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2022 (5) TMI 1619 - AT - Income TaxAddition based on higher consumption of electricity and lower production - undisclosed amount of paddy milled by the assessee - assessee had failed to furnish quantitative details of paddy milled, rice produced, by-products for specific period asked by AO - CIT(A) deleted addition - HELD THAT:- Addition on the basis of suspicion and noticing the factum of higher consumption of electricity and lower production which could be a case of strong suspicion but it is also settled law that suspicion, however strong, cannot take the place of evidence against the assessee for making a sustainable addition. From the relevant part of the CIT(A) order, we observe that CIT(A) has accepted the explanation of the assessee towards higher electricity consumption in the relevant assessment year which was frequent breakdown and longer load of electricity that has then to be used to restart the milling machinery, which consumes higher electricity. CIT(A) also observed that the AO calculated the undisclosed amount of paddy milled by the assessee and enhanced his income accordingly without bringing any evidence on record to suggest a suppression of the stock of paddy by the assessee and the books of accounts have not been rejected by the AO u/s.145(3) of the Act, which implies an acceptance of the results therein by the AO. AO merely relied on the figures of electricity consumption available in the internet without verifying the facts and circumstances of the case of the assessee and he rightly held that this is not a plausible approach of the AO. In view of foregoing discussions, we reach to a logical conclusion that the CIT (A) was right in deleting the addition made by the AO on the basis of on suspicion, conjectures and surmises without bringing any adverse material and positive evidence against the assessee on record to show that the assessee has claimed higher electricity consumption to avoid tax payment. Ground No.1 of the revenue is rejected. Capital contribution by partners - failure to explain the source and nature of cash deposits immediately before transfer and they had not shown adequate in their ITRs for Capital contribution - CIT(A) deleted addition observing that the assessee firm had duly discharged the onus cast upon it by the AO to establish the identity of the partners and their creditworthiness alongwith copies of I.T.returns of three partners, copies of bank accounts from where cheques were issued to the assessee firm, ledger accounts of the partners - CIT(A) observed that If the AO harboured doubts about the credit entries in the bank accounts of the respective partners, then it was open to him to re-open the assessments of these partners and make addition in their hands after conducting inquiries - HELD THAT:- In this regard, we are in agreement with the conclusions arrived at by the ld CIT(A) and in our considered opinion, if the AO was not satisfied with the creditworthiness of the partners, then he was eligible to take action against the partners under the relevant provisions of the Act but no addition can be made in the hands of the assessee firm in view of preposition rendered in the case of Odedara Constructions (2014 (2) TMI 130 - GUJARAT HIGH COURT] and case of Jaiswal Motor Finance (1983 (2) TMI 47 - ALLAHABAD HIGH COURT]. Respectfully following the same, we are compelled to hold that the conclusions arrived at by the CIT(A) does not carry any ambiguity, perversity and inferiority. Thus, we uphold the same. Ground No.2 of the revenue is rejected.
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