2010 (5) TMI 880 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A) order regarding deletion of addition made by A.O. against capital contribution by partners as firm's income.

Deletion of addition by CIT(A):
- A.O. added &8377; 87,00,000 in firm's hands as capital contribution by partners.
- Assessee explained partners invested from agricultural income with affidavits.
- CIT(A) deleted addition, stating partners' capital contribution reasonably explained.
- Revenue contended onus on assessee to prove cash credit, no evidence on sources of investment.
- CIT(A) accepted explanation without evidence, no opportunity for cross-examination.
- Tribunal cited case law stating no addition in firm's hands for partner deposits made before business commencement.

Case law references:
- India Rice Mill vs. CIT, 218 ITR 508 (Alld)
- Surendra Mahan Seth vs. CIT, 221 ITR 239 (Alld)
- CIT vs. Jaiswal Motor Finance, 141 ITR 706 (Alld.)

Decision based on case law:
- Tribunal held no addition in firm's hands for partner capital contribution.
- Burden on partner to explain source of investment.
- A.O. incorrect in adding amount in firm's hands, should act on individual partners.
- Appeal by Revenue dismissed, decision pronounced on 25.05.2010.