When assessee has failed to prove the creditworthiness of the cash deposits (Capital) in the partnership firm, same is liable to be treated as unexplained capital u/s 68.
Income Cash credit Assessee filed return of income which was subsequently, taken up for scrutiny under CASS In course of proceeding, AO disallowed a sum introduced as capital of partners of firm and stated that in assessment order assessee conceded for addition AO also disallowed interest for which, it was stated that AR of assessee conceded CIT(A) dismissed appeal by holding that no appeal was maintainable since assessment order was passed on assessee’s confession ITAT had restored matter back to AO holding that since additions were based on asssessee’s confession without investigation facts, AO should make assessment again after affording opportunity to assessee In second round of assessment, assessee again could not explain source of capital introduction and hence same was again treated as unaccounted income of assessee u/s 68 CIT(A) confirmed AO’s action Held, from balance sheet, it could be seen that assessee had shown an agricultural land for Rs.10,07,560/- as shown on asset side of balance sheet whereas he showed advances against sale of land at Rs.68,50,000/- Thus, there was a discrepancy in amount of consideration shown against sale of agricultural land which could not be more than Rs. 10,07,560/- and thereby difference of Rs.58,42,440/- remained unexplained liability against sale of land as per balance sheet in assessee’s hands Assessee had itself conceded in original assessment that Rs. 92,00,000/- and added as unexplained income in respect of unexplained capital deposit made by partner and that in second round of assessment proceeding’s in compliance to directions of ITAT, assessee failed to explain source of deposit of partner’s capital of Rs. 92,00,00,000/- and merely, filing of an affidavit of partner would not sufficient to discharge assessee primary onus of cash credit liability In first round of proceeding assessee had explained source of such cash credits that M/s. V had transferred to M/s. K and thereafter M/s K had transferred this amount to M/s. V Value of land was shown to be sold as Rs. 10 lacs as evident from balance sheet of firm M/s V AO was correct in holding those credits as unexplained in hands of assessee and CIT(A)was justified in confirming addition as unexplained capital of assessee firm u/s 68 and so ITAT confirmed addition was confirmed as unexplained capital u/s 68 in hands of firm Assessee’s appeal dismissed.
VERMA SERVICE STATION BYE PASS ROA& ANR. vs. DEPUTY COMMISSIONER OF INCOME TAX & ANR.
(2019) 57 CCH 0038 AgraTrib