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TMI Blog2012 (10) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... g in current account of the partner of the assessee-firm again confirmed by the CIT(Appeals). 2. Short facts apropos are that assessee running a hotel called Hotel Sri Lakshmi, filed its return of income declaring total income of Rs. 37,31,370/-. During the course of assessment proceedings, it was noted by the A.O. that assessee had charged a sum of Rs. 22,94,000/- as bad debts in the Profit & Loss account. Clarifications were sought. Reply of the assessee was that the said sum was paid to a person who had promised to get a loan of Rs. 8 Crores at a low rate of interest. Since the deal did not materialize and the concerned person duped the assessee, the amount was claimed as bad debt. Assessing Officer, based on material produced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the complaint filed by the assessee before the Police. Assessee could not establish any business link or commercial expediency for the commission of Rs. 25 lakhs paid to Shri Ramar. Assessee also could not produce any agreement or correspondence which could show that there was any business purpose behind the sum being given. Therefore, he held that the claim was not allowable and sustained the disallowance made by the A.O. 4. Now before us, learned A.R., strongly assailing the orders of lower authorities, submitted that assessee was intending to acquire next door building for extending its lodging business. It had planned expansion of existing business and the loan was only for acquiring the said building. The payment made to Shri Ramar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the first instance that the amount was sought for purchase of land at Coimbatore. He could have very well stated that it was for the purpose of acquiring the adjacent land. In the complaint filed before the Police, there was not even a whisper that the proposal was for expansion of the assessee-firm's business. It is clear that the amounts were paid for the partner's personal purpose only. Nothing was produced before the CIT(Appeals) to show that assessee had any intention to purchase any adjacent property for expansion of the business. It would also be naïve to believe that assessee would have paid a sum of Rs. 25 lakhs just like that without any agreement. Without having produced any records to show that the sum paid was for bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of its business. We are, therefore, of the opinion that the authorities below were justified in disallowing the claim of the assessee. 7. The facts regarding next issue raised by the assessee are that one of the partners named Shri K.P. Subbain had introduced the following sums through his current account into the business:- 01.09.2005 By cheque Rs. 25,000 -do- By cheque Rs. 5,25,000 01.10.2005 By cash Rs. 2,00,000 14.02.2006 By cash Rs. 1,00,000 19.03.2006 By cash Rs. 1,00,000 24.03.2006 By cash Rs. 1,00,000 28.03.2006 By cash Rs. 1,00,000 30.03.2006 By cash Rs. 1,00,000 8. Explanation of the assessee was that the said sums were reflected in Shri Subbain's individual account and books of accounts were also produced. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f proving source of money found, to have been credited by an assessee, is on the assessee as ruled by Hon'ble Apex Court in the case of Kale Khan Mohammad Hanif (supra). In that case, Hon'ble Apex Court was seized of credits entered in assessee's books, which were not appearing in assessee's name, but, in some other name. Here, on the other hand, capital introduced was by the partner and hence it would not come within the definition of "cash credit" automatically. If the partner was unable to give explanation which was satisfactory, an addition no doubt could have been made in the hands of said partner. The amounts were not deposits made by the partner. Reliance placed by the learned D.R. in the case of CIT v Ashok Timber Industries (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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