TMI Blog2013 (10) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee firm was almost closed down during the previous year relevant to the assessment year since the assessee also did not have any business and the income admitted for the assessment year under consideration is NIL – Held that:- The CIT(A), deleted the addition on the ground that the withdrawals made by the assessee's partner Sri Vemireddy Prabhakar Reddy cannot be construed as unexplained withdrawals - In view of the controversial findings by the AO and CIT(A), matter remitted to the file of the AO to examine the account copies filed before the CIT(A) and decide the issue in accordance with law – Decided in favor of Assessee for statistical purpose. - ITA No. 612/Hyd/11 - - - Dated:- 31-1-2013 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. Smt. Amish S. Gupt Shri A.V. Raghu Ram ORDER Per Asha Vijayaraghavan, J. M. Appeals being ITA Nos. 612 to 614/Hyd/11 filed by the revenue and the appeals being ITA No. 615/Hyd/11 and 500/Hyd/11 are cross appeals are directed against the respective orders of CIT(A) for the assessment years 2002-03 to 2005-06. Since identical issues are involved in these appeals, they were clubbed and head together and, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74 (Guj.). 8. After considering the submissions of the assessee and relying upon the decisions of Kolkata Bench of ITAT in the case of LMJ International Ltd. Vs. DCIT, 119 TTJ 214, Delhi Bench of ITAT in the case of Anilkumar Bhatia Vs. ACIT in ITA Nos. 2660 to 2665/Del/09 and Vizag Bench of the ITAT in the case of KGR Exports Vs. JCIT in ITA No. 494/V/2007, order dated 11/09/2008 the CIT(A) held that the AO disallowed certain expenditure without having any valid reasons, as the AO did not have any seized material for making the disallowances. Therefore, following the decision of Hon'ble Gujarat High Court in the case of Vijaybhai N. Chandrani Vs. ACIT, 234 CTR 474 (Guj.), the CIT(A) deleted the addition made by the AO. Accordingly, this ground was allowed. Further, the CIT(A) held that the assessee had filed the return of income at Rs. 1,95,620/- and the original return of income filed was assessed u/s 143(3) of the IT Act and the AO had made an addition of Rs. 4,50,000/-. Therefore, the income determined as per the original assessment order dt. 12/03/2004 at Rs. 6,45,620/- should remain undisturbed. Hence, the CIT(A) directed the AO to adopt the assessment order passed as on 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as per the provision of section 153A of the IT Act. 4. The order of the CIT(A) is not acceptable on the ground that in the case of ACIT Vs. M/s Ch. Marthanda Rao Co., Income Tax Act, 1961 No. 780 to 784/Hyd/2010 the Jurisdictional ITAT has given its categorical finding that the total income shall be assessed or reassessed as per section 153A of the Act." 13. We have heard the arguments of both the parties and perused the record and gone through the orders of the authorities below. In the case under consideration, the contention of the assessee was that during the search operation, the Department did not seize any incriminating documents, therefore, the AO should not have initiated the proceedings u/s 153C of the IT Act. For this proposition, the assessee relied upon the decision of the Hon'ble Gujarat High Court in the case of Vijayabhai N. Chandrani Vs. ACIT 231 CTR 474 (Guj.) wherein the Hon'ble Court held that "notice issued under sec. 153C on the basis of loose papers which bear the name of assessee but actually did not belong to the assessee was without jurisdiction, because, under s.153C notice can be issued only where the money, bullion, jewellery or other valuable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as it is prejudicial to the assessee. 2. The learned CIT(A) erred in confirming the addition of Rs. 19,05,383/- though it is observed to be from bank OD account of partner's on the ground that source of the OD A/c is not explained failing to appreciate the fact that OD a/c demonstrates that it is loan and stands explained." 20. The AO made the addition of Rs. 19,05,383/- being amount introduced in capital account, on the ground that no evidence is produced. 21. On appeal, the CIT(A) observed that it was seen that the partner has brought in Rs. 11,00,000 on 12/04/2004 and Rs. 60,000 on 11/03/2005 from the OD account with Karnataka Bank. It was further observed that the partner account is also credited with cash on 30/03/2005 at Rs. 6,12,883/- and Rs. 1,32,500 on 31/03/2005. He was of the view that the above amounts have been deposited out of the OD account of Karnataka Bank, however, the source of the OD account was not explained. Therefore, the CIT(A) was of the view that the assessee should have explained the said deposits with necessary details. With regard to cash deposits made by the partner to the extent of Rs. 6,12,883/- and Rs. 1,32,500/-, the CIT(A) held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital account of one of the partners Sri Vemireddy Prabhakar Reddy cannot be considered something uncommon in view of the fact that the assessee firm was almost closed down during the previous year relevant to the assessment year since the assessee also did not have any business and the income admitted for the assessment year under consideration is NIL. The CIT(A), therefore, was of the view that when the business is no longer carried on in firm's hand, it could be possible for the partners to withdraw the money from the capital account and current accounts for various purposes. Hence, the CIT(A) held that it cannot be said that the partners do no have right to withdraw the money which is belonging to them only and the withdrawals made by the assessee's partner Shri Vemireddy Prabhakar Reddy from his current account during the year under consideration cannot be construed as unexplained withdrawals. Hence, the addition made by the AO at Rs. 96,75,000/- was deleted by the CIT(A). 29. Aggrieved the revenue is in appeal before us. 30. We have heard the arguments of both the parties and perused the record. The AO made the addition on the ground that no explanation is offered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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