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The ITO Ward-7 (1) Ahmedabad Versus M/s. Murlidhar Ice-cream and Sweet Parlour and Vica-Versa

2015 (9) TMI 274 - ITAT AHMEDABAD

Addition u/s.68 - CIT(A) restricted part addition - Held that:- The finding of the ld. CIT(A) that there were transactions of cash deposit and withdrawal. This fact is not controverted by the Revenue by placing any contrary material on record. We are of the considered view where there are deposit and withdrawal entries into the bank account, it would be presumed that the amount withdrawn was available with the assessee for depositing the same. Therefore, it cannot be concluded that the entire de .....

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re not available before the AO. Therefore, this contention of the Revenue is also devoid of any merit. Thus, we do not see any reason to interfere with the order of the ld. CIT(A), same is hereby upheld - Decided against revenue. - I.T.A. No.531/Ahd/2012, CO No.89/Ahd/2012 - Dated:- 20-8-2015 - SHRI G.D. AGARWAL AND SHRI KUL BHARAT, JJ. For The Revenue : Shri Narendra Singh, Sr.DR For The Assessee : Shri S.N. Divatia, AR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : This appeal and cross-object .....

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1. The Ld. Commissioner of Income tax (Appeals) is not justified in facts and in law in restricting the addition to the extent of ₹ 3,30,150/- out of the total addition of ₹ 24,75,200/- made by the Assessing Officer u/s.68 of the I. T. Act. 2. The Ld. Commissioner of Income tax (Appeals) is not justified in facts and in law in admitting additional evidences in violation of Rule-46A of the I. T. Rules, and in restricting, on the basis of such additional evidences, the disallowance of .....

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assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 09/12/2010. While framing the assessment, the AO made addition of ₹ 24,82,150/- by invoking the provisions of section 68 of the Act as unexplained credit. The AO also made disallowance of bank loan interest of ₹ 1,95,470/- and the addition of ₹ 5,000/- made on account of excess payment made to the related party by invoking the provisions of sect .....

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he assessee. Against the order of the ld. CIT(A), now the Revenue is in appeal and the Assessee is in cross-objection before us. 3. First ground of Revenue s appeal is against the deletion of addition out of ₹ 24,75,2000/- and restricting the same to the extent of ₹ 3,30,150/-. The ld. Sr. DR submitted that the ld. CIT(A) was not justified in deleting the addition and submitted that there is no dispute with fact that the account was not disclosed by the assessee in its regular book o .....

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the account, which is over-draft account, because the source of credit in this account will be the transfer from bank. He further submitted that the AO failed to appreciate the cash deposits made in this account were not unexplained but re-deposits out of the previous withdrawals. He further submitted that recording the transactions in the books has nothing to do with the correlating the withdrawals with the redeposit because once the account is not recorded in the books the corresponding redep .....

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iven a finding on fact that the cash withdrawn from the bank account was used for the purpose of redepositing in the same in the bank account. Further, the ld. CIT(A) in para-3.3 has given a finding on fact as under:- 3.3. Decision: I have carefully perused the assessment order and the submissions given by the appellant. The appellant has submitted that the bank account in which the cash has been deposited was on OD facility and the cash deposits were made out of the withdrawals made earlier fro .....

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ely made the addition on the basis of entries of deposit of cash. The claim of the appellant that the cash has been deposited out of the earlier withdrawal is prima facie acceptable as A.O. has not pointed out any other fact which indicates the utilization of cash in some other manner. Therefore, the claim of the appellant regarding availability of cash out of earlier withdrawals will have to b accepted. The only utilization of the cash withdrawal by the appellant could have been for the purpose .....

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hdrawn and there was a negative cash on that day. The appellant again deposited ₹ 1,45,000/- on 18/03/2008 which further increased the negative balance of cash. Therefore, the total cash deposited in the bank account in excess of what was withdrawn by the appellant comes to ₹ 3,30,150/- tor which the appellant has no source to explain. The appellant in the appellate proceedings has taken contradictory plea for deposit of this cash. In earlier submission, it has been mentioned by appe .....

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posit. The claim of the appellant is not acceptable as these evidences were not submitted before the A.O. and neither these were filed in the earlier stages of hearing. The evidences are not contemporary in nature as there is no evidence of loan from bank. The appellant has tried to create an evidence by showing cash loan from different persons which cannot be accepted at this stage as this is an afterthought and creation of false evidence. It is also worthnoting that this claim is against the e .....

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quate as it is not possible to furnish any shop with this small amount. It would therefore be reasonable to estimate that a further expenditure of ₹ 2,50,000/- must have been made by him in furnishing the shop. The appellant has submitted that the excess amount of cash withdrawn was used by him for this purpose. The claim of the appellant is examined and it is seen that the appellant has withdrawn an amount of ₹ 27,52,000/- and has deposited cash of ₹ 24,82,150/- which shows th .....

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of cash deposit and withdrawal. This fact is not controverted by the Revenue by placing any contrary material on record. We are of the considered view where there are deposit and withdrawal entries into the bank account, it would be presumed that the amount withdrawn was available with the assessee for depositing the same. Therefore, it cannot be concluded that the entire deposits were from unexplained source. We do not see any reason to interfere with the finding of the ld. CIT(A), the same is .....

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or the assessee submitted that during the year under appeal, assessee-firm had claimed interest expenditure of ₹ 1,95,470/- which was paid for the purpose of business. The ld.counsel for the assessee submitted that the interest expenditure was paid towards the interest paid to HDFC secured loan. The loan was taken for the business purposes. Further, ld.counsel for the assessee reiterated the submissions as were made before the ld. CIT(A). 6. We have heard the rival submissions, perused the .....

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f the loan which shows that certain withdrawals were made by the partners in cash and certain withdrawals were made for the business purpose. 1t has been pointed out by him that a withdrawal of ₹ 5,00,000/- was made on 31/07/2006 by cash which was utilised for making the purchases. Similarly, an amount of ₹ 1,03,000/- was also withdrawn in cash and utilised for purchases. Similarly, there were other withdrawals of small amount which were also used by the appellant for the purpose of .....

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t should be proportionately reduced taking into account the amount not utilised for business. After considering the same, the disallowance is restricted to ₹ 65,090/- (Rs.1,95,470 x 7,01,200/21,05,768). The ground of appeal is accordingly partly allowed. 6.1. The above finding of the ld. CIT(A) is not controverted by the Revenue by placing any contrary material on record. The contention of the Revenue is that the ld. CIT(A) has violated the Rule 46A of the IT Rules. There is no specific su .....

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