9911796707
TMI Blog2012 (11) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... return u/s.143(1) the same was selected for scrutiny assessment. The ACIT, Circle-8(1), Hyderabad made the following additions in the income return by the assessee firm for the AY 2006-07: a) Addition on account of capital introduced by partners during the year by holding the same as unexplained account of Rs.15,00,000/- b) Cash credit u/s.68 of the Income tax Act 1961. Interest thereon credited in the books of the firm during the financial year 2005-06 as Rs.87,321/- 3. During the assessment proceedings, the assessee was required to furnish the details of capital introduced and the AO asked the assessee to explain the source of the sale with supporting evidences. The AO noticed that there was a fresh capital of Rs.7,00,000/- eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d furnished a copy of pass book of 11.43 acres of land holding and another letter dt.17.11.2008 from his employer Sri Balaji Spinners stating that G. Venkata Rao is working as a Supervisor for Sri Balaji Spinners for last 7 years and drawing a salary of Rs.6,000/- p.m. It was submitted that investment of Rs.7,00,000/- was made out of agricultural income derived from his land situated in Guntur District and the copy of the land pass book was submitted. Since Shri G. Venkat Rao had failed to explain with supporting evidences, the Assessing Officer held that the credit cannot be accepted as genuine and added the sum of Rs. 7,00,000/- as unexplained credit u/s 68 of the Act, in the hands of the assessee, namely, M/s Prathipathi Estates. 5. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of holding of 11.43 acres was furnished during the assessment proceedings and the AO made the addition of Rs.7,00,000/- as unexplained credit without giving an opportunity to the assessee, since Venkata Rao could not come in person when called for by the Assessing Officer due to his ill health. As regards, addition of Rs.1,00,000 in the hands of Veeraiah, the AR stated AO has made such addition mere presumption and the AR has filed documentary evidence in respect of agricultural holdings during the assessment proceedings. 11. After considering the submissions of the assessee, the CIT(A) held as follows: "It has been submitted by the Ld. AR that the appellant has filed confirmation letters from the three partners during the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence in support of such claim. In the assessment order, the AO has almost reproduced the entire statement recorded from Sri M Srikanth. From the discussions made by the AO in the assessment order, it may be seen that he could produce documents for land holdings only to the extent of 3.66 acres, which are in his father's name. He also failed to produce any proof / evidence in support of his claim about carrying on agricultural operation and having income from such operation. In fact, Sri M Srikanth, has failed to furnish any evidence for having savings to the extent of Rs.7,00,000/- from alleged agricultural operation. Under this circumstance and having regard to the reasons discussed at length by the AO in the assessment order, in my view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partners. 3. The learned CIT(A) is not justified in confirming the additions representing cash credits of Rs. 1,00,000/- in the name of Sri B. Veeraiah. 4. The learned CIT(A) is also not justified in confirming the addition representing the interest on these above three credits. 5. For the above and for any ground or grounds that may be urged during the course of hearing, the appellate prays that the Hon'ble ITAT be pleased to direct the Assessing Officer to delete the additions totaling to Rs. 15,00,000/- representing the cash credits and interest thereon of Rs. 87,321/-." 15. The Ld. Counsel for the assessee Sri Rama Rao submitted that the CIT(A) should not have confirmed Rs.7,00,000/- each in the name of two partners and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f earning agricultural income could not be ruled out. However, he had not appeared before the AO for personal examination due to his health condition and, therefore, we find it reasonable to restrict the addition to Rs. 4,00,000/- as against Rs. 7,00,000/- made by the Assessing Officer and confirmed by the CIT(A). 19. With respect to the plea of the Counsel that the CIT(A) has not justified confirming the additions reading the interest of above three credits, AO noticed that the assessee had claimed interest of Rs.11,26,527/- on the capital account of the partners computed at the rate of 18% p.a. since the provisions of Sec.40(b)(iv) of Act permits interest on partners' capital account @ 12%, the AO disallowed the balance excess amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
