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2012 (11) TMI 934 - AT - Income TaxAddition on account of unexplained cash deposit Held that - Partners of the assessee firm are also partners of the firm M/s Adarsh Octroi Services, Mumbai - amount of Rs.5,25,000/- each was withdrawn by Shri Rafique Shakur Shekhani and Shri Sayed Rasul Shaikh partners of the firm on 15.4.2005 from their partnership firm M/s M/s Adarsh Octroi Services, Mumbai as per copy of cash book filed and the same amount was deposited by both the partners with the assessee firm on the same date - Rs.2,500/- each was deposited by Shri Rafique Shakur Shekhani and Shri Sayed Rasul Shaikh on 23.2.2006 out of their previous withdrawals from the same firm - partners have proved the source of deposits and in the absence of any contrary material placed on record by the Revenue that there is no such corresponding withdrawals in the firm M/s M/s Adarsh Octroi Services or withdrawals made by the partners of the firm have been utilized for some other purpose and not for making deposits in the assessee s firm - assessee is not required to prove the source of source addition deleted Unexplained cash deposits Held that - CIT(A) after examining the regular cash book maintained by the assessee wherein the relevant entries are duly recorded, has accepted the above deposits in the banks accounts - it is not the case of the Revenue that the entries recorded in the cash book are not genuine or the AO has rejected the accounts maintained by the assessee, we hold that the ld. CIT(A) was fully justified in deleting the addition
Issues:
1. Deletion of addition of Rs.10,60,000 as unexplained cash deposit. 2. Deletion of addition of Rs.7,70,000 as unexplained cash deposit. Issue 1: Deletion of addition of Rs.10,60,000 as unexplained cash deposit: The appellant, a firm engaged in real estate business, declared total income of Rs. 41,77,773, which was assessed at Rs. 62,27,450, including unexplained cash deposits. The AO added Rs.10,60,000 as unexplained cash deposit, which the ld. CIT(A) later deleted. The AO questioned the source of these deposits, but the appellant explained that they were from remuneration and profits from another firm. The partners withdrew cash from the other firm and deposited it in the appellant's account. The AO rejected this explanation due to lack of documentary evidence. However, the ld. CIT(A) found that the total capital introduced was only Rs.10,55,000, and hence, deleted the addition. The Revenue argued that the deletion was unjustified without date-wise withdrawals. The appellant contended that complete details were provided and accepted by the ld. CIT(A). The Tribunal noted that partners withdrew and deposited the cash on the same dates, proving the source of deposits. As there was no evidence of withdrawals for other purposes, the ld. CIT(A)'s decision to delete the addition was upheld. The Tribunal rejected the Revenue's appeal. Issue 2: Deletion of addition of Rs.7,70,000 as unexplained cash deposit: The AO added Rs.7,70,000 as unexplained cash deposits made by the appellant in different banks, which the ld. CIT(A) later deleted after verifying the cash book entries. The Revenue contended that the AO's decision should be upheld, while the appellant supported the ld. CIT(A)'s order. The Tribunal observed that the ld. CIT(A) accepted the deposits after examining the cash book entries, and as there was no evidence to suggest otherwise, the deletion of the addition was deemed justified. Since the Revenue failed to prove any discrepancies in the accounts, the Tribunal upheld the ld. CIT(A)'s decision to delete the addition. Consequently, the Revenue's appeal was dismissed. In conclusion, the Tribunal ruled in favor of the appellant, upholding the deletion of both the additions of unexplained cash deposits amounting to Rs.10,60,000 and Rs.7,70,000. The Tribunal found that the explanations provided by the appellant were satisfactory and that there was no evidence to dispute the sources of the cash deposits.
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