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Issues involved: Appeal against order dated 30.08.2011 passed by ld. CIT(A), Ghaziabad for Assessment Year 2003-04. Grounds raised include completion of assessment u/s 144, disallowance of depreciation, and addition of income u/s 68 of the Income Tax Act, 1961.
Completion of Assessment u/s 144: The ld. Authorised Representative did not press grounds no.1, 2 & 4, which were dismissed. The effective ground for adjudication was ground no.3 regarding the addition of Rs. 12,70,842. During assessment, it was noted that partners introduced fresh capital of Rs. 12,70,842. The A.O. made an addition under section 68 of the Income Tax Act, 1961, as the source was not explained. The CIT(A) confirmed the addition of Rs. 9,70,842 after considering cash flow and submissions. The ld. Authorised Representative argued that partners had sufficient cash balance to introduce the capital, supported by evidence. Referring to a previous case, it was highlighted that the initial burden on the assessee to explain the capital contribution by partners was discharged. The I.T.A.T. Agra Bench held that the capital was introduced by partners through their own sources, leading to deletion of the sustained addition of Rs. 9,70,842. Decision and Rationale: After considering relevant judgments, including those of the Hon'ble Allahabad High Court and Hon'ble M.P. High Court, it was concluded that the assessee had explained the capital introduction by partners. The I.T.A.T. Agra Bench order in a similar case supported the assessee's position. The judgment cited by the ld. Departmental Representative was found to be distinguishable. Therefore, the addition of Rs. 9,70,842 sustained by the CIT(A) was deleted. The appeal of the assessee was partly allowed.
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