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TMI Blog2012 (9) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny and the assessment was completed u/s. 143(3) on 24-12-2007 and the total income was determined at Rs.41,48,755/- after making various additions/disallowances. Thereafter assessee preferred appeal before CIT (A) where it was allowed partial relief. Aggrieved by the order of CIT (A) the assessee and the Revenue have filed appeal before us. Ground No.1 and Ground No. 4 are taken together since they are interconnected are therefore decided together for the sake of convenience. 4. During the course of assessment the A.O. observed that Salimbhai Qureshi and Shafibhai Mulani introduced capital of Rs.5 lacs and Rs.4.5 lacs respectively in the firm. To prove identity, capacity and genuineness of transactions, copy of acknowledgement of Income Tax return was furnished. In case of Salimbhai the A.O. noticed that neither the balance sheet nor capital account indicated entry of Rs.5 lac for introduction of capital. According to A.O. though the assessee proved the identity but failed to prove the capacity and genuineness of transaction. In case of Shafibhai, neither balance sheet nor capital account, nor bank account was made available. According to A.O., the assessee proved identity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the firm evidencing the receipt of money through cheque. He also submitted the PAN details of Shafibhai. It was thus contended that the assessee has proved the identity, capacity and genuineness of the transaction and therefore the addition be deleted. He further submitted that in the eventuality of the explanation given by the partners is rejected, the addition can be made only in the hands of the individual partners and not in the hands of firm. For this proposition he relied on the decision of Punjab & Haryana High Court in the case of Rameshwar Dass (2007) 208 CTR (P&H) 457 and the decision in the case of Meta Chem Industries 160 ITR 245 (MP). He thus supported the order of CIT (A), 9. We have heard the rival contentions and perused the material on record. The factual position is that addition u/s. 68 of Rs.9.5 lacs being the capital contribution by the partners was made in the hands of the firm for the reason that the firm could prove the identity but could not prove the capacity and genuineness of transaction. While deleting the addition made by A.O., CIT (A) has given a finding that the capital was brought by cheques, both the partners were assessed to tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007.Such booking deposits for the preceding or subsequent years are not in dispute. The scheme is in middle class Muslim locality. The average plot size is just 160 sq yds. The booking deposit per member against sale deed is less than Rs.1 lac per member and such majority sums received in cash alone is not conclusive evidence against the appellant. The A.O. has made this block addition without any adverse materials except stating that confirmatory letters have not been filed and some booking deposits have been received in cash. In my opinion the stand of the A.O. is not justified as the appellant has established genuineness of booking deposits of Rs.17.71 lacs with supporting evidences. The registered sale deeds show name, address, attested photographs, signatures etc., of the members. The members are low income group from Muslim locality considering booking amount received, size of plot, number of plots etc. The sale price or purchase price is not below State Government guidelines index value. Even a part of the scheme land is still unsold as submitted by the Ld. A.R. In the circumstances I am of the opinion that the booking deposits in the facts of the case as clarified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso not made within the previous year relevant to assessment year. Accordingly, whole claim of Rs.1,80,925/- was disallowed as not proved and added to the total income of the assessee. Against the above order of the A.O., the assessee carried the matter in appeal before CIT (A). 18. CIT (A), after considering the submissions of the A.R. allowed the appeal in favour of assessee by holding as under:- "7.2 I have considered submissions of the A.R. and the judicial authority relied upon by him. The appellant maintains its books on mercantile basis which obliges him to make provision for all known liabilities. Also, the entire sales price has been credited as revenue during the previous year. The ratio of Ahmedabad ITAT judgment directly replies objection of the A.O. that N.A. charges challan stands in the name of the Trust and hence not admissible. Even otherwise in such cases substance of expenses incurred has to be examined. The expenses have been incurred wholly for the purpose of the business. The full sales price has been offered to tax. In view of facts of the case and as per development agreement the appellant is entitled to aforesaid deduction. The A.O. is therefore, directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. the assessee carried the matter in appeal before the Ld. CIT (A). 24. Ld. CIT (A) after considering the submissions of the A.R. partly allowed the appeal of assessee by observing as under:- "9.2 I have considered findings of the A.O. and the submissions of the A.R. on this point. The A.R. along with the accountant produced before me the vouchers of expenses and ledger extract of these expenses disbursed during the subsequent years. The A.R. fairly conceded that since this would be additional evidence, the appellant does not wish to file them on record at this stage. In principle I am in agreement with the A.R. that the aforesaid provision is ascertained liabilities estimated by the appellant and has to be allowed as deduction pro-rata in respect of the plot sold, as the gross sale price has been credited and offered to tax during the relevant previous year. However, the appellant himself has estimated this expenditure at lump sum Rs.150/- per sq. yd. which according to him is most reasonable. The appellant has submitted that there is still about 4000 sq. yd of plot area which is unsold at present. From the facts of the present case, it is seen that the Apex Court has also ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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