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TMI Blog2023 (4) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... reditworthiness of the partners as well as genuineness of the transactions as entered into with them. We also find force in the contentions that assessment in the case of two of the partners was also completed by the same Assessing Officer wherein the AO did not take any adverse view in respect of the amount of capital introduced in the assessee firm which in itself justified that the AO was satisfied with the source of capital introduced in the assessee firm. Assessment in the case of the partnership firm from where the partners of the assessee firm withdrew cash/ obtained loan and thereafter introduced capital in the assessee firm was also completed by the same Assessing Officer and that no adverse view was taken in the case of partnership firm in respect of the amount withdrawn by the partners for contributing capital in the assessee firm which further justified that the AO was satisfied with the source of capital introduced in the assessee firm - no reason to sustain addition to the total income of the assessee on account of capital introduced by partners since source of capital introduced by the partners stood duly explained. Addition made by the Ld. AO on account of capital i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,59,28,791/- made by the Ld. AO on account of capital introduced by partners by treating it as unaccounted and unexplained credit under Section 68 of the Act. 4. The brief fact leading to the case is this that the Ld. AO during the course of assessment proceedings observed that all the partners had introduced capital in the assessee firm during the year under consideration and no documents except for the ledger account of the partners had been submitted to justify the source of capital introduced in the firm. The Ld. AO further observed that Shri Rahul Bansal and Shri Rajendra Bansal had withdrawn amount from the partnership firm, M/s Motilal Gopikishan and had thereafter introduced capital in the firm. The Ld. AO reiterated the fact that books of accounts of M/s Motilal Gopikishan had been treated as suspicious during the course of assessment proceedings since several documents related to cash loan and register related to unaccounted investment had been found during the course of search. Accordingly, in the absence of supporting documentary evidences regarding source of capital introduced by its partners, the Ld. AO added the amount of capital introduced by partners of Rs. 2,59, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the total income of the assessee on account of capital introduced by its partners. We have further considered inter alia the following submission made by the assessee in the synopsis submitted before us: "1.1] The Department in the ground of appeal has challenged the action of Ld CIT(A) of deleting the addition of Rs. 2,59,28,791/- as made to the total income of the respondent firm by the assessing officer on account of capital introduced by the partners by treating it as unaccounted and unexplained credit under section 68 of the Income-Tax Act, 1961 even when the said addition of Rs. 2,59,28,791/- as made by the assessing officer on account of capital introduced by the partners was made without allowing set-off of capital withdrawn. 1.2] The assessing officer while passing the assessment order observed that all the partners had introduced capital in the firm during the year under consideration and no documents except for the ledger account of the partners had been submitted to justify the source of capital introduced in the firm. The assessing officer further observed that Shri Rahul Bansal and Shri Rajendra Bansal had withdrawn amount from the partnership firm, M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iwari 43,95,000 2 Rahul Bansal 38,30,000 3 Rajendra Bansal 43,29,379 4 Satyanarayan Maheshwari 93,00,000 5 Yash Tiwari 40,74,412 Total 2,59,28,791 1.5.2] Detail with respect to source of capital introduced by the partners in the firm is as under: S. No Name of the partners Amount of capital introduced [in Rs.] Source of introduction of capital 1 Madhusudan Tiwari 43,95,000 The said amount of capital was introduced out of loan taken from the firm, M/s Motilal Gopikishan and also out of current year income and past savings of the partner 2 Rahul Bansal 38,30,000 The said amount of capital was introduced out of capital withdrawn from the firm, M/s Motilal Gopikishan and also out of loan taken from various other parties 3 Rajendra Bansal 43,29,379 The said amount of capital was introduced out of capital withdrawn from the firm, M/s Motilal Gopikishan and also out of loan taken from various other parties 4 Satyanarayan Maheshwari 93,00,000 The said amount of capital was introduced out of amount received from other firms of the partner, out of loan taken from various parties and also out of current year income and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,74,412/- introduced during the year 5.1 Confirmation of accounts 88 5.2 Relevant pages of bank statement duly highlighting the amount of capital introduced 89-90 5.3 Acknowledgement of income-tax return along with computation of income for the Assessment Year 2018-19 91-93 5.4 Ledger account in the books of the firm, M/s Motilal Gopikishan so as to justify the source of introduction of capital 94 1.5.4] In view of the above, source of capital introduced by the partners in the firm stands duly justified with the requisite documentary evidences. The respondent firm during the course of appellate proceedings has filed ample documentary evidences including confirmation of accounts, bank statements and incometax returns of the partners so as to justify the identity and creditworthiness of the partners as well as genuineness of the transactions as entered into with them. The respondent firm has also filed copy of capital/ ledger account of the partners in the books of the firm, M/s Motilal Gopikishan so as to justify the source of source of funds introduced by the partners. Hence, it can be satisfactorily concluded that the respondent firm has properly discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 8. The Ld. Counsel further submitted that the same Assessing Officer completed the assessment in the case of the partnership firm, M/s Motilal Gopikishan from where the partners of the assessee firm withdrew cash/ obtained loan and thereafter introduced capital in the assessee firm and that no adverse view was taken in the case of M/s Motilal Gopikishan in respect of the amount withdrawn by the partners for contributing capital in the assessee firm which in itself justifies that the Ld. AO was satisfied with the source of capital introduced in the assessee firm. Further, the Ld. Counsel also submitted that assessment in the case of two of the partners i.e. Shri Rahul Bansal and Shri Rajendra Kumar Bansal was also completed by the Assessing Officer wherein the Assessing Officer did not take any adverse view in respect of the amount of capital introduced in the assessee firm which in itself justifies that the Ld. AO was satisfied with the source of capital introduced in the assessee firm. Accordingly, the Ld. Counsel vehemently argued that there was no justification for making addition to the total income of the assessee on account of capital introduced by partners. 9. The Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification for making any addition to the total income of the assessee on account of capital introduced by its partners. 12. We find that the Ld. CIT(A) while allowing the appeal preferred by the assessee observed as follows: "4.4. Ground Nos 1 to 4 for A.Y. 2018-19: - Through these grounds of appeal the appellant has challenged the addition made by the AO amounting to Rs: 2,59,28,791/- on account of capital introduced by the partners by treating the same as unaccounted and unexplained credit u/s 68 of the I.T. Act, 1961 and charging of tax liability by invoking the amended provision of section 115BBE of the Act. The appellant firm received capital from its partners to the tune of Rs 2,59,28,791/-, since no explanation was provided by the appellant firm. Hence, the said amount was added to the total income of the appellant firm. The assessing officer in the assessment order observed that the amount as introduced by Shri Rahul Bansal and Shri Rajendra Bansal was withdrawn from the firm M/s Motilal Gopikishan but transactions with the firm M/s Motilal Gopikishan was doubted by the assessing officer and entire amount of capital introduced by all the partners were added to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners viz Shri Rahul Bansal and Shri Rajendra Bansal, in that case necessary addition was to be made in their assessment but no such addition was made in their individual assessment order. Considering the overall facts of the case, submissions and supporting documents as filed by the appellant firm, it is held that the AO has not justified in making addition. Therefore, the addition made by the AO amounting to Rs: 2,59,28,791/- on account of capital introduced by the partners is Deleted. Thus, the appeal on these grounds is Allowed. Since the addition as made by the assessing officer on account of unexplained cash credit u/s 68 of the I.T. Act, 1961 have already been deleted on merit. Therefore, the charging of tax liability as per amended provisions of section 115BBE on these grounds is academic in nature and having no impact on the fate of these grounds." 13. The above findings of the Ld. CIT(A) have not been controverted by the Ld. DR. The facts discussed above squarely reveal that the Ld. AO made addition on account of capital introduced by the partners simply for the reason that the assessee did not furnish any documentary evidence during the course of assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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