|The Tax Publishers2023 TaxPub(DT) 3854 (Guj-HC)
INCOME TAX ACT, 1961
Where that cash component, in which form the capital was introduced, was small compared to total capital introduced and further, the partners took a loan, out of which the capital was introduced and furthermore, the partners were assessed to tax as accounts were audited and where all those particulars were not doubted even by AO at the time of assessment proceedings therefore, addition made under section 68 was liable to be deleted.
Income from undisclosed sources - Addition under section 68 - Introduction of capital by partners in cash - Treatment of unexplained cash credit
Assessee-firm was engaged in business of manufacturing of ornaments. AO made addition towards introduction of capital by partners, which was in cash. He treated it as unexplained cash credit under section 68 as according to him, the partners introduced new capital in cash. CIT(A) deleted the addition, which was further upheld by Tribunal. Held: Cash component, in which form the capital was introduced in firm, was small compared to total capital introduced. Further, there was no bar against introduction of capital by way of cash. Further, it was shown that partners took a loan, out of which the capital was introduced in the firm. Furthermore, the partners were assessed to tax as accounts were audited. All those particulars were not doubted even by AO at the time of assessment proceedings. Hence, addition made under section 68 had rightly deleted.
FAVOUR : In assessee's favour
A.Y. : 2014-15
IN THE GUJARAT HIGH COURT
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