9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 1331 - AT - Income TaxAddition u/s 68 - unexplained cash credit - capital contribution in cash by the partners - Addition in the hands of firm v/s partners - As per AO Assessee has not furnished any supporting document like bank statement of the partners from where the cash amount have been withdrawn or any corroborative evidence to explain the source and nature of the cash so deposited - HELD THAT - Since the partners have substantial returned income to the tune of Rs. 24.45 Lac and Rs. 24.00 lac, who have made the capital contribution of Rs. 14.50 lac and 10 lacs, thus, the identity and creditworthiness of such partners cannot be doubted. If the Ld. AO was not convinced with the source of amounts deposited by the partners, then such addition could have been made in the hands of such partners by invoking the relevant provisions of law but no addition was called for in the case of assessee firm , who have discharged its primary onus u/s 68 by providing the details of the partners from whom such funds were received. Thus the addition made by the Ld. AO and affirmed by the Ld. CIT(A) w.r.t. capital contribution in cash by the partners cannot be sustained in the hands of assessee firm. Our decision is supported by various judgments relied upon by. Ground no. 1 of the present appeal is decided in favor of the assessee.
Issues Involved:
1. Addition of Rs. 25,50,000/- under Section 68 on account of unexplained cash credit. 2. Addition of Rs. 1,48,290/- under Section 40(a)(ia) on account of non-deduction of TDS. 3. Addition of Rs. 85,736 being 1/10th of conveyance expense and opening event expense. 4. Charging special rate tax under Section 115BBE on the addition under Section 68. Summary: Issue 1: Addition of Rs. 25,50,000/- under Section 68 on account of unexplained cash credit During the assessment proceedings, the assessee was asked to explain the source of cash deposits made by the partners towards capital introduction. The Ld. AO noted that the assessee failed to furnish supporting documents like bank statements of the partners. The Ld. CIT(A) upheld the Ld. AO's decision due to the absence of submissions from the assessee. The assessee contended that all necessary documents were provided, including partners' capital accounts and income tax returns. The identity and creditworthiness of the partners were not doubted by the Ld. AO. The Tribunal observed that if the Ld. AO was not satisfied with the source of the amounts deposited by the partners, the addition should have been made in the hands of the partners, not the firm. The Tribunal relied on several judgments, including Kesharwani Sheetalaya vs. Commissioner of Income Tax, which supported the assessee's position. Consequently, the Tribunal decided in favor of the assessee on this ground. Issue 2: Addition of Rs. 1,48,290/- under Section 40(a)(ia) on account of non-deduction of TDS The Ld. AR did not advance any arguments or furnish written submissions regarding this issue. Consequently, the Tribunal dismissed this ground as not pursued. Issue 3: Addition of Rs. 85,736 being 1/10th of conveyance expense and opening event expense Similar to Issue 2, the Ld. AR did not present any arguments or submissions on this issue. Therefore, the Tribunal dismissed this ground as not pursued. Issue 4: Charging special rate tax under Section 115BBE on the addition under Section 68 This issue was consequential to the decision on Issue 1. Since the Tribunal decided in favor of the assessee on Issue 1, this ground was not dealt with separately. Conclusion: The appeal filed by the assessee was partly allowed, with the Tribunal deciding in favor of the assessee on the major ground of unexplained cash credit under Section 68. The other grounds were dismissed as not pursued. The order was pronounced in the open court on 22/02/2024.
|
