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2024 (3) TMI 420 - AT - Income TaxUnexplained cash credit u/s 68 - Bogus capital introduced by the partners of the assessee-firm - as per CIT(A) Agriculture income shown by the partners was highly inflated and actually there was not enough income to justify the capital introduction - HELD THAT:- The identity of the partners was not doubted. We have also noted the fact that these partners have confirmed having introduced aforestated capital in the assessee-firm. Where the identity of the partners was not doubted and partners had confirmed introduction of capital in the assessee-firm during the year, the issue stands covered by the decision of Pankaj Dyestuff Industries [2005 (7) TMI 601 - GUJARAT HIGH COURT] wherein held that addition, if any, in such circumstances ought to have been made in the hands of the partners alone who had owned up the money introduced as capital as belonging to them but failed to prove their creditworthiness. Even otherwise we find that the returns filed by these partners prove their creditworthiness since the income though returned as agricultural income was not accepted by the department in toto but the portion not accepted was treated as income from other sources of these partners. Thus the quantum of income returned by these partners was accepted by the Revenue albeit under different head of income. Thus there can be no case of the Revenue now to hold that creditworthiness of the partners is not proved on account of their agricultural income not being accepted by the Revenue. Thus we hold that the addition made to the income of the assessee as unexplained capital of partners, is not sustainable and the same is therefore directed to be deleted. The ground no.2 is allowed. Adhoc disallowance of expenditure incurred by the assessee - assessee contended before us that in the preceding year in the case of the assessee, the disallowance had been restricted to Rs. 1,50,000/-, and he pleaded for relief accordingly in the present case also - HELD THAT:- DR was unable to controvert the above contention of the Ld.CIT(A). Thus we direct the AO to restrict the expenditure to Rs. 1,50,000/-. Decided partly in favour of assessee.
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