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2022 (10) TMI 22 - AT - Income TaxMismatch of turnover between the one reported in Form 26AS with the one disclosed by the assessee in the audited profit & loss account - HELD THAT:- We are of the considered view that the alleged addition was wrongly made by ld. AO on the basis of some arithmetical mistakes made while examining the turnover details of the assessee and ld. AO failed to establish that the appellant has actually received the said sum over and above the turnover disclosed in the books of account. Thus, no interference is called for in the finding of ld. CIT(A) and ground no. 1 raised by the Revenue is dismissed. Addition invoking the provisions of Section 41(1) - substantial increase in the capital in a year due to cessation of liability - HELD THAT:- The assessee being the partner in the firm can withdraw the sum from the partnership firm if needed. Such amount withdrawn from the partnership firm of which genuineness is not in doubt can be utilized by the assessee for any of its purpose including the one for business. The assessee has never claimed the alleged amount as any deduction or allowance against the revenue during the year or in the past. The assessee still remains the partner in the partnership firm M/s. Baba Baidyanath Constructions which is regularly filing the income tax return and the copies of the same for AY 2013-14, 2015-16 are placed in the paper book. The said adjustment of transferring the loan into the capital is between the assessee and the partnership firm. Had the assessee treated it as a part of the capital in the preceding year when the amount was actually withdrawn from the partnership firm, the present situation would not have arrived. We are of the considered view that ld. AO was not justified in invoking the provisions of Section 41(1) of the Act on the alleged transaction and thus, we fail to find any infirmity in the finding of CIT(A) deleting the said addition. Thus, ground no. 2 raised by the Revenue stands dismissed. Addition invoking the provisions of Section 68 - HELD THAT:- We find that the assessee being a partner of M/s. Baba Baidyanath Constructions which is regularly filing income tax return, the assessee in order to procure contracts in the business in his individual name withdrew the sum from the partnership firm and utilized the same showing it as its own capital. We fail to find any merit in the finding of ld. AO invoking provisions of Section 68 even after accepting that the assessee being a partner in the said firm, has withdrawn the amount from the capital account of the firm and utilized it as a capital in its own business and explained the source of the alleged sum in all aspects of identity, genuineness and creditworthiness. Under these facts, there remains no possibility to invoke the provisions of Section 68 - CIT(A) has rightly appreciated the facts and deleted the addition and thus, the finding of CIT(A) do not call for any interference. Revenue challenging the addition is also dismissed.
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