TMI Blog2020 (11) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... urce of sources. The assessee has proved the sources of funds, i.e., it was withdrawal from the partnership firm. The partnership deed, the books of accounts of the firm, its fund position examined by the AO would show that the assessee has proved identity, credit worthiness and genuineness of the transactions. Though the AO has expressed the view that the partnership firm is a colourable entity, yet we notice that the AO has observed so on surmises only. The capital contribution made by the other partners has not been established to be not genuine. In fact, the AO was satisfied with the capacity of the other partners to make the capital contribution. Though he has expressed that there is time gap of six months etc., yet it was again a surmise only not supported by any material to show that the amount introduced as capital was not the amount withdrawn from the banks. In fact, the decision rendered in the cases of P. Padmavathi [ 2010 (10) TMI 1154 - KARNATAKA HIGH COURT ] and S.R Venkata Ratnam [ 1980 (8) TMI 73 - KARNATAKA HIGH COURT ] would reject the apprehension of the AO. Thus, we notice that the assessee has not only proved the source, but also source of sources. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts. Further, all the transactions have been carried by way of cash. Hence the AO took the view that the genuineness of transactions has not been proved. Accordingly, he took the view that the assessee has failed to prove the capital introduced by him in his capital account and accordingly added the sum of ₹ 1.60 crores to the total income of the assessee as unexplained credit u/s 68 of the Act. 4. The Ld CIT(A) deleted the same and hence the revenue has filed this appeal before us. 5. The Ld D.R submitted that the assessee has submitted that the source for the additional capital introduced in his capital account is the money withdrawn from the partnership firm. However, the AO has expressed the view that the assessee has adopted colourable device of forming a partnership firm and through the firm, he has withdrawn money from his capital account. There is a time gap of about six months from the date of withdrawal of funds by the other partners from their respective bank accounts and introduction of amount as capital in the partnership firm. However, the said partners have not maintained books of accounts and hence they could not conclusively prove that the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has furnished bank account details of other partners and the details of compensation received by them on sale of lands. Hence there is no dispute on identity of the firm and its partners, the credit worthiness of the firm and partners. The AO has only surmised that the partnership firm is a colourable device without bringing any material to support his view. Accordingly he submitted that the genuineness of the transactions should also not be doubted. Accordingly he submitted that the Ld CIT(A) was justified in deleting the addition. 8. We heard rival contentions and perused the record. It is well settled proposition of law that the initial burden to prove the cash credits is placed upon the shoulders of the assessee u/s 68 of the Act. In order to discharge the burden, the assessee has to prove three main ingredients, viz., identity of the creditor, creditworthiness of the creditor and genuineness of the transactions. Based on this legal proposition, we shall examine the facts prevailing in this case. 9. The assessee has introduced a sum of ₹ 1.60 crores in his capital account. The source of the above said amount was the withdrawal made by the assessee from a firm nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether he had kept the same in his house or utilised the services of a bank by depositing the same. The ITO has only two choices before him. One was to reject the explanation as not believable for the reason that on his investigation no such pigmy deposit was ever made into the bank. In the alternative, he ought to have called upon the assessee-petitioner to substantiate his claim by documentary evidence. Having exercised neither of the choices, it was not open to the ITO to merely surmise that it would not be probable for the assessee to keep ₹ 15,000/- unutilised for a period of two years. The ITO should have given an opportunity to the assessee to substantiate his assertion as to the source of the capital outlay. Considering the same, the bench held that once the money is shown to be in the account and withdrawn what the assessee did with the money till it was actually deposited is not the concern of the Department. As long as the source is explained and established and when the money is withdrawn from a savings bank account, it is not possible to hold that the source is not explained. 5.0 I have considered the submissions made by the appellant during appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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