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TMI Blog2012 (5) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of interest on partners capital and Rs. 7,00,000 on account of partners' salary - Decided in favor of the assessee Addition u/s 154 made by the CIT(A) - In the present case, this is not the case of the Revenue that the partners of the assessee-firm are fictitious because in the statement of the partner, additional income of Rs. 180 lakhs was declared during the course of survey and it was duly shown in the return of income and the addition was made by the Assessing Officer on the basis of that statement only, which although is deleted, the fact remains that it is not a case of the Revenue that the partners of the assesseer-firm are fictitious - apex court in the case of CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC) - Held that: this addition made by the Assessing Officer under section 68 is not sustainable in the light of this decision of the hon'ble Supreme Court and in the light of the facts of the case, since confirmations along with addresses and permanent account numbers were made available by the assessee to the Assessing Officer and no effort was made by the Assessing Officer to pursue the loan creditors - Decided in favor of the assessee Regarding validity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer worked out the regular income should have been 8 per cent. of turnover, i.e., at 8 per cent. of Rs. 2,01,48,210 = Rs. 16,11,857. He added the amount of Rs. 1,80,00,000 declared by the partner of the assessee and from such total, he reduced the income declared by the assessee, i.e., Rs. 1,75,35,320 and worked out that assessee has shown lesser income of Rs. 20,76,537. He made an addition of this amount. Apart from this, he made an addition of Rs. 70,40,000 with regard to new capital introduced by the partners of the assessee-firm. This addition was made by him by invoking the provisions of section 68. Another addition of Rs. 63,87,809 was made under section 68 in respect of fresh unsecured loans claimed to have received by the assessee in the present year. Against all these three additions, the assessee preferred appeal before learned Commissioner of Income-tax (Appeals). Out of the first addition of Rs. 20,76,537, part relief was allowed by the learned Commissioner of Income-tax (Appeals). He held that it will be in the interest of justice if the Assessing Officer is directed to estimate the profit at 5 per cent. from regular business and in this manner, he allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000, it was submitted that no addition can be made in the case of the assessee-firm with regard to the capital brought in by the partners and in support of his claim, the learned authorised representative relied on the decision of the hon'ble Gujarat High Court in the case of CIT v. Pankaj Dyestuff Industries in I. T. A. No. 241 of 1993 dated July 6, 2005. He submitted a copy of this decision of the hon'ble Gujarat High Court in CIT v. Pankaj Dyestuff Industries (supra). Regarding the third addition of Rs. 63,87,809 made by the Assessing Officer under section 68 with regard to fresh unsecured loans, it was submitted that this addition is also not justified because initial onus has been duly discharged by the assessee. He drew our attention to the letter dated October 22, 2007 submitted by the assessee before the Assessing Officer, copy of which is available on pages 25 and 26 of the paper book and also drew our attention to paragraph 6 of this letter, as per which, duly signed confirmations in respect of unsecured loans taken were submitted with names, addresses and permanent account numbers. Regarding this aspect, it was submitted that the loans have been repaid by account-pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the voluntarily disclosed income is only Rs. 1,75,00,000 less by Rs. 5 lakhs to the disclosed amount of Rs. 1,80,00,000. Against this finding of the learned Commissioner of Income-tax (Appeals), it was submitted that no ground has been raised by the Revenue in the appeal filed by it. Hence no addition on this account is justified unless it is found that additional income declared by the assessee during the survey of Rs. 1,80,00,000 had not been shown by the assessee as additional income. On this aspect, we find that as per profit and loss account available in the paper book, this amount of Rs. 1,80,00,000 has been shown in the income side. Profit before interest on partners' capital and partners' salary is shown by the assessee at Rs. 184.06 lakhs and the net income arrived at was Rs. 175.24 lakhs after allowing deduction of Rs. 1,81,369 on account of interest on partners capital and Rs. 7,00,000 on account of partners' salary. Hence this additional income of Rs. 180 lakhs declared during the course of, survey has been duly considered in the profit and loss account of the present year. In addition to that, there is Rs. 406,145.19 income declared by the assessee on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the partners and assess the same in their hands, if their explanation is not found satisfactory. 14. In the facts and circumstances of the present case, both the Deputy Commissioner of Income-tax (Appeals) and the Tribunal have found that the assessee had discharged the primary onus which was on it by offering explanation, which has not been found to be incorrect or false in any manner. The interests of the Revenue is also safeguarded as the Income-tax Officer has been given the liberty to consider the said credits in the hands of the partners if he is not satisfied with the sources of investment of cash credits in the accounts of the partners. 15. In these circumstances, it is not possible to find that the order of the Tribunal suffers from any infirmity which would require interference at the hands of this court. Accordingly, it is held that the Tribunal was right in law and on facts in deleting the addition of Rs. 87,250 being deposits in the accounts of the partners. The question referred to this court is, accordingly, answered in. the affirmative, i.e., in favour of the assessee and against the Revenue." In the present case, this is not the case of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their permanent account number, copy of acknowledgment of income-tax returns, etc., and no enquiry was made by the Assessing Officer, we feel that addition made by the Assessing Officer cannot be sustained because the assessee has discharged its primary onus and thereafter it was required on the part, of the Assessing Officer to point out the reasons and the basis for not accepting the claim of the assessee regarding un-secured loans. The decision of the hon'ble apex court in the case of CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC) is also supporting the case of the assessee. The relevant portion of this judgment at page 84 is as under:- "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in, the, file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There ..... X X X X Extracts X X X X X X X X Extracts X X X X
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