Rajesh Kumar Todwal v. ITO

INCOME TAX ACT, 1961

--Income from undisclosed sources--Unexplained bank depositGenuineness of transaction----Where source of cash deposited in the bank account of partner was proceed to be out of the cash withdrawals from a firm and the books of account of firm were also reflecting corresponding advancement in its books of account, AO was not justified in making addition in the hands of partners as unexplained bank deposit.--Assessee was deriving shares from income certain partnership firms. He was also a partner in a firm K. AO made addition on account of non-explanation of the amount deposited in the bank received from K, and also doubted genuineness of the firm and was of view that said firm was created for the purposes of explaining the cash entries in the bank account. Held: The source of cash deposited in the bank account was out of the cash withdrawals from K and the books of account of K were reflecting such advancement. The assessee produced cash books of K along with capital account of partners and proof of filing of income-tax return. The assessee also submitted copy of the partnership deed of the firm and also a confirmation. Therefore, the assessee had substantially proved the source of cash deposited in the bank account. Further, the fact that the partnership deed was not registered, could not be a basis for not treating the firm as genuine.