TaxTMI 
TaxTMI 
2011 (7) TMI 798
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....sh from those bank accounts were withdrawn on subsequent dates and introduced the same as their share capital in the books of account of the firm. 3. That the learned CIT ( Appeals) has erred in law and on facts in ignoring the decisions of the jurisdictional Hon'ble ITAT & the Hon'ble High Court of judicature of Allahabad which have been quoted in the written submission. 4. That without prejudice to the averment in aforementioned grounds of appeal Nos. 1, 2 & 3, it is submitted that the learned CIT (Appeals) has erred in law and on facts in sustaining the aforesaid addition of Rs. 10,00,000/- because he has failed to appreciate that- (i) the source of the cash deposits amounting to Rs. 3,00,000/- have been duly proved as withdrawn from the bank account of Shri Amit Kumar Agarwal, partner of the firm. (ii) the source of the cash deposits amounting to Rs. 3,00,000/- have been duly proved as withdrawn from the bank account of Shri Anoop Kumar Agarwal partner of the firm. (iii) the source of the cash deposits amounting to Rs. 4,00,000/- have been duly proved as withdrawn from the bank account of Shri Ratan Kumar Agarwal partner of the firm." 2. From the above ground....
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....vi Bhagat and Smt. Suman Devi Bhagat, the drafts have been prepared on account of the amount transferred from one single bank account No. 12382 to the donors accounts. All other drafts made as gifts have been purchased in cash; (iii) No relationship between the donors and the donees were established. Thus, it is amply clear that all the six donors do not have any capacity for giving gifts. All these gifts can in no way be said to be genuine because of the reasons firstly that a person who does not have taxable income of Rs. 50,000/- in any year, then how he/she can make gift in lakh to any person with whom he/she does not have any near relationship, and secondly it appears that the gift of Rs. 8,00,000/- made by the Kolkata based parties are the appellant's own money which have been routed through account No. 12382 and partially through cash purchase of gifts. Since, the entire gift money has been utilized by the appellant firm, the total gift of Rs. 8,00,000/- has been added in the hand of the firm treating it to be income from undisclosed sources; (iv) As regards gift of Rs. 2,00,000/- made by Shri Rajesh Kumar Agarwal, also the source of availability of funds to the tune of Rs....
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....ellant firm has proved even the source of the sources and the Assessing Officer is not justified for making the addition of Rs. 10,00,000/-, (vii) Hence, the impugned addition is liable to be deleted." 4.1 The learned CIT(A), after considering the submissions of the assessee, confirmed the action of the Assessing Officer by observing as under: "3.3 I have gone through the contentions of appellant and also the facts of the case. At the outset, from the perusal of the capital account of the partners from the period 02/04/2003 to 31/03/2004 with M/s G. L Foods, it is noticed that the partners S/Shri Ratan Kumar Agrawal, Anoop Kumar Agrawal and Amit Kumar Agarwal have introduced capital in cash amounting to Rs. 5,35,000/-; Rs. 5,50,000/- & Rs. 5,50,000/-respectively. These capitals have not been deposited through banking channels. Further, it is also worth to be mentioned that the appellant firm has shown total turnover of Rs. 2,50,85,546/- during the assessment year 2004-05. It shows that the appellant firm has carried out the business activities during the year under consideration. Hence, the contentions of the appellant that the capitals contributed by the partners were utilized ....
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....(Luck.) of 2004 order dated 11/5/2005] (iii) India Rice Mills v. CIT [1996] 85 Taxman 227 (All.) (iv) CIT v. Metachem Industries [2000] 245 ITR 160/[2001] 116 Taxman 572 (MP). (v) CIT v. Burma Electro Corpn. [2001] 252 ITR 344/[2003] 126 Taxman 533 (Punj. & Har.). 6. In his rival submissions the learned D. R. strongly supported the orders of the authorities below. 7. We have considered the rival submissions and carefully gone through the materials available on the record. In the present case, it is not in dispute that the assessee firm received the capital contribution by the partners before starting its business, therefore, it cannot be said that the capital contributed by the partners was the income earned by the assessee firm from undisclosed sources. 7.1 On a similar issue, the Hon'ble Allahabad High Court in the case of Jaiswal Motor Finance (supra) has held as under: "If there are cash credit entries in the books of a firm, in which the accounts of the individual partners exist, and it is found as a facts and circumstances that cash was received by the firm from its partners, then, in the absence of any material to indicate that they were the profits of the firm, it co....