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TMI Blog1995 (2) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... partners, could not be assessed in the hands of the firm and in deleting the same?" The brief facts of the case are that during the course of assessment proceedings, the Income-tax Officer recognised the capital account of Kishorilal, one of the partners of the firm, and it was found that a sum of Rs. 11,502 was credited in his account in the books of the firm. A notice was issued to the firm and in response to such notice it was stated that the investment has been made by the partner which is out of the recoveries made from money-lending business carried on by Kishorilal and such income has been declared to the extent of Rs. 329 in t e accounting year in his individual return and the balance amount of Rs. 6,172 is the sale proceeds of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be assessed in the hands of the firm. The submission of learned standing counsel for the Department is that since the entry was in the books of account of the firm and, therefore, the assessment has to be made in accordance with the provisions of section 68 in the hands of the firm. We have considered over the matter. The provisions of section 68 of the Income-tax Act, 1961, are as under : " Cash credits.-- Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade directly and it is found that the said creditor is not in existence or is incapable of advancing the money to that extent or the explanation of the amount given is not accepted as satisfactory then the result is that the said amount is considered as income of the firm, as income from "undisclosed sources". In the case of a partner, if the entry is made by crediting his account in the books maintained by the firm then the additional explanation could be that it was the income of the partner and not of the firm. Simply because an additional argument could be raised that the money belongs to the partner, it cannot be said that in all cases where any credit entry is made through the account of the partner, no addition can be made in the han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In order to examine the legality of such a presumption which the Income-tax Appellate Tribunal has raised, in this case, let us see that in a case where an addition is made in respect of a credit entry in the account of the partner in the books of the firm for which the partner has no capacity, can it be said that in all cases the Income-tax Officer is bound to consider such credit entry as income in the hands of the partner and not as income of the firm ? The assessee (firm) in order to introduce the concealed income may take shelter in the partner's account, if the view taken by the Tribunal is accepted as in accordance with law. An entry in the books of the firm in the partner's account or in respect of any credit by a third party stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clever assessee can always throw the burden of proof on the income-tax authorities by making a credit entry in the name of a third party either real or pseudonymous. The same High Court in M. M. A. K. Mohindeen Thamby and Co. v. CIT [1959] 36 ITR 481, relying on the said decision came to the conclusion that there is no distinction between the entries in the names of the partners and those in the names of the third parties, and the nature of the entry is not distinguishable. In the absence of a satisfactory explanation, it is open to the Department to infer that these mon ies also belong to the assessee and represent suppressed income. In Hardwarmal Onkarmal v. CIT [1976] 102 ITR 779, it was observed by the Patna High Court that if cash cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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