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2019 (5) TMI 1438 - AT - Income TaxAddition u/s 68 - unexplained cash credits brought into the assessee firm by partners - additional income was disclosed by the partners before the Income Tax Settlement Commission - additional income offered by the partners would be sufficient to cover the introduction of capital / credits in the partners account - HELD THAT:- When an assessee records credit in the name of third party in its books of account, it must prove not only the identity of the creditors, the capacity of the creditors to advance money, but also the genuineness of the transaction. The onus of proving the source of a sum of money found to have been received by the assessee is on the assessee itself. When the nature and source of the receipt cannot be satisfactorily explained by the assessee, it is open for the Revenue to hold that it is the income of the assessee - burden lies with the assessee to show that the income is from a particular source. In the instant case, for all the assessment years, the A.O. has examined the creditworthiness of all the partners and has categorically found that the partners did not have sufficient withdrawals on matching dates of introduction of capital / current account credits. We also notice that the A.O. had given due credits for source when there was matching withdrawal / explanation by partners CIT(A) was of the view that the partners of the assessee-firm had disclosed substantial additional income before the Income Tax Settlement Commission and that would be sufficient to cover the introduction of capital / credit in their current account. We have perused the order of the Settlement Commission dated 23.06.2014. There are variations in the additional income computed by the Income Tax Settlement Commission and the details of the additional income that was furnished by the learned AR before the Tribunal. AO also did not have the benefit of Income Tax Settlement Commission’s order (The assessment order was completed on 28.03.2014, whereas the Income Tax Settlement Commissioner’s order was dated 23.06.2014). Since the A.O. did not have the benefit of Income Tax Settlement Commissioner’s order and for a proper examination of availability of funds with the partners of the assessee-firm for making investments in assessee-firm, necessary the matter needs to be remanded to the A.O. for fresh consideration. The assessee is directed to furnish the orders of the Income Tax Settlement Commission and also cash flow statement to prove that there the disclosure made before the Income Tax Settlement Commission towards unexplained income was directly invested in these funds as their respective capital and there should be direct nexus between the disclosure made by the assessee before the Settlement Commission and the investment in these firms. - Appeals filed by the Revenue are allowed for statistical purposes.
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