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TMI Blog2020 (5) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1372/Hyd/2016 - - - Dated:- 30-4-2020 - Smt. P. Madhavi Devi, Judicial Member For the Assessee : Smt. S. Sandhya For the Revenue : Shri DJP Anand ORDER This is an assessee s appeal for the AY 1998-99 against the order of CIT(A) 5, Hyderabad, dated 30/06/2016. 2. On perusal of record, it is noticed that there was a delay of 30 days in filing of the appeal before the Tribunal. The assessee filed a petition for condonation of the said delay stating that at the relevant point of time, the Managing Partner of the assessee firm, Sri P. Anand Rao, fell sick due to severe back pain besides hypertension and diabetes and was advised bed rest from 08/09/2016 to 12/10/2016 which has resulted in the delay. (A copy of the medical certificate is also annexed to the petition.). In view of the above, it was prayed that the delay in filing of the appeal, may be condoned as the reasons for the delay were bonafide and are beyond the control of the assessee. 2.1. The Ld.DR, however, opposed the same. 2.2. Having regard to the rival contentions, I am satisfied that the assessee was prevented by reasonable cause from filing the appeal within the stipulated time. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the agreement entered into with the land owners, evidence for the investments made by the partners, copy of the agreements with the land owner for taking back the amount invested without purchasing the land, mode of the receipt, whether by cash or by cheque etc. The assessee submitted that it had entered into a transaction for purchase of land situated at Vizag for which ₹ 40 lakhs was paid in two different years, but the transactions did not materialize and therefore, the amount was returned by the party and the receipts evidencing the payment by the assessee were taken back by the selling party and that the copy of the agreement entered into with the selling party was also returned to the party as the transaction had not materialized and, therefore, the assessee firm did not have any copies to file before the AO. The assessee firm further submitted that the books of firm were already submitted before the AO, which showed the details of investment made by each of the partners. But, the AO held observed that the assessee could not furnish sources of the investments by the partners. He also observed that the assessee firm has claimed to have received the return of inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 40 lakhs was brought by the partners of the firm, which in turn, was used for purchase of landed property at Vizag. Since none of the partners appeared and have not filed any evidence, the AO treated the sum of ₹ 40 lakhs as unexplained investment of the firm and accordingly brought it to tax, against which, the assessee filed an appeal before the CIT(A), who confirmed the order of AO and the assessee is in second appeal before the ITAT by raising the following grounds of appeal: 1) The order of the ld. CIT(A) is erroneous both on facts and in law. 2) The ld. CIT(A) erred in treating the status of the appellant as AOP instead of Partnerhsip firm 3) The ld. CIT(A) erred in confirming the addition of ₹ 40 lakhs made by the AO by applying the provisions of section 69 of the IT Act. 4) The ld. CIT(A) ought to have seen that the partners confirmed the deposit made into the partnership firm of ₹ 40 lakhs and therefore, the said amount should not have been treated as the income of the appellant u/s 69 of the IT Act. 5) The ld. CIT(A) ought to have considered the fact that the partners admitted the investment made and filed their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the assessee firm failed to prove the genuineness of the capital contribution by the partners and that though some of the partners never filed their income tax returns, but copies of the balance sheet were not filed along with returns to prove their creditworthiness. 8. Having regard to the rival contentions and material on record, I find that the assessee firm was formed with effect from 01/04/1996 and also got dissolved in the year 2000. It is also not disputed that the assessee did not carry on any business activity except for making payment of₹ 40 lakhs for purchase of land at Vizag. It is the case of the assessee that the said deal did not go through and the amount was returned by Mr. Srinivas and the same was in turn returned by the assessee to the partners. When the assessee did not carry on any business, it cannot be said that it has unexplained income to make the unexplained investment. For this proposition, the ld. counsel for the assessee relied on the decision of the Hon ble Supreme Court in the case of CIT Vs. Bharat Engineering and Construction Co., 83 ITR 187, wherein it was held that where the business had not commenced or just commenced, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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