9911796707
TMI Blog2023 (3) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act, 1961 (briefly, 'the Act' hereinafter), against the order dated 28.10.2005, passed by the Income Tax Appellate Tribunal, Bench 'A' (SMC), Hyderabad (briefly, 'the Tribunal' hereinafter) in I.T.A.No.949/Hyd/03 for the assessment year 1998-99. 3. Though the appeal was admitted vide the order dated 30.10.2006 with an interim stay, no substantial question of law was framed. However, from the memo of appeal, we find that appellant has proposed the following questions as substantial questions of law: I. Whether on the facts and in the circumstances of the case, Tribunal was justified in upholding the investments made by the partners as addition of Rs.4,70,966/- in the total income of the assessee on the ground that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.V.fluids etc. In the return of income for the said assessment year, assessee declared export turnover and claimed deduction under Section 80HHC of the Act. Thus, assessee declared nil income. Case of the assessee was selected for scrutiny and in the course of assessment proceedings it was found that assessee had claimed to have taken loans from the following parties and in the following manner: Name of the party Amount of cash credit Interest --------------------- --------------------------- ---------- Smt. K.Sujatha Rs. 2,00,000 Rs. 39,533 Smt. K.Shantha Kumari Rs. 1,00,000 Rs. 5,000 Sri K.Prabhakar Reddy Rs. 1,00,000 Rs. 26,432 7. We may mention that out of the above three persons, Smt. K.Sujatha and Sri K.Prabhakar R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly dismissed the appeal thereby confirming the addition of Rs.4,70,966.00. 10. Learned counsel for the appellant Ms. K.Manasa submits that Tribunal was not justified in confirming the entirety of the addition. Referring to a judgment of this Court in Commissioner of Income Tax v. M.Venkateswara Rao [2015] 370 ITR 212 (Andhra Pradesh and Telangana) (Mag.) she submits that contribution of the partners of the firm cannot be added to the income of the firm under Section 68 of the Act even if the explanation is not satisfactory. At the most, such credits can be questioned in the assessment proceedings of the concerned partners. She further submits that the aforesaid decision of this Court in M.Venkateswara Rao (supra) has been foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee company from alleged bogus shareholders, Supreme Court has taken the view in Commissioner of Income Tax v. Lovely Exports (P.) Ltd [2008] 216 CTR 195 (SC) that in such a scenario, department would be free to proceed to reopen the individual assessment in accordance with law but would not be entitled to invoke Section 68 of the Act to add such share application money to the income of the assessee company. 13. Submissions made by learned counsel for the parties have received the due consideration of the Court. 14. After thorough consideration of all relevant aspects, we are of the view that issue raised in this appeal is squarely covered by the decision of this Court in M.Venkateswara Rao (supra) which is binding on us. That was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the firm, is the contribution made by the partners, to the capital. In a way, the amount so contributed constitutes the very substratum for the business of the firm. It is difficult to treat the pooling of such capital, as credit. It is only when the entries are made during the course of business that can be subjected to scrutiny under Section 68 of the Act. 9. Even otherwise, it is evident that the respondent explained the amount of Rs.76,57,263 as the contribution from its partners. That must result in a situation, where Section 68 of the Act can no longer be pressed into service. However, in the name of causing verification under Section 68 of the Act, the Assessing Officer has proceeded to identify the source for the respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that the amount represented the security deposits made by the retail dealers, and the source thereof was properly explained. Nowhere in the order of assessment, the Assessing Officer recorded any finding to the effect that he verified the matter from the respective retail dealers and that such dealers have denied of making deposits. In the field of Arrack business, it is not uncommon that the retail dealers are required to keep security deposits with the supplier. At any rate, it is a pure question of fact. 12. Therefore, the appeal is dismissed. 15. Following and applying the aforesaid decision of this Court, Patna High Court in Anurag Rice Mills (supra) held that in such circumstances the unexplained cash credits would have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
