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TMI Blog2016 (3) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts mentioned in the assessment order. 3. That the Ld. CIT(A) has erred in law and on facts by allowing relief of Rs. 9,35,100/- to the assessee on account of non genuine rent, by treating it satisfactory use of the four premises for various business purposes, without appreciating the facts mentioned in the assessment order. 4. That the order of the Ld. CIT(A) being erroneous in law and on the facts deserves to be set-aside and the order of the AO be restored." 3. Briefly stated, the facts giving rise to this appeal are that the assessee is a partnership firm having three partners, engaged in the business of manufacture and export of home furnishing textile articles like quilt, cushion covers, curtains, etc. For the relevant year under consideration, the assessee filed return of income on 17.10.2006 declaring an income of Rs. 2,98,38,714/-. Assessment was completed vide order dated 30.12.2008 u/s 143(3) of the Income tax Act, 1961 [for short, 'the Act'] assessing the income of the assessee at Rs. 3,96,49,370/- against the income of Rs. 2,98,38,714/-. Ground No. 1 The ld. AR submitted that the three partners namely, Shri Onkar Nath Agrawal, Shri Praveen Kumar Agra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. The ld. CIT(A) further observed that the assessee has successfully demonstrated the source of each and every amount credited in the capital account of the three partners. The explanation of the assessee is fully supported by documents placed in the paper book in the form of bank pass book, extracts from the regular books of accounts of respective partners and the financial statements of the partners. Therefore, the ld. CIT(A) was quite justified in directing the AO to delete the addition of Rs. 8,50,000/- made by the AO. Accordingly, we uphold the impugned order on this count and dismiss ground No. 1 raised by the revenue. Ground No. 2 7. Vide ground No.2, the department has disputed the deletion of addition of Rs. 80,25,560/- by the ld. CIT(A) which was made by the AO on account of unexplained credit in the capital contribution of the assessee firm. The AO accepted the transfer of gray fabric stock of Rs. 36,03,260/- but did not accept the transfer of 1,89,517 mtrs of ready and dyed fabric aggregating to Rs. 80,25,560/-. Observing that the ready and dyed fabric was not actually available with M/s Nath International and therefore and the partners could not have transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts of raw cloth/ dyed cloth, etc., are entered into. In the said stock register dispatches to the Farukhabad and to various contractors are also recorded; b. Separate stock register is maintained at the Noida office for daily receipt of dyed cloth/ material from the contractors to whom raw material/cloth is sent for dying. Daily dispatches to the Farukhabad and to various contractors are also recorded therein; c. Stock register is maintained at Farukhabad wherein daily receipt of raw material/ cloth from the Noida office are recorded. In the said register the quantitative details of cloth/ other material after cutting is separately recorded and the material/ cloth sent for fabrication/quilting is also recorded; d. Separate stock register is maintained for finished goods wherein daily quantitative details of production of each finished items is recorded. 2.8 The fact that M/s. Nath International had sufficient stock of ready/ dyed fabric is evident from the following: Particulars Quantity (Mtr.) Remarks Pg.No. Opening stock of Fabric (Gray and Ready) of. was assessed/; 2,12,821 Accepted in assessment u/s 143(3) for the assessment year 2005-06 32, 139-144, Purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect conclusion/ inferences merely from the monthly details of stock purchased by M/s. Nath International. The observation of the assessing officer that since M/s. Nath International purchased/ received from dyers only 687 mtrs of Ready Fabric and Dyed Fabric and therefore, was in no position to transfer stock to the respondent is, it is submitted, patently erroneous. 2.14 In coming to the aforesaid erroneous conclusion, the assessing officer, it is submitted, completely ignored to consider the details of stock of Ready Fabric at Farrukhabad and at Noida, discussed supra. On perusal of the said details, it will kindly be noticed that though only 687 mtrs of new stock was received in the month of February, 2006, but M/s. Nath International had following opening stock in that month: Opening stock (Feb, 06) - mtrs At Noida (39282.70+9370.80) 48,653 At Farukhabad 2,35,907 Total 2,84,560 2.15 The assessing officer failedto appreciate that out of the aforesaid opening stock already available with M/s.Nath International inFebruary, 2006, that the partners withdrew the stock and introduced the same in the respondent-firm. 2.16 In the remand report dated 12.08.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - for 4 premises to the income of the assessee. The ld. AR detailed the usage of premises in the chart placed at page 165 of paper book. Copy of the rent agreements of all the four premises, copy of ledger account of rent, copy of Sales Tax Registration (form 15 for branch addition with sales tax department), copy of electricity bills paid by the assessee for the premises were placed on record to support his contention. The CIT(A), after examining/verifying the aforesaid details, deleted the disallowance made by the assessing officer, The ld. AR submitted that the AO disallowed an amount of Rs. 9,35,100/- in respect of the four rented premises, whereas actual rent comes to Rs. 7,95,100/- instead of Rs. 9,35,100/-. The ld. DR on the other hand relied on the orders of the AO. 14. On a careful perusal of the assessment order, we find that the AO mixed two different types of information and wrongly interpreted them and arrived at the conclusion arbitrarily without giving the assessee any opportunity of being heard. From the written submissions of the assessee before the authorities below, it is amply clear that ht property situated at A-1, Sector 26, Noida was used for activities, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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