TaxTMI 
TaxTMI 
2009 (9) TMI 1099
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....t return declaring nil income filed on 15-10-2005 by the assessee, engaged in the business of embroidery on job work, after being processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was selected for scrutiny with the issue of notice u/s 143(2) of the Act on 05-06-2006. During the course of assessment proceedings, the AO noticed that the assessee had accepted the following deposits in cash: Sr. No. Name of Depositor Amount of loan accepted Mode of deposit in bank before issuing cheques 1. Hiteshbhai Desai 1,30,000 Cash 2. Rameshbhai Bhuva 1,50,000 Cash 3. Chandrikaben 25,000 Cash 4. Gunvantrai Ranabhai 25,000 Cash 5. Nileshbhai Bhuva 2,75,000 Cash 6. Pramilaben 1,00,000 Cash 7. NIleshbhai M. Patel 2,00,000 Cash 8. Manishbhai* 1,00,000 Cash No PAN 9. M. K. Patel* 1,00,000 Cash Total 11,05.000 * sl. no. 8 & 9 are same person To a query by the AO, the assessee submitted that aforesaid depositors derived income from salary, brokerage and agriculture etc. The assessee also furnished copies of bank statemen....
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....epositors. It was further observed that the source of source can be examined only in the hands of individual depositors and not in the hands of the assessee and the AO could have forwarded his findings/observations or material to the AO, assessing the depositors. The assessee having discharged the onus placed on him, no addition can be made, the learned CIT(A) concluded. 4. The Revenue is now in appeal against the aforesaid findings of the learned CIT(A). The learned DR supported the findings of the AO while the learned AR on behalf of the assessee relied upon the order of the ld. CIT(A). 5. We have heard both the parties and gone through the facts of the case. We find that the ld. CIT(A) deleted the addition on the ground that the assessee had established the identity and creditworthiness of the aforesaid eight depositors and genuineness of the transactions and thus, had discharged the onus placed on him. Since the amount have been received through cheques from the aforesaid eight depositors, who are stated to be having PAN and filing their returns for a considerable number of years while the Revenue have not placed before us any material, controverting these findings of fac....
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....in particular the fact that the Assessing Officer had not disallowed the interest claimed / paid in relation to these credits in the assessment year under consideration or even in the subsequent years, and tax had been deduced at source out of he interest paid /credited to the creditors, the Tribunal held that the Departmental authorities were not justified in making the addition of Rs. 12,85,000. On appeal to the High Court: Held, that considering the facts and circumstances of the case narrated by the Tribunal and the law explained by it, the appeal was liable to be dismissed. [The Supreme Court has dismissed the special leave petition filed by the Revenue against this judgment : see [2002] 254 ITR (St.) 275-Ed.] 6. In the light of aforesaid decision of the Hon'ble jurisdictional High Court and the undisputed findings of the ld. CIT(Appeals) that the assessee had established the identity and creditworthiness of the creditors and genuineness of the transactions in respect of the aforesaid depositors, especially when no material has been placed before us for taking a different view in the matter, we have no hesitation in upholding the findings of the ld. CIT(A).Ther....
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....he facts narrated before us, the aforesaid amount of capital contribution was brought in by the eight partners out of their income earned from agriculture or gift or cash loans . All the eight partners partners are stated to be assessed to tax for the last seven years and their PAN and copies of acknowledgement of returns are stated to have been furnished by the assessee. After considering the material on record, the ld. CIT(A) concluded that there is no justification to make addition in the hands of firm when partners have confirmed, having brought the capital in the assessee firm with proper evidences. The Revenue have not referred us to any material controverting these findings of facts recorded by the ld. CIT(A). As regards onus for the amounts found credited in the books of the firm, the Hon'ble Rajasthan High Court in CIT v Kishorilal Santhoshilal, 216 ITR 9(Raj) held that the burden of proof in respect of cash credits found in the partners' accounts in the books of the firm was on the firm itself. Referring to the decisions in 34 ITR 807(SC), 102 ITR 779(Pat), 36 ITR 481(AP) and 29 ITR 942(AP), the Hon'ble High Court held that (a) there was no distinction between....
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.... of the cash credits introduced in their names in the books of the firm and the manner in which such cash had been earned by them, the question of shifting of the burden on to the Department cannot arise . Hon'ble jurisdictional High Court in the case of DCIT Vs. Rohini Builders, 256 ITR 360(Guj) held that the unsatisfactoriness of the explanation does not automatically results in deeming the amount credited in the books as income of the assessee. In the case under consideration, the ld. CIT(A) found that the assessee has discharged the initial onus laid down upon the firm and had furnished an explanation that the amount was brought in by the respective partners. The identity of the partners and the evidence regarding sources of income has been placed before the lower authorities. All the partners are stated to be assessed to tax on their independent income and have admitted the amount of money brought in by them. There is nothing to suggest that the aforesaid amounts brought in by the partners were actually the income of the firm . When the assessee has explained the amounts as capital contributions by the partners, the AO is not justified in holding that the assessee has not ....