TMI Blog2010 (4) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... kanna Rs.1,46,000 e) Shri B. Hari Prasad Rs.1,94,000 f) Shri M. Kishore Kumar Rs.1,85,000 3. The learned Commissioner of Income-tax (Appeals) ought to have seen that the appellant discharged the onus by providing detailed addresses, confirmation letters having invested the amounts and proved the genuineness of the investment and, therefore, ought to have deleted the addition made by the Assessing Officer. 3. Learned counsel for the assessee submitted that the assessment year under consideration, viz. 2005-06 was the first year of business of the assessee and the capital was introduced by the partners in the beginning of the relevant accounting period. In the circumstances, he submitted that the ratio of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Bharat Engineering and Construction Company (83 ITR 187)(SC) applies to the case of the assessee. He submitted that in this case, Hon'ble Supreme Court has held that a construction company takes time to earn profit and it could not have earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced in the very first year of business, we find that this decision of the Hon'ble Apes Court has been distinguished by the Hon'ble Calcutta High Court in the case of Ashok Timber Industries (Supra) wherein it was held that this case of Bharat Engineering and Construction Company (Supra) before the Hon'ble Apex Court pertains to the period covered by the 1922 Act, and under S.68 of the Income-tax Act, 1961, even in a case, where an amount is credited in the very first day of the accounting year and the explanation offered by the assessee is not accepted, such amount may be assessed as income of the assessee of the accounting year for which the books are maintained. This decision of the Hon'ble Calcutta High Court in Ashok Timber Industries (Supra) was followed by the Madhya Pradesh High Court in the case of Banshider Agarwal Panna (Supra). Admittedly, case of the assessee is covered by the 1961 Act and accordingly, provisions of S.68 of the Income-tax Act, 1961 are clearly applicable to the case of the assessee. In this view of the matter, we are unable to accept the legal plea raised by the learned counsel for the assessee. Accordingly, we reject the same. 6. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the borrowing claimed to have been made by Sri Hari, we hold that this amount of ₹ 55,000 claimed to have been borrowed from friends, has to be allowed, and accordingly, addition on account of credit entry in the account of K. Sri Hari is restricted to ₹ 50,000 as against ₹ 1,05,000 confirmed by the CIT(A). We do so accordingly. 8. As for the next item of addition of ₹ 1,20,000 sustained by the CIT(A) in respect of the capital introduced by B. Srinivasa Rao, learned counsel for the assessee submitted that Srinivasa Rao was an employee in a private concern and was also having agricultural income. He submitted that no addition is called for in respect of credit entry in the account of this partner. Learned Departmental Representative opposed the submission of the learned counsel for the assessee and submitted that the assessee could not prove the creditworthiness of Srinivasa Rao with any documentary evidence. He submitted that Srinivasa Rao is not even an income-tax assessee, and as such the addition sustained by the CIT(A) in respect of credit in the account of Srinivasa Rao should be upheld. On careful consideration of the rival submissions, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that this partner was working as a driver and has savings accumulated for the last nine years. He submitted that Venkanna was also an agriculturist and was doing cultivation on land taken on lease at his native place. He submitted that no credit was given by the lower authorities either for the agricultural income derived by Venkanna for the past several years, or for the amount of ₹ 72,000 which was invested by borrowing from friends. The Learned Departmental Representative has opposed the submissions of the assessee and submitted that the explanation of the assessee has no supporting evidence and this partner is not even an income-tax assessee, and as such his credit-worthiness is not at all proved with any documentary evidence. On careful consideration of the rival submissions with regard to the capital introduced by this partner, we find that this partner, Venkanna, has confirmed that he was an agriculturist, deriving agricultural income for the last several years from the land taken by him on lease at his native place. We find that no credit for his savings out of agricultural income was allowed by the lower authorities, though no adverse finding has been given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that no credit was allowed by the Assessing Officer with regarded to the agricultural income of the assessee. He submitted that an amount of ₹ 98,000 invested on 4.4.2004 was borrowed by the assessee from others, and this fact has been affirmed by the partner Kishore Kumar in his confirmation letter. He therefore, submitted that the addition sustained by the CIT(A) in respect of credit entry in the account of this partner is not justified. The Learned Departmental Representative on the other hand, opposed the submissions of the learned counsel for the assessee and submitted that the assessee could not produce any evidence in support of the confirmation letter filed by Kishore Kumar and the said partner is not even assessed to income-tax and in the circumstances, the creditworthiness of Kishore Kumar has not been proved by the assessee. On careful consideration of the rival submissions with regard to the capital introduced by this partner, we find that the total credit found in the account of this partner, Kishore Kumar, was ₹ 2,48,000. We find that no credit for the savings out of agricultural income of Kishore Kumar was allowed by the lower authorities, though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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