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2020 (6) TMI 170 - AT - Income TaxAddition u/s.68 - Unexplained share capital - onus to prove - HELD THAT:- Basic requirements of section 68 have been discharged by the assessee by furnishing the relevant evidences. The evidences which were furnished by the assessee were confirmation letters of the partners, copies of I.T.Returns, PAN Nos, and income declared. By furnishing the above, the preliminary onus was discharged by the assessee. There is no dispute to the fact that all the partners have owned the introduction of capital in assessee’s firm. The AO has not challenged the correctness of the evidences filed by the assessee. We find that this is a case where the partners have introduced the capital, therefore, the issue is covered in the case of Metachem Industries [1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT] wherein held moment the firm gives satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be income of the firm for the purposes of income tax. It is open for the AO to take appropriate action under section 69 of the act against the person who has not been able to explain the investment. In the case at hand, the assessee has discharged its onus satisfactorily by furnishing all the relevant evidences. Therefore, when the firm is disclosing capital introduction by the partner providing names and PAN nos of contributing partners, then no addition can be made in the hands of the firm - Decided in favour of assessee. Disallowance under various heads of expenses - adhoc disallowance by disallowing 20% of the expenses - HELD THAT:- The onus is on the assessee to prove the genuineness of expenses claimed by furnishing relevant bills and vouchers. When the assessee is unable to produce the bills and vouchers, the Assessing Officer can make reasonable addition, as he deems proper. In this case, the assessee has produced ledger copies in support of various expenses incurred by him. The assessee is in the business of hotel and textile business and is bound to incur the above expenditure for smooth running of the hotel and textile business but has to keep the bills and vouchers for claiming the deduction, which is lacking in this case. However, keeping in mind the nature of business and expenditure incurred, we are of the view that the disallowance @ 20% is on higher side. Therefore, we restrict the disallowance at 10% - Decided partly in favour of assessee. Disallowance of interest on loans - HELD THAT:- onus was on the assessee to establish that no amount of interest-bearing loan was being used to extend interest free loan. Since the assessee was not properly show caused by the authorities below enabling him to explain his stand and to establish that no amount of interest bearing loan was used for advancing interest free loan, therefore, we deem it proper, as also candidly agreed by the ld D.R. to restore the issue to the file of the AO for afresh examination and verification after allowing due opportunity of hearing to the assessee. Hence, this ground is allowed for statistical purposes. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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