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2012 (9) TMI 50 - AT - Income TaxDisallowance of claim of Agriculture income - Addition on account of undisclosed income - shortfall in the cash flow statement of Smt. Kadeeja, mother of one of the partners - Held that:- Considering the specification provided by the rubber Board the undisclosed income has to be computed in accordance with provisions of chapter XIVB. Therefore, the income has to be computed on the basis of the material found during the course of search operation whereas in thus case the undisclosed income was computed on the basis of the cash flow statement filed by the assessee in the course of the assessment proceedings. In fact, AO disbelieved the cash flow statement in respect of the agricultural income and the balance was added as undisclosed income. In the absence of any material found during the course of search operation the assessing officer cannot make any addition - in favour of assessee. Addition on unexplained cash credit - Held that:- As concerned persons in this case confirms that they has given the gold jewellery as capital investment in the firm, the addition if any has to be made only in their hands only and not in the hands of the firm. No material is found in the course of search proceedings that the entry found in the books of account with regard to the credit of gold jewellery is false, thus AO cannot make any addition with regard to the investment made in the partnership firm - in favour of assessee. Disallowance of depreciation - Held that:- As the profit of the assessee was estimated at 5% of the turnover u/s 44AF and once the profit is estimated, all expenditure and allowances including depreciation are deemed to have been allowed, thus CIT(A) has rightly rejected the claim of the assessee for depreciation - against assessee. Addition being the value of jewellery brought in by the partners of the assessee firm - Held that:- As the partners of the firm have disclosed incomes under VDIS 1997. Once the amount disclosed under VDIS, the same would be available for making further investment. It is not in dispute that the amount disclosed under VDIS was accepted by the competent authority. Therefore, the assessing officer cannot doubt the source of investment made at this stage - against revenue.
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