ACIT,, Chandigarh v. M/s Supreme Liquor,, Chandigarh

ITA 547/CHANDI/2010 | 2007-2008
Pronouncement Date: 27-12-2011 | Result: Dismissed

Appeal Details

RSA Number 54721514 RSA 2010
Bench Chandigarh
Appeal Number ITA 547/CHANDI/2010
Duration Of Justice 1 year(s) 7 month(s) 13 day(s)
Appellant ACIT,, Chandigarh
Respondent M/s Supreme Liquor,, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 27-12-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 27-12-2011
Date Of Final Hearing 19-12-2011
Next Hearing Date 19-12-2011
Assessment Year 2007-2008
Appeal Filed On 14-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 547/CHD/2010 ASSESSMENT YEAR: 2007-08 ACIT CIRCLE 1(1) V M/S SUPREME LIQUORS CHANDIGARH. 189 INDUSTRIAL AREA-II CHANDIGARH. PAN: AACAS-3917P (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI S.K.MITTAL ASSESSEE BY : SHRI VED JAIN DATE OF HEARING : 19.12.2011 DATE OF PRONOUNCEMENT : 27.12.2011 ORDER PER MEHAR SINGH AM THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER DATED 01.03.2010 PASSED BY THE LD. CIT(A) U/S 250 OF THE INCOME-TAX ACT 1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. THAT LD. CIT(A) HAD ERRED IN PRESUMPTIONS MADE ON THE BASIS OF INCOHERENT LETTERS OF THE ASSESSEE FIL ED WITHOUT ENOUGH CORROBORATIVE EVIDENCE OF THE CAPITA L INVESTMENT MADE. 2. THE LD. CIT(A) HAD ERRED IN ALLOWING THE RELIEF ON THE DISALLOWANCES MADE OF RS.8269/- U/S 40A(3) OF THE INCOME-TAX ACT 1961. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CANCELLED AND THAT OF THE AO BE RESTORED. 4. THE APPELLANT CARVES TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OF . 2 REVISED GROUNDS OF APPEAL 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION O F RS.3 23 93 751/- MADE ON ACCOUNT OF UNEXPLAINED SOURCE OF CAPITAL INTRODUCED AS THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF HUGE CAPITAL INVESTMENT AND MOREOVER THE ASSESSEE WAS ALSO FAILED TO PROVE THE GENUINENESS OF THE VARIOUS ENTITIES MENTIONED B Y HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) HAD ERRED IN ALLOWING THE RELIEF ON THE DISALLOWANCES MADE OF RS.8269/- U/S 40A(3) OF THE INCOME-TAX ACT 1961. 3. LD. 'DR' DURING THE PRESENT APPELLATE PROCEEDIN GS BEFORE US CONTENDED THAT THE THAT THE ASSESSEE HAD FAILED TO FILE REQUISITE EVIDENCES TO PROVE HIS CASE. THE ASSESSE E RESORTED TO CHANGE OF STANDS IN SUBMITTING EXPLANATIONS IN THE MATTER BEFORE THE AO. THE LD. 'DR' WAS OF THE OPINION THAT ASSESSEE HAS FAILED TO PROVE HIS CASE IN TERMS OF THE PROVISIONS OF SECTION 68 OF THE ACT HENCE ADDITION MADE BY THE AO IS JUSTIF IED. HE PLACED RELIANCE ON THE DECISION IN THE CASE OF CIT V DEEPAK IRON & STEEL ROLLING MILLS TO STATE THAT ADDITION CAN B E MADE IN THE HANDS OF THE FIRM IN RESPECT OF UNEXPLAINED CREDITS IN THE ACCOUNT OF THE PARTNERS. 4. LD. 'AR' ON THE OTHER HAND VEHEMENTLY CONTENDE D THAT REQUISITE DOCUMENTARY EVIDENCES IN THE SHAPE OF PHO TO COPY OF THE RETURN OF INCOME PHOTO COPY OF THE BANK ACCOUN T PERMANENT ACCOUNT NUMBER AND CONFIRMATORY LETTERS F ROM THE PARTIES HAVE BEEN PLACED BEFORE THE AO. THE AO FAI LED TO APPRECIATE AND CO-RELATE MATERIAL EVIDENCES AND MAD E ADDITIONS 3 ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT BR INGING ANY COGENT MATERIAL ON RECORD. LD. 'DR' REFERRED TO VA RIOUS RELEVANT PAGES OF THE PAPER BOOK EVIDENCING THE FILING OF S UCH DOCUMENTS FOR THE PURPOSE OF ESTABLISHING HIS CASE. 5. LD. 'AR' CONTENDED THAT THE CASE LAWS RELIED UPO N BY THE LD. 'DR' IS MATERIALLY DIFFERENT DISTINGUISHABLE H ENCE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. LD. ' AR' FURTHER PLACED RELIANCE ON THE DECISION OF THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF CIT V METAL & METAL OF IN DIA WHEREIN IT HAS BEEN HELD THAT WHERE PARTNER HAVING ADMITTED THAT HE HAS MADE THE IMPUGNED DEPOSIT WITH THE ASSESSEE FIRM OU T OF THE AMOUNT RECEIVED AS GIFT IT IS THE PARTNER AND NOT THE FIRM WHO IS LIABLE TO BE TAXED BY TREATING THE SAID AMOUNT A S UNDISCLOSED INCOME EVEN IF THE CLAIM OF GIFT SAID TO HAVE BEEN RECEIVED BY HIM IS REJECTED. LD. 'AR' ALSO PLACED RELIANCE IN THE CASE OF CIT V RAMESHWAR DASS SURESH PAL CHEEKA 208 CTR (P&H) 4 59 WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT AFTE R FOLLOWING NUMBER OF DECISIONS OF VARIOUS HIGH COURTS AND HON' BLE SUPREME COURT IN THE CASE OF GIRDHARI LAL NANNELAL V CSD (1977) 109 ITR 726 (S.C) AND CIT V ORISSA CORPORATI ON (P) LTD. 159 ITR 78 (S.C) HELD THAT ONCE A PARTNER OF THE FI RM HAS ACCEPTED HAVING ADVANCED AMOUNT TO THE FIRM NO ADD ITION COULD BE MADE IN THE HANDS OF THE FIRM U/S 68 OF THE ACT. 6. LD. 'AR' ALSO FILED SYNOPSIS WHICH IS REPR ODUCED HEREUNDER : GROUND NO.1 DELETION OF ADDITION OF RS.3 23 93 7 51/- MADE BY THE AO ON ACCOUNT OF THE CAPITAL CONTRIBUTE D BY 12 PARTNERS IN THE FIRM. 4 THE GROUND TAKEN BY THE REVENUE IS THE LD. CIT(A) HAS ERRED IN PRESUMPTION MADE ON THE BASIS OF INACCURATE LETTER OF THE ASSESSEE FILED WITHOUT ENOUGH CORROBORATIVE EVIDENC E OF THE CAPITAL INVESTMENT MADE. THIS IS A NEW FIRM CONSTITUTED ON 1 ST APRIL 2006 COMPRISING OF 12 PARTNERS. ALL THESE PARTNERS ARE INCOME TAX ASSESS EES AND CAPITAL HAS BEEN CONTRIBUTED BY THE WITHDRAWAL MADE FROM THE EXISTING FIRMS WHERE THEY WERE PARTNERS. ALL THE 12 PARTNERS ARE EXISTING INCOME TAX ASSESSE ES CARRYING ON BUSINESS SINCE LONG HAVING SUBSTANTIAL INCOME. THE SE PARTNERS AND THE FIRMS WHERE SUCH PARTNERS ARE PARTNERS HAV E BEEN FILING RETURNS REGULARLY. EACH OF THE PARTNERS HAVE CONFI RMED THEIR ACCOUNT AND EXPLAINED THE SOURCES FROM WHERE THE CA PITAL HAS BEEN CONTRIBUTED. ALL THE DETAILS I.E. CONFIRMATION PAN ITR COMPUT ATION BANK ACCOUNT COPY OF CAPITAL ACCOUNT EXPLAINING SOURCE OF CAPITAL CONTRIBUTED BY EACH PARTNER WERE FILED BEFORE THE A O. THE CAPITAL HAS BEEN CONTRIBUTED BY THE PARTNERS AT THE BEGINNING OF THE FIRM. ACCORDINGLY THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION IN THE HANDS OF THE FIRM. IN THIS REGARD RELIANCE IS BEING PLACED ON THE JUD GMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V META LS AND METALS OF INDIA 208 CTR 457 (P&H). IN THIS CASE THE COURT HAS HELD : THE FIRM HAS GIVEN EXPLANATION ABOUT THE SOURCE VI Z SURESH BHANDARI PARTNER WHO HIMSELF IS AN ASSESSEE . THE SAID PARTNER HAS ADMITTED HAVING MADE DEPOSIT WITH THE FIRM. THUS AS FAR AS THE FIRM IS CONCERNED EVEN I F THE GIFT CLAIMED TO HAVE BEEN RECEIVED BY SURESH BHANDARI IS TO BE REJECTED THE SAID SURESH BHANDARI MAY BE LIABLE TO TAX BY TREATING THE SAID AMOUNT AS DISCLOSED INCOME BUT T HE FIRM CANNOT BE SUBJECTED TO TAX ON THAT GROUND. 5 RELIANCE IS ALSO BEING PLACED ON THE JUDGEMENT OF THE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT VS. RAMESHWAR DASS SURESH PAL CHEEKA. INTHIS CASE THE COURT HAS REFERRED TO THE VARIOUS JUDGMENTS AND HAS STATED; 5. WE ARE ALSO IN AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL THAT NO CASE WAS MADE OUT TO THE ADDITION TO THE INCOME OF THE FIRM EVEN IF DEPOSIT MADE WITH THE FI RM BY THE PARTNERS WERE UNEXPLAINED INCOME OF THE PARTNERS. T HIS VIEW HAS BEEN TAKEN BY US IN OUR RECENT ORDER PASSE D ON 6 TH NOVEMBER 2006 IN I.T.APPEAL NO. 370 OF 2006 CIT V METALS AND METALS OF INDIA. BOTH THESE JUDGMENTS ARE RECENT JUDGMENTS AND BOTH THESE JUDGMENTS ENDORSES THE SETTLED POSITION OF THE LAW THAT IN CASE PARTNERS HAVE CONFIRMED ITS ACCOUNT THEN ADDITION C ANNOT BE MADE IN THE HANDS OF THE FIRM. WITHOUT PREJUDICE TO ABOVE THE SOURCE AND CREDITWO RTHINESS OF EACH OF THE PARTNERS HAS BEEN FULLY EXPLAINED IN VIEW OF THE DOCUMENTS AND EVIDENCES PLACED ON RECORD BEFORE THE AO AS WELL AS CIT(A). IT IS A CASE WHERE AO HAS NOT BEEN ABLE TO POINT OU T ANY DEFECT IN ANY OF THE CASE AS IS EVIDENT FROM THE AS SESSMENT ORDER. THE AO HAS QUOTED SOME OF THE REPLIES GIVEN BY THE ASSESSEE AND HAS NOT BEEN ABLE TO POINT OUT HOW THE EXPLANATION GIVEN REGARDING THE SOURCE IS NOT THERE. IN EACH O F THESE LETTERS THE EXPLANATION HAS BEEN GIVEN ALONGWITH EVIDENCES REGARDING SOURCE OF THE CAPITAL. NOTHING ADVERSE HAS BEEN CO MMENTED UPON BY THE AO. IT IS IMPORTANT TO NOTE THAT OUT OF THE TOTAL 12 PA RTNERS FOLLOWING SIX WERE EARLIER PARTNERS IN M/S VIJAY KU MAR & CO.: 1. MR. ARUN SHARMA 2. MR. RAKESH SHARMA 3. MR.IQBAL SINGH 4. MR. CHHOTA RAM 6 5. MR.VIJAY KUMAR PURI S/O MR.BUDHRAM 6. MR.RAKESH KUMAR PURI S/O MR.BUDHRAM MR.VIJAY KUMAR & CO. WAS ENGAGED IN THE SAME BUSINE SS OF LIQUOR TILL 31 ST MARCH 2006. THESE FOLLOWING SIX PARTNERS CAME OUT OF THAT FIRM AND JOINED THIS FIRM AND CAPITAL I N THAT FIRM WAS WITHDRAWN AND INTRODUCED HERE. M/S VIJAY KUMAR & CO . WAS BEING ASSESSED TO INCOME TAX AND FILING ITS RETURNS . COPY OF THE INCOME TAX RETURN FILED ALONGWITH COMPUTATION OF IN COME AND THE BALANCE SHEET WITH CAPITAL ACCOUNT OF EACH OF THE P ARTNER FOR THE YEAR ENDED 31 ST MARCH 2005 AND 31 ST MARCH 2006 ARE PLACED IN THE PAPER BOOK PAGES 422 TO 435. FURTHER THE FIVE PARTNERS NAMELY : 1. MR.BALWINDER SINGH 2. MR. HARPREET SINGH 3. MR. SANJEEV GOYAL 4. MR. ARUN SHARMA AND 5. MR. IQBAL SINGH WERE PARTNERS IN THE FIRM M/S CHANDIGARH SALES ALS O ENGAGED IN THE BUSINESS OF LIQUOR AND BEING ASSESSED TO INCOME TAX. COPY OF THE INCOME TAX RETURN WITH COMPUTATION OF M/S CHAND IGARH SALES ARE PLACED AT PAPER BOOK PAGES 259-262. IN ADDITION ONE OF THE PARTNERS MR.KESHO RAM WAS PARTNER IN THE FIRM M/S UNIVERSAL ENTERPRISES. M/S UNIVERS AL ENTERPRISES IS BEING ASSESSED TO INCOME TAX AND COPY OF INCOME TAX RETURN AND BALANCE SHEET ARE PLACED AT PAPER BOOK PAGES 27 2-287. THUS OUT OF THE 12 10 PARTNERS WHO HAVE CONTRIBUT ED THE CAPITAL ARE ALL EXISTING PARTNERS OF ONE OR MORE O F THE FIRMS AND ARE BEING ASSESSED TO INCOME TAX SHOWING SUBSTANTIA L AMOUNT OF INCOME IN THEIR INDIVIDUAL HANDS AS WELL AS SHARE O F INCOME FROM THE FIRM WHICH IS EXEMPT UNDER SECTION 10(2A) OF TH E INCOME TAX ACT. NOT ONLY THESE PARTNERS BUT ALSO THE FAMILY M EMBERS OF THESE PERSONS ARE ALSO BEING ASSESSED TO INCOME TAX AND ALL THE TRANSACTIONS BETWEEN THE FAMILY MEMBERS ARE THROUGH BANK ACCOUNT. 7 2. THE ASSESSEE IN THE COURSE OF THE ASSESSMENT HAS PL ACED DOCUMENTS IN RESPECT OF THE PARTNER ABOUT ITS IDENT ITY SOURCE AND CREDITWORTHINESS. 3. THE CIT(A) HAS ANALYSED EACH OF THE CASE ON PAGE 5 TO 7 AND AFTER EXAMINATION OF THE DOCUMENTS HAS DELETED THE ADDITION. ALL THESE DOCUMENTS ARE PLACED IN THE PAP ER BOOK AT PAGE 48 TO 435 AND EACH OF THE CASE IS EXPL AINED BELOW :- 1. BHARDWAJ PRINTWELL (P) LTD. 2. NEW WAVE AGENCIES (P) LTD. BOTH THESE COMPANIES HAVE CONTRIBUTED RS.50 000/- E ACH AS THEIR CAPITAL CONTRIBUTION ON THE FIRST DAY I.E. ON 1 ST APRIL 2006. COPY OF THE ACCOUNT IS AVAILABLE AT PAGE 48 AND THE ACCOUNT IN THE BOOKS OF THE CREDITOR IS PLACED AT PAGE 50 AND 53. BOTH T HESE COMPANIES ARE INCOME TAX ASSESSEES HAVING PAN NUMBER. ADDRES SES OF BOTH THESE COMPANIES ARE ALSO AVAILABLE AND BOTH THESE C OMPANIES HAVE FILED THE CONFIRMATION IN THIS REGARD. 3. SHRI ARUN SHARMA SHRI ARUN SHARMS IS AN INCOME TAX ASSESSEE WITH IN COME TAX OFFICER WARD 11(1) CHANDIGARH. HE HAS BEEN F ILING THE RETURNS REGULARLY. BEFORE BECOMING A PARTNER HE WA S A PARTNER IN VIJAY KUMAR & CO. HE IS HAVING A REGULAR BANK ACCO UNT NO.86285 WITH PUNJAB NATIONAL BANK CHANDIGARH. CO PY OF THE CAPITAL IN THE BOOKS OF THE ASSESSEE IS PLACED AT P AGE 54. ON GOING THROUGH THE CAPITAL ACCOUNT IT IS TO BE SEEN THAT HE HAS CONTRIBUTED A CAPITAL OF RS.5 22 222/- IN CASH ON1S T APRIL 2006. THE SAME HAS BEEN CONTRIBUTED OUT OF THE WITHDRAWAL MADE BY HIM FROM THE FIRM M/S VIJAY KUMAR & CO. WHERE HE I S A PARTNER. COPY OF THE PARTNERS CAPITAL ACCOUNT IN M/S VIJAY KUMAR & CO. IS PLACED AT PAGE 60 AND SHRI ARUN KUMARS PERSONAL CAPITAL ACCOUNT STATEMENT IS PLACED AT PAGE 61. THE FIRM M/S VIJAY KUMAR & CO. IS BEING TAX TO INCOME AND COPY OF THE ACKNOWLEDGEMENT OF THE INCOME TAX RETURN IS PLACED AT PAGE 62. THE COMPLETE BALANCE SHEET AND PROFIT AND LOSS ACCO UNT OF VIJAY KUMAR & CO. FOR THE AT YEAR 2005-06 AND 2006-07 ARE PLACED AT PAPER BOOK PAGE 422 TO 435. 8 THE OTHER CREDIT IN THE CAPITAL ACCOUNT IS FROM HIS BANK ACCOUNT. EACH OF THE CREDIT IS DULY EXPLAINED ON PAGE 59 OF THE PAPER BOOK GIVING THE SOURCE FROM WHERE THE MONEY HAS COME IN. ON PAPER BOOK PAGE 63 TO 65 IS THE PHOTOCOPY OF THE BANK ACC OUNT AND PAGES 62-67 IS A TYPED COPY OF THE BANK ACCOUNT EXP LAINING THE CREDIT IN THE BANK ACCOUNT FROM WHERE THE MONEY WAS DEPOSITED FOR MAKING ONWARD PAYMENTS TO THE ASSESSEE. THERE WAS A BANK BALANCE OF RS.23 82 593.79 AS PER THE PASS BOOK AS ON 17.3.2006 I.E. EVEN BEFORE THE ASS ESSEE FIRM CAME INTO EXISTENCE IN THE BANK ACCOUNT OF MR.ARUN SHARMA. AGAINST THIS HE HAS ISSUED PAY ORDER ON BEHALF OF T HE FIRM AS UNDER WHICH ARE CREDITED IN THE CAPITAL ACCOUNT ON PAGE 54 : DATE PAY ORDER AMOUNT RS. AMOUNT DEBITED IN THE BANK ACCOUNT-RS. 17.3.2006 1 00 000/- 1 00 150/- THERE WAS A BANK BALANCE OF RS.23 82 593.79 AS PER THE PASS BOOK AS ON 17.3.2006 I.E. EVEN BEFORE THE ASSESSEE FIRM CAME I NTO EXISTENCE IN THE BANK ACCOUNT OF MR. ARUN SHARMA. AGAINST THIS HE HAS ISS UED PAY ORDER ON BEHALF OF THE FIRM AS UNDER WHICH ARE CREDITED IN THE CAPITAL ACCOUNT ON PG 54:- DATE PAY ORDER AMOUNT - RS. AMOUNT DEBITED IN THE BANK ACCOUNT - RS. 17.3.2006 1 00 000/- 1 00 150/- 17.3.2006 4 00 000/- 4 00 600/- 23.3.2006 5 00 000/- 5 00 750/- 23.3.2006 5 00 000/- 5 00 750/- THERE ARE FURTHER CREDITS IN THE CAPITAL ACCOUNT PG 54 AS UNDER BY DEBIT TO BANK ACCOUNT:- DATE PAY ORDER AMOUNT - RS. AMOUNT DEBITED IN THE BANK ACCOUNT - RS. 7.6.2006 12 00 000/- 12 03 600/- 7.6.2006 50 000/- 50 150/- 9 8.6.2006 10 50 000- 10 53 150/- THERE IS ANOTHER DEBIT IN THE BANK ACCOUNT ON 7 TH JUNE 2006 OF RS. 12 03 600/- FOR A PAY ORDER OF RS.12 00 000/- CREDI TED IN THE FIRM ACCOUNT. THESE PAYMENTS HAVE BEEN PAID OUT OF THE CREDIT REC EIVED IN BANK OF RS.3 00 000/- AND RS 10 00 000 ON 26 TH APRIL 2006 AND RS.8 25 000/- ON 12 TH MAY 2006 FROM MRS. RAKSHA SHARMA AND RS.1 50 000/- FROM SRI RAM TIRATH SOCIETY. MRS. RAK SHA SHARMA IS ALSO ASSESSED TO INCOME AND SHE HAS MADE THE PAYMENT FROM HER BAN K ACCOUNT. COPY OF HER BANK ACCOUNT IS PLACED AT PAPER BOOK PG. 68-71. THE DEBIT OF RS.8 25 000/- IS APPEARING ON 22 ND MAY 2006 ON PG. 69 AND DEBIT OF RS.3 00 000/- AND RS.10 00 000/- IS APPEARING IN THE BANK ACCOUNT ON PG. 71. THESE PAYMENTS HAVE BEEN MADE OUT OF THE OPENING BALANCE STANDING IN HER ACCOUNT MUCH BEFORE THE START OF THE YEAR AS IS EVIDENT FROM THE PASS B OOK. COPY OF BANK ACCOUNT OF SWAMY RAM TIRATH SOCIETY IS PLACED AT PAPER BOOK PG S. 73-74 AND THE DEBIT OF RS.1 50 000/- IS APPEARING ON 1 ST MAY 2006 AT PG. 74. THERE IS A FURTHER CREDIT OF RS.5 00 000/- ON 8 TH JUNE 2006 IN THE BANK ACCOUNT OF MR ARUN SHARMA P G 65 BEING THE AMOUNT RECEIVED FROM SMT. UMA SHARMA. COPY OF HER BANK ACCOUNT IS PLACED AT PGS. 175-177 AND THIS DEBIT OF RS.5 00 000/- IS APPEARING ON 8 TH JUNE 2006 AT PG. 76. THEREAFTER THE ASSESSEE HAS WITHDRAWN THE FOLLOWING AMOUNTS FROM ASSESSEE FIRM ITSELF AS CAN BE SEEN FROM THE DEBIT IN THE CAPITAL ACCOUNT ON PG. 54. DATE AMOUNT - RS. 20.11.2006 7 00 000/- 1.12.2006 5 00 000/- 18.12.2006 7 00 000/- 20.1.2007 7 00 000/- 20.1.2007 7 00 000/- ALL THESE WITHDRAWALS WERE BY CHEQUE AND DEPOSITED IN THE BANK ACCOUNT AND CREDIT OF WHICH CAN BE SEEN AT PG. 66 IN THE BANK A CCOUNT. CONSEQUENT OF THESE WITHDRAWALS THE BANK BALANCE GOT INCREASED TO RS.29 77 207/-. THE ASSESSE FURTHER RECEIVED A S UM OF RS.1 70 000/- ON 10 MATURITY OF THE LIC PAYMENT. THE COVERING LETTER FR OM THE LIC IS PLACED AT PG. 79 AND THIS AMOUNT HAS BEEN CREDITED IN THE BANK AC COUNT AS CAN BE SEEN FROM PG. 67. AGAINST THIS THE ASSESSE MADE A WITHDRAWAL OF RS.28 LAC ON 19 TH MARCH 2007 AS IS EVIDENT FROM PG. 67 AND DEPOSITED THE SA ME WITH THE FIRM AS CAPITAL ON 19 TH MARCH 2007 AS CAN BEEN SEEN FROM PG. 54. MR. ARUN SHARMA RECEIVED A FURTHER AMOUNT OF RS.10 LAC FROM MRS. UMA SHARMA FR OM HER BANK ACCOUNT PLACED AT PAPER BOOK PG. 75-77 AND DEBIT OF RS.10 L AC APPEARING ON 26 TH MARCH 2007 AT PG. 77. AGAINST THIS HE DEPOSITED A SUM OF RS.8 40 000/- IN THE FIRM ON 28 TH MARCH 2007. THE DEBIT IN THE BANK ACCOUNT IS APPE ARING ON PG. 67 AND CREDIT IN THE FIRM ACCOUNT IS APPEARING ON PG. 54. MR. ARUN SHARMA'S COMPUTATION OF INCOME AND ITR IS PLACED AT PAPER BOOK PG. 66-68 AND CONFIRMATION COPY OF ACCOUNT AT PG. 55. I N THIS WAY THE FIRM HAS NOT ONLY EXPLAINED THE SOURCE OF THE CREDIT IN ITS BOOK S OF ACCOUNT BUT ALSO EXPLAINED THE SOURCE OF SOURCE IN THE HANDS OF THE PARTNER MR. ARUN SHARMA. IT MAY ALSO BE MENTIONED THAT THE A.O. HAS MADE AN ADDITION OF RS.79 62 222/- BEING AGGREGATE OF THE CREDIT SIDE I N THE CAPITAL ACCOUNT IGNORING THE FACT THAT INITIAL CONTRIBUTION AS CAPI TAL WAS ONLY RS.43 22 222/-AND THE REST OF THE CREDIT IS AGAINST THE DEBIT IN THE FIRM ITSELF OF RS.35 00 000/- AS IS EVIDENT FROM PG. 54. FURTHER THERE IS NOTHING ADVERSE BROUGHT ON RECORD BY THE A.O. AND THERE IS NO DOUBT LEFT ABOUT THIS CREDIT. 4. SH. BALVINDER SINGH COPY OF CAPITAL ACCOUNT OF MR. BALVINDER SINGH IS P LACED AT PG. 80. CONFIRMATION WITH PAN AND ADDRESS OF THE PARTNER IS PLACED AT PG. 81. MR. BALVINDER SINGH IS BEING ASSED TO INCOME TAX AND TH E INCOME TAX RETURN ALONG WITH ACKNOWLEDGEMENT IS PLACED AT PG. 82 AND COMPUTATION IS PLACED AT PG. 83-85. ON GOING THROUGH THE COMPUTATION IT IS T O BE NOTED THAT HE IS HAVING SUBSTANTIAL INCOME FROM RENT BESIDES SHARE FROM PAR TNERSHIP FIRM VIZ. SUPREME LIQUOR CHANDIGARH SALES AND SUPREME POULTR IES WHICH IS EXEMPT UNDER SECTION 10(2A) OF THE ACT. THE CAPITAL CONTRIBUTION HAS COME FROM DEBIT TO HIS PERSONAL ACCOUNT. PHOTOCOPY OF THE BANK ACCOUNT IS PLACED AT PGS. 87- 104 AND THE TYPED COPY OF BANK ACCOUNT GIVING EXPLANATION FOR EACH CREDIT AND DEBIT IS APPEARING AT PGS. 105 TO 109. THE CREDIT IN THE FIRM ACCOUNT BY WAY O F CAPITAL CONTRIBUTION HAS COME BY WAY OF DEBIT IN THE BANK ACCOUNT. THE F IRST CREDIT OF RS.2 75 000/- ON 23.3.2006 IS BY WAY OF DEBIT TO THE BANK ACCOUNT OF RS.2 75 453/- ON PG. 11 105. THE NEXT CREDIT OF RS.1 00 000/- ON 5 TH JUNE 2006 RS.1 00 000/- ON 5 TH JUNE 2006 AND RS.4 00 000/- IS AGAIN DEBITED TO TH E BANK ACCOUNT AT PG. 106 OF RS.1 00 040/- RS.1 00 040/- AND RS.4 00 448/-. THERE IS A CREDIT OF RS.5 LAC IMMEDIATELY BEFORE DEBIT OF RS.4 LAC IN THE BANK AC COUNT ON 5 TH JUNE 2006 WHICH HAS BEEN RECEIVED FROM MR. VIJAY KUMAR. COPY OF BAN K ACCOUNT OF MR. VIJAY KUMAR IS AT PG. 113 TO 117 AND PAYMENT OF RS.5 LAC IS APPEARING ON 5 TH JUNE 2006 AT PG. 114. COPY OF THE CHEQUE IS AT PG. 118. THIS AMOUNT WAS RETURNED BY MR. BALVINDER SINGH TO MR. VIJAY KUMAR ON 22 ND JANUARY 2007 AT PAPER BOOK PG. 119. MR. VIJAY KUMAR IS BEING ASSESSED TO INCOME TA X AND HIS INCOME TAX RETURN AND COMPUTATION IS PLACED AT PAPER BOOK PG. 120 TO 122. THE NEXT CREDIT IS RS.2 50 000/- RECEIVED ON 28 TH JUNE 2006. THE SAME IS AMOUNT WITHDRAWN FROM THE BANK AND CAN BE SEEN IN THE PASS BOOK ON PG. 10 6/92 ON 28 TH JUNE 2006. THEREAFTER MR. BALVINDER SINGH THE PARTNER HAS WIT HDRAWN RS.5 LAC ON 16.1.2007 AND RS.3 50 000/- ON 31.3.2007 FROM THE F IRM AS CAN BE SEEN FROM THE DEBIT IN THE CAPITAL ACCOUNT AT PG. 80. THIS A MOUNT HAS BEEN DEPOSITED IN THE BANK ACCOUNT AS CAN BE SEEN ON PG. 108 AND 109 OF THE PASS BOOK. AGAINST THESE WITHDRAWALS HE HAS AGAIN DEPOSITED A SUM OF R S.4 LAC ON 17.3.2007 IN THE FIRM OUT OF THE WITHDRAWAL FROM THE BANK ACCOUNT ON 17.3.2007 WHICH CAN BE SEEN AT PG. 109. THUS SOURCE AND SOURCE OF SOURCE O F EACH CREDIT STANDS FULLY EXPLAINED. WE MAY FURTHER SUBMIT THAT THE A.O. HAS MADE AN ADD ITION OF RS. 15 25 000/- BEING THE AGGREGATE OF THE CREDIT SIDE OF THE CAPITAL ACCOUNT IGNORING THE FACT THAT THE INITIAL CAPITAL WAS RS.11 25 000/ - ONLY AND THE FURTHER CREDIT OF RS.4 LAC HAS COME OUT OF THE WITHDRAWAL FROM THE FIRM ITSELF OF RS.8 50 000/-. THUS IT IS A CASE WHERE THE FIRM HAS BEEN ABLE TO E XPLAIN NOT ONLY THE SOURCE BUT ALSO THE SOURCE OF SOURCE LEAVING NO DOUBT. 5. SH. CHHOTA RAM COPY OF THE CAPITAL ACCOUNT IS PLACED AT PAPER BOOK PG. 123. CONFIRMATION WITH PAN AND ADDRESS OF THE PARTNER IS PLACED AT PG. 124 . MR. CHHOTA RAM IS BEING ASSESSED TO INCOME TAX AND HE IS A PARTNER IN THE F IRM M/S UNITED POULTRY FARM AND M/S SUPREME LIQUOR THE SHARE OF PROFIT FR OM WHICH ARE EXEMPT UNDER SECTION 10(2A) OF THE ACT. COPY OF COMPUTATIO N AND ACKNOWLEDGEMENT IS PLACED AT PG. 125-126. SOURCE OF CAPITAL HAS BEEN E XPLAINED AT PG. 127. THE FIRST CREDIT IS OF RS.17 49 445/- ON 1.4.2006 W HICH REPRESENTS THE CAPITAL WITHDRAWN FROM M/S VIJAY KUMAR & CO. WHERE MR. CHHOTA RAM WAS A 12 PARTNER. COPY OF PARTNER'S CAPITAL ACCOUNT IN VIJAY KUMAR & CO. IS PLACED IN THE PAPER BOOK. THE NEXT CREDIT IS OF RS.5 LAC WHICH HA S BEEN RECEIVED FROM THE BANK ACCOUNT OF THE PARTNER. PHOTOCOPY OF THE BANK ACCOU NT IS PLACED AT PAPER BOOK PG. 131-132 AND THE DEBIT IS APPEARING ON 23 RD MARCH 2006 WHEREBY A PAY ORDER HAS BEEN ISSUED FOR RS.5 00 750/- ON BEHALF O F THE FIRM. THIS DEBIT IS EVEN BEFORE THE START OF THE YEAR I.E. 1 ST APRIL 2006. MR. CHHOTA RAM WAS A PARTNER IN UNIVERSAL ENTERPRIS ES. COPY OF CAPITAL ACCOUNT OF IN UNIVERSAL ENTERPRISES AND BALANCE SHE ET ARE PLACED AT PGS. 134 TO 137. 6. SH. HARPREET SINGH COPY OF CAPITAL ACCOUNT IS AT PG. 138. CONFIRMATION COPY OF ACCOUNT BY THE PARTNER GIVING PAN AND ADDRESS AND THE SOURCE THERE OF IS AT PG. 139. MR. HARPREET SINGH IS BEING ASSESSED TO INCOME TAX HAVI NG SUBSTANTIAL INCOME FROM RENT AND SHARE OF INCOME FROM THE FIRMS M/S C HANDIGARH SALES AND SUPREME POULTRIES. SHARE OF PROFIT FROM THESE FIRMS IS EXEMPT UNDER SECTION 10(2A) OF THE ACT. COPY OF ACKNOWLEDGEMENT OF HIS R ETURN AND COMPUTATION IS AT PG. 142 TO 143. THE CREDIT IS COMING FROM THE BA NK ACCOUNT. PHOTOCOPY OF THE BANK ACCOUNT IS PLACED AT PG. 145 TO 164 AND TYPED COPY OF THE BANK ACCOUNT GIVING EXPLANATION FOR THE DEBIT AND C REDIT IS PLACED AT PAPER BOOK PGS. 165 TO 169. THERE ARE FOLLOWING CREDITS I N THE CAPITAL ACCOUNT ON 1ST APRIL 2006 AND THE SOURCE OF WHICH ARE THE DEB IT IN THE BANK ACCOUNT AS IS EVIDENT FROM PG. 165. DATE PAY ORDER AMOUNT - RS. AMOUNT DEBITED IN THE BANK ACCOUNT - 20.3.2006 4 00 000/- 4 00 660/- 20.3.2006 1 00 000/- 1 00 165/- 20.3.2006 1 00 000/- 1 00 165/- 20.3.2006 1 00 000/- 1 00 165/- 23.3.2006 5 00 000/- 5 00 825/- THESE PAY ORDERS HAVE BEEN ISSUED FROM THE OPENING BANK BALANCE OF RS.15 96 074/- AS ON 20 TH MARCH 2006 I.E. EVEN BEFORE THE START OF THE YEAR . THEREAFTER A FURTHER AMOUNT OF RS.8 50 000/- HAS BE EN CREDITED IN THE 13 CAPITAL ACCOUNT PG 138 ON 7 TH JUNE 2006. THE DEBIT IN THE BANK ACCOUNT ON 17 TH JUNE 2006 OF RS.8 50 952/- IS APPEARING ON PG. 166 . ON GOING THROUGH THE BANK ACCOUNT THE SOURCE OF THIS IS FROM THE RENTAL INCOM E BEING DEPOSITED EVERY MONTH IN THE BANK ACCOUNT. THIS INCOME IS DULY REFL ECTED IN THE RETURN AS CAN BE SEEN FROM THE COMPUTATION OF INCOME PLACED AT PG. 1 41 TO 142. THERE IS A CREDIT OF RS.5 LAC ON 20 TH MARCH 2006 IN THE BANK ACCOUNT PG 165. THIS AMOUN T HAS BEEN RECEIVED FROM MR. RAKESH KUMAR. COPY OF THE CH EQUE RECEIVED FROM RAKESH KUMAR IS PLACED AT PAPER BOOK PG. 170. RAKESH KUMAR IS BEING ASSESSED TO INCOME TAX. COPY OF THE INCOME TAX RETURN IS PLACED AT PGS. 172-174. THE ABOVE AMOUNT WAS REFUNDED TO RAKESH KUMAR ON 3 RD JANUARY 2007 AND A COPY OF THE CHEQUE ISSUED IS PLACED AT PAPER BOOK PG. 17 1 AND THE DEBIT IN BANK ACCOUNT IS APPEARING ON 4 TH JANUARY 2007 AT PG. 168. THEREAFTER MR HARPREET SINGH THE PARTNER HAS MADE THE FOLLOWING WITHDRAWA LS IN CASH FROM THE FIRM PG 138:- DATE AMOUNT - RS. 25.1.2006 2 00 000/- 28.12.2006 2 00 000/- 19.2.2007 3 50 000/- TOTAL 7 50 000/- ALL THESE CASH WITHDRAWALS SO MADE WERE DEPOSITED W ITH CHANDIGARH SALES OF WHICH THE MR. HARPREET SINGH IS ALSO A PARTNER AS C AN BE SEEN FROM THE CAPITAL ACCOUNT OF HARPREET SINGH IN CHANDIGARH SAL ES PLACED AT PG. 180. THIS AMOUNT WAS AGAIN WITHDRAWN BACK FROM CHANDIGARH SAL ES ON 26 TH FEBRUARY 2007 AND DEPOSITED BACK IN THE SUPREME LIQUOR I.E. ASSESSEE FIRM AS CAN BE SEEN FROM PG. 180 AND 138. MR. HARPREET SINGH HAS ALSO W ITHDRAWN FOLLOWING AMOUNTS FROM THE FIRM PG 138: DATE AMOUNT - RS. 1.12.2006 3 00 000/- 19.12.2006 2 00 000/- 1.1.2007 5 00 000/- 31.1.2007 5 00 000/- TOTAL 15 00 000/- 14 ALL THESE AMOUNTS SO WITHDRAWN HAVE BEEN DEPOSITED IN THE BANK AS CAN BE SEEN AT PG. 168 WHERE THESE CREDITS ARE APPEARING ON 1.1 2.2006 19.12.2006 1.1.2007 AND AT PG. 169 ON 3.2.2007. OUT OF THIS BA NK ACCOUNT THIS PARTNER HARPREET SINGH AGAIN PAID BACK RS.5 LAC TO THE FIRM. THIS CREDIT IS APPEARING ON PG. 138 ON 16.1.2007 AND THE DEBIT OF THE SAME IS APPEARING IN THE BANK ACCOUNT ON 17.1.2007 AT PG. 169. THUS THE FIRM HAS BEEN ABLE TO EXPLAIN NOT ONLY ITS SOURCE BUT ALSO SOURCE OF THE PARTNER FROM WHERE HE HAS MADE THE CAPITAL. IT MAY BE FURTHER MENTIONED THAT THE A.O. HAS MADE AN ADDITION OF RS.33 LAC WHICH IS THE AGGREGATE OF THE CREDIT SIDE IN THE CA PITAL ACCOUNT PG 138 IGNORING THE FACT THAT THE INITIAL CREDIT WAS ONLY RS.20 50 000/- AND THE FURTHER CREDIT IS OUT OF THE WITHDRAWAL FROM THE FIRM ITSELF AS CA N BE SEEN FROM THE CAPITAL ACCOUNT AT PG. 138. 7. IQBAL SINGH COPY OF THE CAPITAL ACCOUNT IS PLACED AT PG. 187. C ONFIRMATION COPY OF ACCOUNT FROM THE PARTNER WITH PAN AND ADDRESS AND G IVING SOURCE FROM WHERE THE MONEY -HAS BEEN PAID IS AT PG. 188. MR. IQBAL S INGH IS BEING ASSESSED TO INCOME TAX AND COPY OF INCOME TAX RETURN ALONG WITH COMPUTATION IS PLACED AT PAPER BOOK PGS. 189-192. ON GOING THROUGH THE CO MPUTATION IT CAN BE SEEN THAT IS HAVING SUBSTANTIAL INCOME FROM THE RENT AND SHARE OF INCOME FROM THE PARTNERSHIP FIRMS M/S CHANDIGARH SALES AND SUPREME LIQUOR. AS FAR CONTRIBUTION TO THE CAPITAL ACCOUNT IS EXPLAINED ON PAPER BOOK PGS. 194-195. AS EXPLAINED ABOVE MR. IQBAL SINGH WAS ALSO ONE OF THE PARTNERS IN THE FIRM M/S VIJAY KUMAR & CO. FROM WHERE HE RECEIVED RS.34 99 4 45/-. COPY OF CAPITAL ACCOUNT IN VIJAY KUMAR & CO. IS PLACED AT PGS. 196- 197. OUT OF THE MONEY RECEIVED RS.10 LAC WAS DEPOSITED ON 1 ST APRIL 2006 WITH THE FIRM. A FURTHER CREDIT IN THE CAPITAL ACCOUNT IS COMING FROM THE BA NK ACCOUNT. PHOTOCOPY OF THE BANK ACCOUNT IS PLACED AT PGS. 199 TO 216. TYPED CO PY OF THE BANK ACCOUNT WITH EXPLANATION FOR DEBIT AND CREDIT IS PLACED AT PAPER BOOK PGS. 217 TO 220. THE CREDIT IN THE CAPITAL ACCOUNT PG 187 ARE A S UNDER:- DATE PAY ORDER AMOUNT RS. AMOUNT DEBITED IN THE BANK ACCOUNT - RS. 20.3.2006 10 000/- 10 028/- 20.3.2006 1 00 000/- 1 00 165/- 20.3.2006 4 00 000/- 4 00 600/- 23.3.2006 3 75 000/- 3 75 618/- 15 29.3.2006 10 000/- 10 028/- 29.3.2006 1 00 165/- 1 00 165/- 30.3.2006 4 00 000/- 4 00 660/- ALL THESE PAYMENTS ARE BEING MADE BY DEBIT TO BANK ACCOUNT AS CAN BE SEEN ON PG. 217. THEREAFTER THERE ARE FURTHER CREDIT IN THE CAPITAL ACCOUNT PG 187 AS UNDER:- DATE PAY ORDER AMOUNT RS. AMOUNT DEBITED IN THE BANK ACCOUNT - RS. 5.6.2006 1 00 000/- 1 00 140/- 5.6.2006 4 00 000/- 4 00 448/- 7.6.2006 4 50 000/- 4 50 504/- 8.6.2006 5 00 000/- 5 00 560/- 8.6.2006 9 50 000/- 9 51 064/- 28.6.2006 7 60 000/- 7 60 000/- 4.6.2006 5 00 000/- 5 00 000/- ALL THESE DEBITS ARE APPEARING ON PG. 218 AND PG. 2 19 WHICH IS THE BANK ACCOUNT. THE SOURCE OF THESE CREDITS IN THE BANK AC COUNT FROM WHERE THESE PAYMENTS HAVE BEEN MADE IS EXPLAINED ON PG. 217-219 . THE CREDIT ON 21 ST JANUARY 2006 OF RS.5 LAC IS FROM MAURYA DISTILLERS AND BOTTLERS PVT. LTD. COPY OF CHEQUE RECEIVED FROM MAURYA IS PLACED AT PA PER BOOK PG. 271. THE CREDIT IN BANK ACCOUNT PG 218 ON 18 TH APRIL 2006 OF RS.5 LAC AND RS.6 LAC ON 19 TH APRIL 2006 AND ON 8 TH JUNE 2006 OF RS.6 LAC ARE THE AMOUNTS RECEIVED FROM VIJAY KUMAR &. CO. OF WHICH THE ASSES SEE WAS A PARTNER AS EXPLAINED HEREINABOVE. DOCUMENTS REGARDING VIJAY KU MAR AND CO ARE PLACED AT PGS. 196-197. FURTHER CREDIT OF RS.4 LAC IN BANK ACCOUNT PG 218 IS FROM SMT. JAGMOHAN KAUR WIFE OF THE ASSESSEE WHO IS BEING ASSESSED SEPARATELY. COPY OF HER BANK ACCOUNT IS PLACED AT P G. 222 TO PG. 237. DEBIT IS APPEARING ON PG. 225 ON 8 TH JUNE 2006 OF RS.4 LAC. MRS. JAGMOHAN KAUR IS BEING ASSESSED TO INCOME TAX AND COPY OF HER RET URN IS PLACED AT PGS. 238 TO 241. THERE IS A FURTHER CREDIT IN THE BANK ACCOU NT PG 218 OF RS.5 80 0007- ON 28 TH JUNE 2006 FROM MR. IQBAL SINGH HUF. COPY OF IQBAL SINGH HUF IS PLACED AT PGS. 242 TO 254. DEBIT IS AP PEARING ON PG. 245. IQBAL SINGH HUF IS BEING ASSESSED INDEPENDENTLY AND COPY OF I.T. RETURN AND 16 COMPUTATION IS PLACED AT PGS. 255 TO 256 AND THE CO PY OF THE CHEQUE ISSUED IS PLACED AT PG. 257. THEREAFTER THE PARTNER MR IQBAL SINGH HAS MADE FOLLOWING WITHDRAWALS FROM THE CAPITAL ACCOUNT OF T HE FIRM APPEARING ON PAPER BOOK PG. 187: DATE AMOUNT 17.11.06 5 00 000/- 17.11.06 5 00 000/- 30.11.06 1 00 000/- 15.12.06 8 50 000/- 1.1. 07 8 50 000/- 16.1.07 8 50 000/- 22.1.07 5 00 000/- 31.1.07 5 00 000/- TOTAL 46 50 000/- ALL THESE WITHDRAWALS FROM THE FIRM WERE DEPOSITED IN THE BANK ACCOUNT AS CAN BE SEEN FROM PGS. 219 AND 220. CONSEQUENT TO THESE WITHDRAWALS OF RS.46 50 000/- BANK BALANCE INCREASED RS.48 03 829 /- AND THE ASSESSEE WITHDREW RS.25 LAC FROM THE BANK AND DEPOSITED IN THE FIRM A ND RS.3 LAC ON 22 ND MARCH 2007 AND RS.10 20 000/- ON 26 TH MARCH 2007. THE DEBIT IN THE BANK ACCOUNT IS APPEARING ON PG. 220 AND CREDIT IS APPEARING IN THE CAPITAL ACCOUNT ON PG. 187. THUS EACH AND EVERY CREDIT IN THE CAPITAL ACCOUNT I S FULLY EXPLAINED WITH SOURCE OF SOURCE. IT MAY BE FURTHER MENTIONED THAT THE A.O. MADE AN A DDITION OF RS.48 75 000/- ON ACCOUNT OF CAPITAL IN THE NAME OF MR. IQBAL SINGH WHICH IS AGGREGATE OF THE CREDIT SIDE IN THE CAPITAL ACCOUNT IGNORING THE FACT THAT A TOTAL CREDIT IN THE BEGINNING WAS ONLY RS.60 55 000/- AND FURTHER CREDIT OF RS.38 20 000/- HAS COME OUT OF THE WITHDRAWAL FROM THE FIRM BEFORE THAT OF RS.46 50 0007-. 8. SH. KESHO RAM COPY OF THE CAPITAL ACCOUNT IS PLACED AT PG. 263. C ONFIRMATION COPY OF ACCOUNT FROM THE PARTNER WITH PAN AND ADDRESS AND G IVING SOURCE FROM WHERE THE MONEY HAS BEEN PAID IS AT PG. 264. MR. KE SHO RAM IS BEING ASSESSED TO INCOME TAX AND COPY OF INCOME TAX RETUR N ALONG WITH 17 COMPUTATION IS PLACED AT PAPER BOOK PGS. 265-266. P HOTOCOPY OF THE BANK ACCOUNT IS PLACED AT PAPER BOOK PG. 268-269 AND TYP ED COPY OF THE BANK ACCOUNT IS PLACED AT PG. 270. THE CREDIT IN THE CAP ITAL ACCOUNT IF BY PAYMENTS MADE OUT OF WITHDRAWALS FROM THE BANK ACCO UNT. THE CREDITS APPEARING ON PG. 263 IN THE CAPITAL ACCOUNT ARE FUL LY EXPLAINED BY WAY OF DEBIT IN THE BANK ACCOUNT ON PG. 270. THE CREDIT IN THE BANK ACCOUNT IS COMING FROM THE FIRMS M/S CHANDIGARH SALES AND M/S UNIVERSAL ENTERPRISES OF WHICH MR. KESHO RAM IS A PARTNER. COPY OF THE BALAN CE SHEET AND THE CAPITAL ACCOUNT IS PLACED AT PAPER BOOK PGS. 271-287. 9. SH. RAKESH KUMAR COPY OF THE CAPITAL ACCOUNT IS PLACED AT PG. 288. C ONFIRMATION COPY OF ACCOUNT FROM THE PARTNER WITH PAN AND ADDRESS AND G IVING SOURCE FROM WHERE THE MONEY HAS BEEN PAID IS AT PG. 289. MR. RA KESH KUMAR IS BEING ASSESSED TO INCOME TAX AND COPY OF INCOME TAX RETUR N ALONG WITH COMPUTATION IS PLACED AT PAPER BOOK PGS. 290-292. F IRST CREDIT OF RS.3 14 861/- REPRESENTS THE CAPITAL WITHDRAWN FROM THE FIRM M/S VIJAY KUMAR & CO. THE CAPITAL ACCOUNT OF WHICH IS PLACED AT PAPER BOOK PG. 294-295. RAKESH KUMAR IS SON OF BUDH RAM WHO WAS THE PARTNER IN VIJAY KUMAR & CO. AND HIS TWO SONS HAVE RECEIVED THE MONEY ON BEHALF OF BUDH RAM I.E. VIJAY KUMAR AND RAKESH KUMAR IN EQUAL AMOUNT OF RS.3 14 861/-. THE NEXT CREDIT IS OF RS.6 LAC WHICH HAS BEEN PAID FROM THE BANK ACCOUNT. COPY OF THE BANK ACCOUNT IS PLACED AT PGS. 297-298. TYPED COPY OF BANK ACCOUNT IS PLACED AT PG. 299. THE CREDIT IN THE BANK ACCOUNT O F RS.5 LAC IS THE MONEY RECEIVED BACK FROM MR. HARPREET SINGH ANOTHER PARTNER. COPY OF THE BANK ACCOUNT OF HARPREEET SINGH IS PLACED AT PGS. 300-319 AND THE D EBIT OF RS.5 LAC IS APPEARING AT PG. 315. COPY OF INCOME TAX RETURN OF HARPREET S INGH IS PLACED AT PAPER BOOK PG. 321-324. COPY OF THE CHEQUE REED IS PLACED AT P G. 325. 10. SH. RAKESH SHARMA COPY OF THE CAPITAL ACCOUNT IS PLACED AT PG. 326. C ONFIRMATION COPY OF ACCOUNT FROM THE PARTNER WITH PAN AND ADDRESS AND G IVING SOURCE FROM WHERE THE MONEY HAS BEEN PAID IS AT PG. 327. MR. RA KESH SHARMA IS BEING ASSESSED TO INCOME TAX AND COPY OF INCOME TAX RETURN ALONG W ITH COMPUTATION IS PLACED AT PAPER BOOK PGS. 328-330. FIRST CREDIT IN THE CAPITAL ACCOUNT PG 326 OF 18 RS.2 62 362/- REPRESENTS THE CAPITAL WITHDRAWN FROM THE FIRM M/S VIJAY KUMAR & CO WHERE HE WAS A PARTNER BEFORE AND COPY OF CAP ITAL ACCOUNT IN VIJAY KUMAR & CO. IS PLACED AT PAPER BOOK PGS. 332 TO 334 . THE NEXT CREDIT OF RS.5 LAC ON 8 TH JUNE 2006 IN THE CAPITAL ACCOUNT PG 326 IS FROM THE BANK ACCOUNT. PHOTOCOPY OF BANK ACCOUNT IS PLACED AT PAPER BOOK P GS. 335-336 AND ON PG. 336 IS THE DEBIT OF RS.5 01 500/- BEING PAY ORDER I SSUED ON BEHALF OF THE FIRM. 11. SH. SANJEEV GOYA I COPY OF THE CAPITAL ACCOUNT IS PLACED AT PG. 338. T HERE IS A CONTRIBUTION OF RS.6 LAC AS CAPITAL WHICH HAS BEEN PAID FROM THE BANK AC COUNT. COPY OF THE BANK ACCOUNT IS PLACED AT PAPER BOOK PG. 343. MR. SANJEE V GOYAL IS A PARTNER IN M/S G.M. POULTRIES. COPY OF ACCOUNT WITH GM POULATR IES IS PLACED AT PAPER BOOK PG. 345 FROM WHERE HE HAS RECEIVED THE AMOUNT ON 3 RD JUNE 2006 AND DEPOSITED THE SAME IN ITS BANK ACCOUNT WITH HDFC PG 343. CONFIRMATION COPY OF ACCOUNT FROM THE PARTNER WITH PAN AND ADDRESS AND GIVING SOURCE FROM WHERE THE MONEY HAS BEEN PLACED AT PG. 339. MR. SANJEEV GOYAL IS BEING ASSESSED TO INCOME TAX AND C OPY OF INCOME TAX RETURN ALONG WITH COMPUTATION IS PLACED AT PAPER BOOK PGS. 340-341. ON GOING THROUGH THE COMPUTATION IT CAN BE SEEN THAT HE A PA RTNER IN BESIDES THE ASSESSEE FIRM M/S CHANDIGARH SALES UNITED POULTRY FARM AND G.M. POULTRY. SHARE OF PROFIT FROM THESE FIRMS IS EXEMPT FROM INC OME TAX UNDER SECTION 10(2A) OF THE ACT. 12. SH. VIJAY KUMAR COPY OF THE CAPITAL ACCOUNT IS PLACED AT PG. 346. C ONFIRMATION COPY OF ACCOUNT FROM THE PARTNER WITH PAN AND ADDRESS AND G IVING SOURCE FROM WHERE THE MONEY HAS BEEN PAID IS AT PG. 347. THE FI RST ENTRY OF CREDIT IN CAPITAL ACCOUNT ON PG 346 IS RS.3 14 861/- AS THE M ONEY RECEIVED FROM THE FIRM M/S VIJAY KUMAR & CO. . VIJAY KUMAR IS SON OF BUDH RAM WHO WAS THE PARTNER IN VIJAY KUMAR & CO. AND HIS TWO SONS HAVE RECEIVED TH E MONEY ON BEHALF OF BUDH RAM I.E. VIJAY KUMAR AND RAKESH KUMAR IN EQUAL AMOU NT OF RS.3 14 861/-. COPY OF CAPITAL ACCOUNT OF VIJAY KUMAR & CO. IS PLACED A T PAPER BOOK PG.352- 353. THE NEXT CREDIT IN CAPITAL ACCOUNT ON PG 346 OF RS. 5 LAC ON 8 TH JUNE 2006 AND AGAIN RS.5 LAC ON 8 TH JUNE 2006 IS FROM THE BANK ACCOUNT. PHOTOCOPY OF BANK ACCOUNT IS PLACED AT PGS. 355 TO 360. TYPED COPY IS PLACED AT PAPER BOOK PG. 361 TO 362. DEBIT OF RS.5 LAC IS APPEARING IN THE B ANK ACCOUNT ON 8 TH JUNE 2006 19 OF RS.5 00 560/- AND 8 TH JUNE 2006 RS.5 00 560/-. THESE DEBITS ARE APPEARIN G ON PG. 361 AND CORRESPONDING CREDIT IN CAPITAL ACCOUNT ON 346. THE CREDIT IN BANK ACCOUNT IS COMING FROM MRS. NIRMAL PURI WIFE OF VI JAY PURI OF RS.4 LAC ON 8.6.06 AND RS.L LAC FROM VIJAY KUMAR HUF ON 8.6.06. MRS. NIRMAL PURI AND VIJAY KUMAR HUF BOTH ARE BEING ASSESSED TO INCOME TAX. COPY OF BANK ACCOUNT AND THE INCOME TAX RETURN OF NIRMAL PURI ARE PLACED AT PAPER BOOK PGS. 365- 366 AND DEBIT OF RS.4 LAC IS APPEARING ON 8.6.2006 ON PG. 366. DEBIT OF RS 1 00 000 IN THE BANK ACCOUNT OF HUF IS APPEARING ON PG 369. THERE IS A FURTHER CREDIT IN THE CAPITAL ACCOUNT PG 346 OF RS.12 LAC O N 16 TH MARCH 2007 WHICH IS BY WAY OF DEBIT IN THE BANK ACCOUNT ON 17 TH MARCH 2007 AT PAPER BOOK PG. 362. THE MONEY IN THE BANK ACCOUNT HAS BEEN RECEIVED FRO M BALVINDER SINGH ON 22 ND JANUARY 2007 MR. BALVINDER SINGH IS ANOTHER PARTN ER IN THE FIRM AND IS BEING ASSESSED TO INCOME TAX. COPY OF THE BANK ACCO UNT OF MR. BALVINDER SINGH AND THE INCOME TAX RETURN AND COMPUTATION IS PLACED AT PGS. 398 TO 419. THE CHEQUE ISSUED IS PLACED AT PG. 421. THUS THE ASSESEE HAS DISCHARGED ITS ONUS FULLY. IT NOT ONLY HAS EXPLAINED THE SOURCE BUT ALSO SOURCE OF SOURCE. THERE IS NO DOUBT LEFT WHATSOEVER ABOUT THE CREDIT WORTHINESS AND GENUINENESS OF THE CAPITAL CO NTRIBUTED BY EACH PARTNER. ALL THE 12 PARTNERS ARE EXISTING INCOME TAX ASSESSE CARRYING ON BUSINESS SINCE LONG HAVING SUBSTANTIAL INCOME. THESE PARTNERS AND THE FIRMS WHERE SUCH PARTNERS ARE PARTNERS HAVE BEEN FILING RETURNS REGULARLY. EA CH OF THE PARTNER HAVE CONFIRMED THEIR ACCOUNT AND EXPLAINED THE SOURCES F ROM WHERE THE CAPITAL HAS BEEN CONTRIBUTED. IN VIEW OF THE ABOVE FACTS IT IS SUBMITTED THAT THE LEARNED CIT(A) HAS DELETED THE ADDITION NOT ON THE BASIS OF PRESUMPTION BUT ON THE BASIS OF THE APPRECIATION OF THE EVIDENCES WHICH PROVES BEYOND DOUBT THE SOUR CE OF THE CAPITAL IN THE FIRM AND DEBIT OF RS.4 LAC IS APPEARING ON 8.6.2006 ON P G. 366. DEBIT OF RS 1 00 000 IN THE BANK ACCOUNT OF HUF IS APPEARING ON PG 369. THERE IS A FURTHER CREDIT IN THE CAPITAL ACCOUNT PG 346 OF RS.12 LAC O N 16 TH MARCH 2007 WHICH IS BY WAY OF DEBIT IN THE BANK ACCOUNT ON 17 TH MARCH 2007 AT PAPER BOOK PG. 362. THE MONEY IN THE BANK ACCOUNT HAS BEEN RECEIVED FRO M BALVINDER SINGH ON 22 ND JANUARY 2007 MR. BALVINDER SINGH IS ANOTHER PARTN ER IN THE FIRM AND IS BEING ASSESSED TO INCOME TAX. COPY OF THE BANK ACCO UNT OF MR. BALVINDER SINGH AND THE INCOME TAX RETURN AND COMPUTATION IS PLACED AT PGS. 398 TO 419. THE CHEQUE ISSUED IS PLACED AT PG. 421. 20 THUS THE ASSESEE HAS DISCHARGED ITS ONUS FULLY. IT NOT ONLY HAS EXPLAINED THE SOURCE BUT ALSO SOURCE OF SOURCE. THERE IS NO DOUBT LEFT WHATSOEVER ABOUT THE CREDIT WORTHINESS AND GENUINENESS OF THE CAPITAL CO NTRIBUTED BY EACH PARTNER. ALL THE 12 PARTNERS ARE EXISTING INCOME TAX ASSESSE CARRYING ON BUSINESS SINCE LONG HAVING SUBSTANTIAL INCOME. THESE PARTNERS AND THE FIRMS WHERE SUCH PARTNERS ARE PARTNERS HAVE BEEN FILING RETURNS REGULARLY. EA CH OF THE PARTNER HAVE CONFIRMED THEIR ACCOUNT AND EXPLAINED THE SOURCES F ROM WHERE THE CAPITAL HAS BEEN CONTRIBUTED. IN VIEW OF THE ABOVE FACTS IT IS SUBMITTED THAT THE LEARNED CIT(A) HAS DELETED THE ADDITION NOT ON THE BASIS OF PRESUMPTION BUT ON THE BASIS OF THE APPRECIATION OF THE EVIDENCES WHICH PROVES BEYOND DOUBT THE SOUR CE OF THE CAPITAL IN THE FIRM. 7. WE HAVE PERUSED THE RIVAL SUBMISSIONS FACTS OF THE CASE AND THE RELEVANT CASE-LAWS CITED BY THE PARTIES. L D. 'DR' CONTENDED THAT THE ADDITIONAL GROUNDS EMANATE FROM THE ORIGINAL GROUNDS FILED BY THE REVENUE THEREFORE TH E ADDITIONAL GROUNDS DESERVE TO BE ADMITTED AND ADJUDICATED. THE ADDITIONAL GROUNDS FILED BY THE REVENUE ARISE FROM THE RECORD AND THE ORIGINAL GROUNDS OF APPEAL FILED BY THE REV ENUE. CONSEQUENTLY ORIGINAL GROUNDS OF APPEAL ARE ADMITT ED BEING LEGAL IN NATURE. 8. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT T HE AO MADE ADDITION ON THE GROUND OF DIFFERENT EXPLANATIO NS REGARDING SOURCE OF INVESTMENT FILED BY THE ASSESSE E. LD. CIT(A) AFTER A DETAILED FACTUAL AND LEGAL DISCUSSI ON; ON THE ISSUE OF SOURCE OF CAPITAL INTRODUCED BY THE PARTNE RS IN THE FIRM DELETED THE IMPUGNED ADDITION OF RS.3 23 93 7 51/- MADE BY THE AO. THE FINDINGS OF THE LD. CIT(A) ARE FOU NDED ON APPRECIATION OF FACTS OF THE CASE EVIDENCES FILED BEFORE HER AND APPRECIATION OF THE DECISIONS OF THE HON'BLE SU PREME 21 COURT IN THE CASE OF CIT V ORISSA CORPORATION (P) L TD. (SUPRA) AND JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V METAL & METALS OF INDIA (SUPRA). THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREUNDER : 11. I HAVE GONE THROUGH THE ASSESSMENT RECORDS THE SUBMISSIONS OF THE COUNSEL AND THE PAPER BOOK FILED. THE AO IN THE ASSESSMENT ORDER HAS REPRODUCED THE INFORMATION ABOUT ALL THE 12 MEMBERS OF AOP BUT HAS OMITTED TO CONSIDER THE PIECEMEAL INFORMATION FILED WHILE EXPLAINING THE SOURCE OF INVESTMENT. 12. IT IS AN ACCEPTED PROPOSITION OF LAW THAT WHEN AN INVESTMENT IS MADE BY AN EXISTING ASSESSEE WHO ADMITS HAVING MADE THE INVESTMENT ADDITION IF ANY HAS TO BE MADE IN HIS PERSONAL CASE AND NOT IN THE CASE OF THE FIRM/AOP. 13. I HAVE GONE THROUGH THE INDIVIDUAL LEDGER COPY OF ACCOUNT OF EACH MEMBER OF AOP SHOWING INVESTMENT MADE DATEWISE AND THE SUPPORTING EVIDENCE FILED IN THE SHAPE OF COPY OF SAVING BANK ACCOUNT AND ACCOUNT OF FIRMS FROM WHERE THE FUNDS HAVE BEEN DRAWN AND INVESTED IN THE PRESENT AOP. 14. ON APPRECIATION OF THE EVIDENCE AVAILABLE ON RECORD I AM SATISFIED THAT SOURCE OF INVESTMENT MADE BY EACH MEMBER HAS BEEN PROPERLY EXPLAINED AND IN ANY CASE CALLS FOR NO ADDITION IN THE HANDS OF AOP. RELIANCE ON THE REPORTED CASES (SUPRA) SQUAREL Y COVERS THE ISSUE. 15. IN THE RESULT ADDITION OF RS.3 23 93 751/- IS DELETED ACCEPTING ASSESSEE'S GROUND OF APPEAL. 9. A PERUSAL OF THE IMPUGNED APPELLATE ORDER PASSED BY THE 22 FIRST APPELLATE AUTHORITY REVEALS THAT THE CIT(A) H AS APPRECIATED INDIVIDUAL LEDGER COPY OF ACCOUNT OF EA CH MEMBER AND INVESTMENT MADE DATE-WISE AS ALSO THE SUPPORTI NG EVIDENCES FILED IN THE SHAPE OF COPY OF SAVING BANK ACCOUNT AND ACCOUNT OF FIRMS FROM WHERE THE FUNDS HAVE BEE N DRAWN AND INVESTED IN THE PRESENT FIRM. WE HAVE FURTHER CAREFULLY PERUSED THE SYNOPSIS FILED BY THE LD. 'AR' AS REPRO DUCED ABOVE AND FOUND THAT REQUISITE EVIDENCE IN THE FORM OF CO NFIRMATION PAN PHOTO COPY OF INCOME TAX RETURNS COMPUTATION BANK ACCOUNT COPY OF CAPITAL ACCOUNT EXPLAINING THE SOU RCE OF CAPITAL CONTRIBUTED BY EACH PARTNER WERE FILED IN THE FORM OF BULKY PAPER BOOKS. THE SAID DETAILS HAVE ALSO BEEN FILED BY THE LD. 'AR' IN RESPECT OF EACH PARTNER WHO CONTRI BUTED TOWARDS SHARE CAPITAL OF THE ASSESSEE. LD. 'AR' DE MONSTRATED THAT ALL THE FUNDS HAVE BEEN WITHDRAWN FROM THE ACC OUNTS OF VARIOUS ENTITIES WHICH ARE ALSO ASSESSED TO TAX AN D THROUGH THE BANKING CHANNEL THE IMPUGNED AMOUNT HAS BEEN CONTRIBUTED BY THE RESPECTIVE PARTNERS. AS AGAINST SUCH CARDINAL EVIDENCES ON THE ISSUE IN QUESTION THE R EVENUE HAS FAILED TO BRING PRIMA-FACIE ANY MATERIAL ON RECORD TO REBUT SUCH EVIDENCES FILED BY THE ASSESSEE. THE REVENUE HAS ALSO FAILED TO REBUT THE FINDINGS OF THE LD. CIT(A) AS REPRODUCED ABOVE PARTICULARLY IN THE CONTEXT OF EVIDENCES BRO UGHT ON RECORD BY THE LD. CIT(A). IN VIEW OF THIS IT IS E VIDENT THAT THE ASSESSEE HAS DISCHARGED THE ONUS CAST ON IT TO PRO VE THE IDENTITY CAPACITY OF THE PARTIES AND THE GENUINENE SS OF THE TRANSACTIONS WITHIN THE MEANING OF PROVISIONS OF S ECTION 68 OF THE ACT. THEREFORE HAVING REGARD TO THE CASE L AWS CITED BY 23 THE ASSESSEE AND THE FACT SITUATION OF THE PRESENT CASE INCLUDING THE EVIDENCES FILED BY THE ASSESSEE TO PR OVE HIS CASE WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A). CONSEQUENTLY FINDINGS OF THE CIT(A) ARE UP HELD. 10. IN GROUND NO.2 REVENUE CONTENDED THAT THE CIT( A) ERRED IN ALLOWING THE RELIEF ON DISALLOWANCE AMOUNTING TO RS.8269/- U/S 40A(3) OF THE ACT. 11. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS LD. 'DR' AND LD. 'AR' DID NOT SERIOUSLY ARGUED THE ISSUE BEI NG MEAGERNESS OF AMOUNT INVOLVED. 12. WE HAVE CAREFULLY PERUSED THE ORDER OF THE CIT( A) AND FOUND NO INFIRMITY THEREIN. THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREUNDER : 2.15 THE WORDS USED IN S. 40A(3) ARE IN A SUM MEANING SINGLE SUM IRRESPECTIVE OF THE NUMBER OF TRANSACTIONS. WHERE THE AMOUNT IN A SINGLE SUM DOES NOT EXCEED RS.20 000/- RIGOURS OF S . 40A(3) WILL NOT APPLY. THE ISSUE HAS BEEN DEALT WI TH BY THE HON'BLE ITAT MADRAS BENCH IN THE CASE OF CIT V KOTHARI & TILES (P) LTD. (2006) 282 ITR 115/202 CTR 277 (MAD). 2.16 IN THE INSTANT CASE THE AO APPLIED AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY (PROVISIONS WHICH ARE APPLICABLE W.E.F. 1.4.2009) WHICH WAS NOT IN EFFECT FOR THE ASSESSMENT YEAR 2007-08. AS SUCH I HOLD THAT THE ONLY TRANSACTION ON WHICH 40A(3) IS APPLICABLE IS THAT OF RS.21 944/ - 20% OF THIS AMOUNT IS TO BE DISALLOWED PART LY 24 ALLOWING THE ASSESSEE'S GROUND OF APPEAL ON THIS ISSUE. 13. THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 14. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DEC. 2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH DEC. 2011. POONAM COPY TO: THE APPELLANT THE RESPONDENT THE CIT(A) THE CIT DR ASSISTANT REGISTRAR ITAT CHANDIGARH