2011 (7) TMI 1359

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....f developing construction and sale of residential and commercial properties and the main activity of the assessee is to procure land, to develop and construct residential or commercial flat/shops. For the assessment year under appeal, it filed the return of income on 29.12.2006 declaring the total loss at Rs. 9,33,845/-. The AO framed the assessment under section 143(3) on 26.12.2008 at a total income of Rs. 49,33,155/-. In the assessment order, the AO made addition amounting to Rs. 6,53,000/- for unexplained credit in capital account of the partners and another addition of Rs. 52,14,000/- on account of unexplained deposits from 14 parties. In respect of first addition, the AO observed that the assessee was asked to prove the  creditwo....

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....ed with the order of the ld. CIT(A), the assessee is in appeal against the confirmation of addition of Rs. 52,14,000/- under section 68 of the I.T. Act in respect of advance deposits. The only ground raised by the Revenue in its appeal is against deletion of Rs. 6,53,000/- made by the AO on account of unexplained credit under section 68 of the I.T.act. 4. At the time of hearing, Shri Pritesh Shah, A.R. appeared on behalf of the Assessee and pointed out that the assessee is a firm consisting of 10 partners. In the assessment year under appeal, various parties booked the flat. Out of 88 parties, the assessee firm was having the dispute with 14 parties. This dispute reached among the partners of the firm. There was a division of two groups ....

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....n this Revenue's appeal is covered in favour of the assessee by the decision of the Hon'ble Allahabad High Court in teh case of India Rice Mills -vs- CIT reported in 218 ITR 508 (ALL) wherein it was held that in respect of capital contribution made by the partners, it was for the partners to explain the source of deposits. This unexplained deposit, in no case, could be the income of the assessee firm. He accordingly, pointed out that the view taken by the ld. CIT(A) in deleting the addition of Rs. 6,53,000/- be upheld. 5. On the other hand, Shri S.K.Meena, appeared for the Revenue and pointed out that enough opportunity was allowed by the AO to explain the deposit of 14 parties. Since this was not done, the addition was rightly made and ....