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Issues Involved:
1. Whether the addition of Rs. 12,85,000 on account of alleged unexplained cash credits was justified. Summary: Issue 1: Addition of Rs. 12,85,000 on account of alleged unexplained cash credits The assessee, a partnership firm engaged in land dealings, appealed against the order of the CIT(A) confirming the addition of Rs. 12,85,000 to its income on the grounds of unexplained cash credits. The assessee had taken loans from various parties, providing loan confirmations, addresses, and Permanent Account Numbers. The AO issued summons to some creditors and conducted inquiries, resulting in the addition of Rs. 12,85,000 as unexplained credits. The AO's assessment highlighted discrepancies in the explanations provided by the creditors regarding the sources of their deposits. For instance, a creditor earning a meager salary could not justify a large deposit, and another creditor's explanation of receiving money in "Kanyadan" was inconsistent with the timing of the deposit. The AO treated these and other similar credits as unexplained. The assessee argued before the CIT(A) that the loans were received and repaid by account payee cheques, and that it had provided all necessary confirmations and details. The CIT(A) upheld the AO's decision, stating that the assessee failed to prove the capacity of the creditors and the genuineness of the transactions, despite proving their identity. On appeal to the Tribunal, the assessee reiterated that all loans were received and repaid by account payee cheques, and that the interest on these loans was also paid by cheques. The assessee argued that it had discharged its onus u/s 68 by proving the identity of the creditors and the genuineness of the transactions, and that it was not required to prove the source of the source of the credits. The Tribunal considered the rival submissions and noted that the AO had not disallowed the interest paid on these credits, which was allowed as a business expenditure. It was further noted that the assessee had provided complete addresses, GIR Numbers/Permanent Account Numbers, and confirmations for all creditors. The Tribunal held that the assessee had discharged its initial onus u/s 68 and that the AO's failure to serve summons or the creditors' non-appearance could not justify treating the loans as non-genuine. The Tribunal concluded that the Departmental authorities were not justified in making the addition of Rs. 12,85,000 and directed its deletion, thereby allowing the appeal.
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