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2016 (3) TMI 1077 - ITAT DELHI

2016 (3) TMI 1077 - ITAT DELHI - TMI - Unexplained cash credit u/s 68 - Held that:- CIT(A) granted relief to the assessee by observing that the assessee had explained the sources to be out of cash withdrawn by the partners from their bank accounts and out of regular cash in hand. The said contention of the assessee was supported by copies of partner’s bank pass book and also cash book as maintained by them in regular course of business. The ld. CIT(A) further observed that the assessee has succe .....

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ained credit in the capital contribution of the assessee firm - Held that:- In the present case we find no infirmity in the order of the ld. CIT(A) wherein he has categorically held that sufficient stock of ready and dyed fabric was actually available with the parent firm M/s Nath International out of which 1,89,517 meters of stock was withdrawn by the partners and was introduced as their capital contribution in the assessee firm. The ld. CIT(A) further held that the findings of the AO that no s .....

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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 property situated at B-114, Sector 5, Noida and Kanodia House, Lohai Road, Farrukabad were used for production activities and the property at 504A, Nagarjuna Apartments, Mayur Vihar – 1, New Delhi was used fo .....

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-2016 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AND SHRI O.P. KANT, ACCOUNTANT MEMBER, For the Appellant: Shri Rohit Jain, Adv Ms. Deepashree Rao, CA For the Respondent: Shri P. DAM Kanunjna, Sr. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal filed by the revenue is directed against the order of the CIT(A), Ghaziabad, dated 29/11/2010 in first appeal No. 120/2008-09/GZB-Noida for A.Y. 2006-07. 2. The grounds raised by the assessee read as under: 1. 1. That the Ld. CIT(A) has erre .....

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ciating the facts mentioned in the assessment order. 3. That the Ld. CIT(A) has erred in law and on facts by allowing relief of ₹ 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 .....

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essing the income of the assessee at ₹ 3,96,49,370/- against the income of ₹ 2,98,38,714/-. Ground No. 1 The ld. AR submitted that the three partners namely, Shri Onkar Nath Agrawal, Shri Praveen Kumar Agrawal and Shri Vipin Kumar Agrawal were regularly maintaining their individual books of accounts and filing their balance sheet/statement of affairs with the Income tax department alongwith their return of income. The AO noticed that the following amounts were found credited in the c .....

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unal against the impugned order of the ld. CIT(A). 4. We have heard the rival submissions and have perused the relevant material on record. The ld. DR supporting the action of the AO contended that the ld. CIT(A) was not justified in deleting the addition of ₹ 8,50,000/- on account of capital introduction by the three partners. 5. Replying to the above, the ld. AR submitted that in the present case, the identity is undisputed and the credit worthiness stood established as copy of the incom .....

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. AR has relied on various decisions including the oft quoted judgment of the Allabahad Hon'ble High Court in the SunderLal Jain Vs. CIT reported in 117 ITR 316 [All]. 6. On careful consideration of the above from the first appellate order, we note that the ld. CIT(A) granted relief to the assessee by observing that the assessee had explained the sources to be out of cash withdrawn by the partners from their bank accounts and out of regular cash in hand. The said contention of the assessee w .....

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tatements of the partners. Therefore, the ld. CIT(A) was quite justified in directing the AO to delete the addition of ₹ 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 ₹ 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 .....

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finding that the stock of ready and dyed fabric was actually available with M/s Nath International, deleted the addition made by the AO. Aggrieved, the Revenue is in appeal before the Tribunal. 8. The ld. DR supported the action of the AO and submitted that the ld. CIT(A) was not right in allowing relief to the assessee. 9. The ld. AR submitted written broad proposition in support of his oral arguments which have been reproduced verbatim hereunder: 2.5 During the year under consideration, M/s. .....

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oth is carried out from the Noida office. The cloth required for manufacturing is required to be dyed and processed and the same is sent for dying to the various independent contractors. In certain cases, the dyed cloth (Ready Fabric) is also purchased and in that case the dying activity is not required. The dyed cloth is sent from Noida office to the factory at Farukhabad and Noida where cutting of the cloth for manufacturing as per the dimensions and the requirements of the final product take .....

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as regularly maintaining the following stock registers for recording each and every movement of stock:- a. Raw material stock register is maintained at Noida office wherein all the daily quantitative details of receipts 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 w .....

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erein 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 of Fabric (Gray: 3,97,211 mtrs and Ready: 3,31,452 mtrs) 7,28,663 Not questioned by A.O 32 Opening s .....

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(refer para 6.5/ pages 11/12 and page 18 of CIT(A) order) 2.10 Neither in the assessment order nor in the remand report, the assessing officer has been'able to controvert/ rebut aforesaid figures. 2.11 Apart from the aforesaid, it is further submitted that M/s Nath International, during the relevant period, was enjoying a credit limit of ₹ 3,50,00,000/- from the bank (sanction letter of the bank is placed at page 45) and used to submit monthly stock statement to the bank for the above .....

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No. 12- 14), @78 Monthly stock statements submitted with Canara Bank Sample for the following months of April, June, August, February and March, placed in the paper book Particular attention invited to the stock statement for February, 06 - ready stock of 2,35,907 mtrs at Farukhabad Branch 46-59 54 2.12 The aforesaid details/ documents, particularly the stock registers, clearly establish beyond any doubt, existence of stock of Ready and Dyed Fabric with M/s. Nath International. The contention of .....

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abric 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 f .....

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rder. A point by point rebuttal to the same was filed before the CIT(A), placed at pages 270-276 of the paper book. 2.17 In the light of the aforesaid facts, the order of the CIT(A) deleting the addition of ₹ 80,25,560/- as unexplained credit calls for being affirmed. 10. Per contra, the ld. DR supported the action of the AO and submitted that the ld. CIT(A) was not justified in deleting the addition made by the AO. 11. In the light of the above, when we analyse the facts of the present ca .....

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tock were available with the said firm is factually incorrect and in view of the above facts noted by the ld. CIT(A) the addition made by the AO cannot be held as sustainable and the first appellate authority rightly added the same. Hence we agree with the explanation tendered by the ld. AR and consequently concur with the conclusion arrived at by the ld. CIT(A). Accordingly, we uphold the impugned order of the ld. CIT(A) on this count. Ground No. 2 of the Revenue being devoid of merits is dismi .....

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9,35,100/-. 13. We have heard the rival submissions and have perused the relevant material on record. The ld. AR submitted that the Assessing officer wrongly interpreted the aforesaid two different information and without giving any opportunity of being heard, arbitrarily added the rent paid amounting to ₹ 9,35,100/- 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 f .....

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