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2018 (5) TMI 135 - AT - Income TaxUnexplained investment - source for capital not explained by any of the partner - Held that - Since the assessee s capital investment is in the partnership firm is properly explained the A.O. is not permitted to make the investment made by the other partners in the partnership firm as income in the hands of the assessee. If the source for capital is not explained by any of the partner the same required to be taxed either in the hands of the partnership firm or in the hands of the respective partner but not in the hands of the assessee. Accordingly addition made by the A.O. in the hands of the assessee with regard to the investment in capital of the firm is bad in law and the same is unsustainable. Hence we uphold the order of the ld. CIT(A) and dismiss the appeal of the revenue on this ground. Unsecured loans appearing in the balance sheet of the partnership firm - Held that - The unsecured loans are appearing in the books of the partnership firm but not in the books of the assessee. The only investment made by the assessee is contribution to capital which was explained in his hands. If the sources of unsecured loans are unexplained the addition should be made in the hands of the partnership firm but not in the hands of the assessee. The assessing officer has not established that the unsecured loans were introduced by the assessee in the partnership firm his unexplained source of income. Making addition of unsecured loans relating to the partnership firm in the hands of the assessee is bad in law and unsustainable. Hence we up hold the order of the Ld.CIT(A) and dismiss the appeal of the revenue on this ground. Addition made by the AO on account of gifts received by the assessee from the family members - Held that - Since all of them are assessed to tax and the CIT(A) has discussed the sources of accumulation of income we do not see any reason to suspect the genuineness of the gifts received by the assessee. In case the A.O. is of the opinion that the sources of gifts are unexplained the same should be brought to tax in the hands of the donors but not in the hands of the assessee. Once the source is explained by the assessee the burden shifts on revenue to disprove the evidence furnished by the assessee. In the instant case though the assessee furnished the affidavits the revenue did not shift the burden to the assessee by disproving the genuineness of the gifts. Therefore we do not see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. This ground of appeal is dismissed.
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