TMI Blog2011 (3) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... to disagree with the findings of fact which are based on evidence. CIT rightly deleted the addition made on ground that assessee has successfully established the source of the credit entry in the partners' capital account - Decided in favor of assessee - 80 of 2010 - - - Dated:- 31-3-2011 - BOBDE S. A., DESHMUKH S. B. JJ. JUDGMENT 1. This appeal is filed by the appellant against the order of the Income-tax Appellate Tribunal, Nagpur Bench, Nagpur. 2. In exercise of powers under section 68 of the Income-tax Act, the Assessing Officer found that an amount of Rs. 1,71,78,161 was unexplained cash credit in the form of WIP (work-in-progress) in the books of the assessee-firm. 3. The facts which gave rise to the order unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Appeals) (hereinafter referred to as "the CIT (Appeals)" for short). The Commissioner of Income-tax (Appeals) went into all the alleged irregularities found by the Assessing Officer and, after examining evidence, the case in the assessment order, remand report, the submissions of the appellant and after appreciation of the evidence, came to the conclusion that the amount is not unexplained at all as contemplated by section 68 of the Income-tax Act. The appellate authority came to the conclusion that appropriate books of account have been maintained by the S. K. Banerjee firm and every item of transfer is supported by purchase bills, delivery memo, etc. The Commissioner of Income-tax (Appeals) also observed that the items of fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debit notes were raised by M/s. G and B to M/s. SKB on the basis of which M/s. SKB recorded the expenditure on the Transport Plaza in its books of account. The payments were made by M/s. SKB to M/s. G and B. This according to the assessee was a mutual arrangement in between the two firms, i.e., M/s. S. K. B. and M/s. G. and B. The assessee has further claimed that the construction at site was given on labour contracts basis to M/s. G and B which the Assessing Officer has doubted on the basis that it is an afterthought. However, on a perusal of the various documents including the return of income of M/s. G and B, balance-sheet, profit and loss account, TDS certificates and other records, I find that the labour work was provided by M/s. G an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also reflected as debit outstanding in the partners' own books of account, then in such circumstances no doubt can be raised on such credit. In the instant case, the credit entry in the capital account of the partner has been satisfactorily explained and the onus which lay on the assessee has been properly discharged." 5. The Commissioner of Income-tax (Appeals) has also observed that the Assessing Officer has not applied his mind to the documents referred to and, therefore, came to the conclusion that the addition of Rs. 1,71,78,161 as bogus cash credit, is not justified on the basis of the lack of factual integrity on record. In appeal, the Income-tax Appellate Tribunal has approved the order of the Commissioner of Income-tax (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. The amount has been found to be credited in the name of the assessee by way of a journal entry by which the WIP (work-in-progress) was transferred from the old firm to the new firm, i.e., M/s. S. K. Banerjee to S. K. Banerjee J. V. Firm. 8. Mr. Thakkar, learned advocate for the assessee, relied on the decision of this court in CIT v. Tania Investments P. Ltd. reported in [2010] 322 ITR 394 (Bom) where the Division Bench held that under section 68 an assessee has to establish (i) the identity of the party, (ii) capacity, and (iii) genuineness of the transaction. In the present case, we find that the identity of the party is well established due to the fact that one partner of the old firm is common with the new firm, i.e., the J. V. F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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