ITO Vs Goodfarm Rearing (ITAT Ahmedabad)
ITAT Ahmedabad held that addition u/s. 68 of the Income Tax Act towards capital contribution deleted since assessee furnished adequate evidence to prove the identity, genuineness and creditworthiness of the partner. Accordingly, appeal of revenue dismissed.
Facts- The assessee is a partnership firm engaged in the business of cattle/poultry/aqua/livestock and dairy farms. The case was selected for complete scrutiny under the e-Assessment Scheme, 2019, specifically on the issue of “Share Capital / Other Capital”. During the year under consideration, the assessee introduced capital amounting to Rs.16,00,00,000/-, of which Rs.8,00,00,000/- was contributed by each of the two partners.
During assessment proceedings, relying solely on non-response, AO treated the capital contribution by Goodfarms Calfcare LLP as unexplained cash credit and made addition u/s. 68 taxing the same u/s. 115BBE of the Act. Penalty proceedings u/s. 271AAC(1) of the Act were also initiated.
CIT(A) deleted the addition. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the CIT(A) was justified in deleting the addition of 8,00,00,000/- made under section 68 of the Act. The assessee has satisfactorily discharged the onus cast upon it by furnishing adequate evidence to prove the identity, genuineness and creditworthiness of the partner. Therefore, we find no infirmity in the order passed by the CIT(A), and accordingly, the appeal filed by the Revenue is dismissed.
