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2016 (2) TMI 626 - ITAT DELHI

2016 (2) TMI 626 - ITAT DELHI - TMI - Addition u/s 68 - Held that:- The assessee not only gave the confirmation but also furnished the balance sheet of the creditors and also the acknowledgement of the filing of income tax return by the creditors. Therefore, if the Revenue was not satisfied about the creditworthiness of the creditors, it could have examined the creditors as they were assessed to income tax and all particulars relating to them were with the Assessing Officer. Addition deleted - D .....

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transfer shall be deemed to be full value of the consideration received or accrued as a result of such transfer. However, the sine qua non of the applicability of this Section is the transfer of capital asset by way of distribution of capital asset. In the case under appeal before us, it has not been pointed out by the Assessing Officer or the learned DR whether there was any distribution of capital asset. The Assessing Officer levied the capital gain tax in respect of land but the land was own .....

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of capital asset is not fulfilled, Section 45(4) is not applicable. - Decided in favour of assessee - ITA No. 36/Del/2011 - Dated:- 19-2-2016 - Shri G. D. Agrawal, Vice President And Shri Chandra Mohan Garg, Judicial Member For the Appellant : Smt. Anima Barnwal, Senior DR For the Respondent : Shri U.S. Bhargava, Advocate ORDER Per G. D. Agrawal, VP :- This appeal by the Revenue for the assessment year 2007-08 is directed against the order of learned CIT(A), Ghaziabad dated 27th October, 2010. 2 .....

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sit immediately before issue of cheque to the assessee. That no satisfactory explanation was given by the assessee for cash deposit in the bank account of the creditor and the creditor was not produced for examination before the Assessing Officer. Therefore, the Assessing Officer was fully justified in treating the credit to be unexplained cash credit u/s 68 of the Income-tax Act, 1961. Learned CIT(A) deleted the addition without properly appreciating the facts of the case. She, therefore, submi .....

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port of this contention, he relied upon the decision of Hon'ble Supreme Court in the case of CIT, Orissa Vs. Orissa Corporation P.Ltd. - [1986] 159 ITR 78. 5. We have carefully considered the rival contentions and have perused the relevant material placed before us. Learned CIT(A), while deleting the addition, has recorded the following finding:- 5.1 Regarding ground No.1, I find that all the partners/family members, who have either contributed in their capital account or have given unsecure .....

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s. CIT 304 ITR 239 (All.) clearly take the issue in favour of the appellant. 5.1(a) The AO's objections as listed on page 10 & 11 of the assessment order are either irrelevant or very weak in the given facts and circumstances of the case. Once the evidence of their being assessed to tax along with copies of I.T. returns and confirmations are furnished; the nature of source of income in their hands can very well be ascertained. Some ladies were not produced on religious grounds but even t .....

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r creditworthiness is more than established. 5.1(b) It is true that some of the cash deposits in the bank accounts of these partners/relatives have only remote nexus with cash withdrawals, as those withdrawals were made months earlier; but that observation, per se, is not strong enough to hold that the appellant failed in its duty of meeting the requirements as laid down in section 68 of the Act. What the AO could have been done or can still do is to take/cause to take remedial action in the han .....

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CIT(A), it is evident that all the creditors are assessed to tax and have given the money to the assessee through banking channel. After analyzing their balance sheets, learned CIT(A) has also recorded the finding that they have sufficient creditworthiness because they have huge capital balances. On the facts of this case, in our opinion, the decision of Hon ble Apex Court in the case of Orissa Corporation P.Ltd. (supra) would be squarely applicable. In the said case, there was credit balance i .....

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assessee could not produce the parties, an adverse inference should not be drawn that the amount represented undisclosed income of the respondent-assessee. On appeal to the Supreme Court, Hon ble Apex Court held :- that in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under se .....

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clusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case. 8. That the facts of the assessee s case are even better than the facts in the above mentioned case before Hon ble Apex Court. In the case under appeal before us, the assessee not only gave the confirmation but also furnished the balance sheet of the creditors a .....

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not find any justification to interfere with the order of learned CIT(A). The same is upheld and ground No.1 of the Revenue s appeal is rejected. 9. Ground No.2 of the Revenue s appeal reads as under:- That the ld.CIT(A) has erred in law and on facts by deleting the addition of ₹ 36.93 lacs on account of long term capital gain and not properly appreciating the facts that the assessee s case is covered u/s 45(4) of the IT Act. 10. The facts relating to this ground as recorded by the Assess .....

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ked out the Capital Gains on the asset transferred i.e. land shown at ₹ 60 lacs in its balance sheet by taking the fair market value thereof as on 01.06.2006. 11. From the above, it is evident that during the accounting year relevant to assessment year under consideration, there was change in the constitution of the partnership firm from which three partners retired and one new partner joined. On these facts, the Assessing Officer is of the opinion that provision of Section 45(4) of the Ac .....

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the previous year in which the said transfer takes place and, for the purpose of section 48, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration received or accruing as a result of the transfer. 13. Section 45(4) of the Act would be applicable if there is transfer of capital asset by way of distribution of capital asset on dissolution of firm or otherwise. Such profit and gain would be chargeable to tax as income of the firm i .....

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