TMI Blog2012 (10) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... o charge such loss in the accounts of the assessee by claiming it as bad debt. Issue decides in favour of revenue Addition on account of unexplained cash - Cash introduced by one of the partner in a firm – AO basis for addition was that the partner could not give any explanation – Held that:- As relevant transaction are available in books of introducing partners. Capital introduced was by the partner and hence it would not come within the definition of “cash credit” automatically. If the partner was unable to give explanation which was satisfactory, an addition no doubt could have been made in the hands of said partner. Thus, in our opinion, addition made in the hands of the assessee cannot be justified. Issue decides in favour of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad promised to arrange a loan if 4% stamp fees and Rs. 5 lakhs paid as service charges. Accordingly, it seems the partner concerned had paid Rs. 25 lakhs and also given two blank cheques to Shri Ramar. However, as per the assessee, the persons involved had disappeared thereafter. Assessee gave a complaint to Deputy Commissioner of Police (Crime, Law Order), Madurai, on January, 2002 and a copy of the said complaint was filed before the Assessing Officer. Assessing Officer came to a conclusion that the claim was neither revenue in nature nor was it a loan or debt incurred in respect of the business carried on by the assessee. He, therefore, disallowed the claim. 3. Before the CIT(Appeals), argument of the assessee was that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterialized, and there was no asset whatsoever acquired. Hence the claim had to be allowed as business loss or bad debt. Reliance was placed on the decisions of Hon ble Apex Court in the case of Badridos Dega v. CIT (34 ITR 10) and CIT v. National Bank Ltd. (55 ITR 707) for its contention that the business loss had to be allowed. If it was considered as bad debt, it had to be allowed in view of the decision of Hon ble Apex Court in the case of TRF Ltd. v. CIT (323 ITR 397). 5. Per contra, learned D.R. supported the order of CIT(Appeals). 6. We have perused the orders and heard the rival submissions. Assessing Officer had come to a conclusion that a loan was being raised by one of the partners, namely, Shri K.P.S. Prakash for purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh in its books. Recording of such transaction by itself would not render it an allowable expense either as bad debt or as a business loss. If it was only a fee paid for arranging loan for the assessee s business, the amount need not have been shown as debt due from Shri Ramar. Having suffered a personal loss, Shri K.P.S. Prakash was only trying to charge such loss in the accounts of the assessee by claiming it as bad debt. Neither it was allowable as bad debt nor as a business loss. No business purpose was demonstrated by the assessee at all. As for the decisions of Hon ble Apex Court in the case of Badridos Dega (supra) and National Bank Limited (supra) relied on by the learned A.R., both are not applicable on facts here. In the case of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rs. 1 lakhs introduced on 28.3.2006, Shri Subbain could not give any explanation. Therefore, the said sums were added in the hands of the assessee as unexplained cash. 9. Assessee s appeal on this issue before CIT(Appeals), did not meet with any success. 10. Now before us, learned A.R. submitted that additions were made in the hands of the assessee, whereas, introduction of the sums were done in the capital account of the partner. Shri Subbain was a known person and had produced his books in support. If at all an addition should have been made, it should have been made in the hands of Shri Subbain and not in the hands of the firm. 11. Per contra, learned D.R. supported the order of CIT(Appeals). He relied on the decisions of Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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