INCOME TAX APPELLATE TRIBUNAL, MUMBAI
ITA No. 4284/Mum/2010 -(Assessment Year: 2006- 07)
Dy. Commissioner of Income Tax
M/s R. R. Builders
Date of Pronouncement:18.01.2012
O R D E R
PER D.K.AGARWAL (JM)
This appeal preferred by the Revenue is directed against the order dated 9.3.2010 passed by the ld. CIT(A) for the assessment year 2006- 07.
2. Briefly stated facts of the case are that the assessee firm in engaged in the business of builders
and developers and also dealer in real estate. It filed return declaring total income at Rs. 41,77,773/-. However, the assessment was completed at an income of Rs. 62,27,450/- including the addition of unexplained cash deposit in the partners’ account of Rs. 10,60,000/- and the addition of unexplained bank deposit of Rs. 7,70,000/- vide order dated 19.12.2008 passed u/s 143(3) of the Income Tax Act, 1961( in short the Act). On appeal , the ld. CIT(A) however, deleted both the additions made by the AO.
3. Being aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us.
4. Ground No. 1 is against the deletion of addition of Rs. 10,60,000/- added by the AO as unexplained cash deposit.
5. The brief facts of the above issue are that during the course of assessment proceedings, the AO from the capital accounts of the partners observed that a sum of Rs. 5,27,500/- was introduced by each partner on 15.4.2005 and another sum of Rs. 2,500/- was introduced by each partner on 23..2.2006. The assessee submitted before the AO that the partners Shri Gulam Rasul Sheikh and Shri Radique Shekhani were also partners in the firm M/s Adarsh Octroi Services from where the cash was withdrawn and introduced in the capital account of this firm. The AO required the assessee to explain the source of cash deposits. The assessee submitted that it was out of remuneration and profit received by the partners from M/s Adarsh Octroi Services. The AO did not accept the assessee’s explanation on the ground that date- wise withdrawal was not given and it is not clear whether the amount was withdrawn in cash or by cheque. In the absence of documentary evidences, the AO held that the claim of the assessee could not be accepted and added a sum of Rs. 10,60,000/- as unexplained cash deposits to the total income of the assessee firm. On appeal, the ld. CIT(A) after examining the relevant accounts while observing that the total capital introduced was only Rs. 10,55,000/- @ Rs. 5,27,500/- by each partner, deleted the addition made by the AO.
6. At the time of hearing, the ld. DR while relying on the order of the AO further submits that in the absence of date-wise corresponding withdrawals whether by cash or cheque, the ld. CIT(A) was not justified in deleting the addition of Rs.10,60,000/- made by the AO as unexplained cash deposit and hence, the order passed by the AO be restored.
7. On the other hand, the ld. Counsel for the assessee while relying on the order of the ld. CIT(A) further submits that the assessee has filed complete details of deposits and withdrawals before the AO and the ld. CIT(A) and the ld. CIT(A) after examining the same has accepted the sources of deposits made by the assessee and therefore, the order passed by the ld.CIT(A) be upheld.
8. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that there is no dispute that the partners of the assessee firm are also partners of the firm M/s Adarsh Octroi Services, Mumbai. We further find that the amount of Rs.5,25,000/- each was withdrawn by Shri Rafique Shakur Shekhani and Shri Sayed Rasul Shaikh partners of the firm on 15.4.2005 from their partnership firm M/s M/s Adarsh Octroi Services, Mumbai as per copy of cash book filed and the same amount was deposited by both the partners with the assessee firm on the same date. We further find that Rs.2,500/- each was deposited by Shri Rafique Shakur Shekhani and Shri Sayed Rasul Shaikh on 23.2.2006 out of their previous withdrawals from the same firm. Since the partners have proved the source of deposits and in the absence of any contrary material placed on record by the Revenue that there is no such corresponding withdrawals in the firm M/s M/s Adarsh Octroi Services or withdrawals made by the partners of the firm have been utilized for some other purpose and not for making deposits in the assessee’s firm and also keeping in view that it is settled law that the assessee is not required to prove the source of source, we hold that the ld. CIT(A) was fully justified in deleting the addition of Rs.10,55,000/- made by the AO. As regard the remaining amount of addition of Rs.5,000/-, we find that as per partners’ capital account there is no such deposit by the partners with the firm and in the absence of any basis for making such addition, we uphold the order of the CIT(A) in deleting the addition made by the AO. The ground taken by the Revenue is, therefore, rejected.
9. Ground No.2 is against the deletion of addition of Rs. 7,70,000/- made by the AO.
10. The brief facts of the above issue are that the AO noticed that the assessee made unexplained cash deposits of Rs. 7,70,000/- i.e. Rs. 1,00,000/- on 6.8.2005, Rs. 1,49,000/- on 29.8.2005, Rs. 1,51,500/- on 30.8.2005 and Rs. 1,40,000/- on 31.8.2005 with Union Bank of India and Rs. 1,80,000/- on 7.10.2005 and Rs. 50,000/- on 10.10.2005 with Bharat Co- operative Bank, therefore he added the same to the total income of the assessee firm. On appeal , the ld. CIT(A) after examining the bank accounts with assessee’s cash book, however, deleted the addition made by the AO.
11. At the time of hearing the ld. DR supports the order of the AO.
12. On the other hand, the ld. Counsel for the assessee relied on the order of the ld. CIT(A).
13. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the ld. CIT(A) after examining the regular cash book maintained by the assessee wherein the relevant entries are duly recorded, has accepted the above deposits in the banks accounts. In the absence of any contrary material placed on record by the Revenue and keeping in view that it is not the case of the Revenue that the entries recorded in the cash book are not genuine or the AO has rejected the accounts maintained by the assessee, we hold that the ld. CIT(A) was fully justified in deleting the addition of Rs. 7,70,000/- made by the AO. The grounds taken by the Revenue are, therefore, rejected.