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TMI Blog2022 (11) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the assessee is able to proof the transaction with the party and business activities are going on just beyond the doubt. - I.T.A. No. 479/Asr/2018, I.T.A. No. 480/Asr/2018 - - - Dated:- 13-10-2022 - DR. M. L. MEENA , ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE , JUDICIAL MEMBER Appellant by Sh.Sudhir Sehgal , Sh. P.N. Arora , Adv. Respondent by Sh. Amlendu Nath Misra , CIT. DR . ORDER Per Anikesh Banerjee , J. M. The Cross appeals were filed by the revenue and the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Bathinda, [in brevity the CIT(A)] for Assessment Years 2009-10, the order passed u/s. 250(6) of the Income Tax Act 1961, [in brevity the Act]. The impugned orders were emanated from the orders of the Ld. Income Tax Officer, Ward-1(2), Bathinda, [in brevity the AO] order passed u/s. 143(3)/147 of the Act, date of order 23.12.2016. 2. At the outset, the relevant factual backdrops as well as the issues involved in both the cases are co-related. After consent of both the parties, we are adjudicating the matter in ITA No. 480/Asr/2018 for A.Y. 2009-10 as lead case. ITA No. 480/Asr/2018 The assessee has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of account without appreciating that the primary onus of proving capacity of the creditor as well as genuineness of the transaction was not discharged by the assessee. 4. Brief fact of the case is that both appeal of the assessee and the revenue was emanated from a common order of the Ld. CIT(A) which is mentioned above. The assessee has challenged both the legal and the factual ground related to assessment made by the revenue. The reopening was made u/s. 148 related to a transaction with a party M/s. Pratap Enterprises, Proprietor Mr. Varinder Kumar. The reason was recorded which was duly challenged by the assessee and submitted the objection before the AO. Considering the transaction with the party Mr. Pratap Enterprises, the addition was made amount of Rs. 3,67,94,540/-. The said party of the assessee is a seller and assessee purchased the goods from this party during this financial year. The grievance of the Ld. AO was that the said party during this year had not filed the return of income and the payment amount of Rs. 27,80,000/- was withdrawn by cash by the party from its bank account. Accordingly, the entire transaction was treated as bogus. Further Rs. 3 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s. Pratap Enterprises Proprietor and Mr. Varinder Kumar in following sequences on dated 06.10.2008, Rs. 10 lac and Rs. 17,80,000/- on dated 14.11.2008. But the assessee filed the objection before the Ld. AO against the reopening and a ledger account was filed which is also annexed in the APB pages 34 to 35. As per the ledger the assessee has made transaction with the party Rs. 3,45,20,115/- during the financial year. Further the Rs. 10 lac which was presumed to transfer on 06.10.2008 to the party was fully wrong and the copy of the bank statement was submitted before the Ld. AO. The assessee filed an objection before the Ld. AO on dated 10.08.2016. The copy of the objection is annexed. The relevant part of the objection is reproduced as below: As per reasons recorded, it has been mentioned that the firm has transferred a sum of Rs. 27,80,000/- in the bank account of Varinder Kumar Prop. M/s. Partap Enterprises, Shop No. 15, Additional Mandi, Sirsa. In this regard, it is submitted that as per record of the assessee firm no amount of Rs. 10,00,000/- has been transferred on 06-10-2008 and if there is any material to show that the amount has been transferred the necessary co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to believe and further payment of Rs. 17.80 has been made towards purchases and that party after few years is not traceable, it is not the fault of the assessee. 7. We heard the rival submission and considered the documents available in the record related to the grounds of the appeal by challenging the notice u/s. 148, the Ld. AO has erred to issue the notice by mentioning Rs. 10 lac paid by the assessee. The said notice has no relevance with the observation in factual aspect. The reasons recorded in fact there is no live nexus related to this payment of Rs. 10 lac and assessee's books of account. Recorded reasons itself erroneous and the notice is liable to be quashed. 8. Accordingly the ground No. 1 of the assessee is allowed. Ground No. 2 9. Related the Ground No. 2, we heard the rival submissions and considered the documents available on the record. During hearing Ld. Counsel first pointed out that the assessee had a transaction for purchasing of goods with M/s. Pratap Enterprises. The Pratap Enterprises had purchased from M/s. Birla Textile Mills, Baddi and M/s. Chenab Textile Mills, Kathua. In the remand report of the Assessing Officer was received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no evidence to show that amount was recycled back to assessee, and held that addition was not called for - 'Whether, on facts, SLP against said order was to be dismissed - Held, yes 10.1. The Ld. CIT DR vehemently argued and relied on the order of the assessing authority. 10.2. Considering the above submissions the entire purchase of the assessee was duly substantiated before the appellate authority. The assessee by his evidence able to prove the transaction with the party and also the next stage of transaction was also proved. None of the parties denied the said transactions. In fact, the assessee had not filed return during the assessment year. But in succeeding year the return was filed. There was no proof that the said amount was returned back to the assessee by other mode of transactions. Respectfully considered the order of the Apex Court, the assessee is able to proof the transaction with the party and business activities are going on just beyond the doubt. Considering this the ground No. 2 of the appeal is allowed. 11. In the result, the ground No. 2 of the assessee is allowed. Adjudication of ITA No. 479/Asr/2018 12. Related to this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) confirmed the additions. On second appeal, the Tribunal found that it could not be established that the partners had sufficient funds in their possession to prove that said investments were made from that found in the capital accounts. The concerned partners, however, admitted to have made those investments. The Tribunal finally deleted the additions on the ground that the revenue and failed to establish the availability of funds at the time of investment with the assessee and further to bring on record any material to indicate that those unexplained investments were the profits of the assessee. It held that as such said credits could not be assessed as the income of the assessee in terms of section 68 but might be assessed in the individual hands of the partners, if it is permissible under section 69. 15. We find no infirmity in the order of the Ld. CIT(A). The introduction of capital by the partner, Sh. Saurabh Gupta was already confirmed by the partner himself. The addition if recorded should be in the hands of the partner not in the partnership firm. Accordingly, the ground of the revenue bearing ground No. 6 is dismissed. 14.1. In relation to ground Nos. 1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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