08.</h1> <h3>M/s Kohinoor Enterprises Versus Assistant Commissioner of Income Tax & Others</h3> M/s Kohinoor Enterprises Versus Assistant Commissioner of Income Tax & Others - [2019] 410 ITR 153 (J&K) Issues Involved:1. Addition of Rs. 15,00,000/- as unexplained unsecured loan under Section 68 of the Income Tax Act.2. Addition of Rs. 18,30,000/- as unexplained expenditure under Section 69C of the Income Tax Act.Issue-wise Detailed Analysis:1. Addition of Rs. 15,00,000/- as Unexplained Unsecured Loan:The Assessee, a partnership firm, had declared an unsecured loan of Rs. 1,50,00,000/- from M/s Himachal Futuristic Co. Ltd. raised in the financial year 2001-02. The Assessing Officer (AO) added Rs. 15,00,000/- to the Assessee's income for the assessment year 2007-08 under Section 68 of the Income Tax Act, citing the lack of repayment details and documentary evidence. The Commissioner of Income Tax (Appeals) deleted this addition, stating that the loan had been consistently carried forward since 2001-02 and could not be considered as income for 2007-08. The Tribunal reversed this decision, arguing that the Assessee failed to establish the genuineness of the loan and its relationship with the creditor. The High Court, however, found that the loan was indeed carried forward and not a fresh credit, thus not applicable under Section 68 for the year 2007-08. The Court upheld the deletion of the addition by the Commissioner of Income Tax (Appeals).2. Addition of Rs. 18,30,000/- as Unexplained Expenditure:The AO added Rs. 18,30,000/- to the Assessee's income as unexplained expenditure under Section 69C, citing the failure to establish the identity of the creditor, Ghulam Nabi, and the mode of repayment. The Commissioner of Income Tax (Appeals) deleted this addition, noting that the amount was already added in the assessment year 2006-07 and could not be taxed again. The Tribunal reversed this decision, stating that the Assessee failed to provide documentary evidence of repayment. The High Court found that the addition was indeed made in the previous assessment year and taxing the same amount again would result in double taxation. The Court upheld the deletion of the addition by the Commissioner of Income Tax (Appeals).Conclusion:The High Court concluded that the Tribunal erred in sustaining the additions of Rs. 15,00,000/- and Rs. 18,30,000/-. The Court upheld the findings of the Commissioner of Income Tax (Appeals) and set aside the Tribunal's order, deleting the additions from the Assessee's income for the assessment year 2007-08. The appeal was allowed in favor of the Assessee.
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