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Issues involved: Cross-appeals against the common order dated 07-08-2009 of the Learned Commissioner of Income Tax(Appeals), Gandhinagar for the assessment year 2006-07.
Summary: 1. Facts and AO's additions: The assessee, engaged in developing construction and sale of properties, filed a return declaring a loss. The AO made additions for unexplained credit in partners' capital accounts and unexplained deposits from parties. The AO treated these as unexplained under section 68 of the Act. 2. Decision of CIT(A): The CIT(A) deleted the addition of one amount and confirmed the addition of another. The assessee appealed against the confirmed addition, while the Revenue appealed against the deletion. 3. Assessee's arguments: The assessee, a firm with 10 partners, explained that a dispute among partners led to difficulties in providing details to the AO and CIT(A). The assessee requested a remand to submit additional evidence and cross-verification of creditors. 4. Legal precedent: The assessee cited a decision of the Hon'ble Allahabad High Court to support the deletion of one addition, arguing that unexplained deposits cannot be considered the firm's income. 5. Revenue's stance: The Revenue argued that the AO had given ample opportunity to explain the deposits, and restoration of the issue was unwarranted. They also contended that the amount received from three partners was not adequately proven. 6. Tribunal's decision: The Tribunal noted the dispute among partners and directed the issue to be restored to the AO for further verification and adjudication. The AO was instructed to conduct necessary inquiries under section 68 of the Act. 7. Final verdict: The appeal of the Revenue was treated as allowed for statistical purposes, and both appeals were treated as allowed. This judgment highlights the importance of providing complete details and evidence to substantiate transactions, especially in cases involving unexplained credits and deposits, under section 68 of the Income Tax Act.
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