1979 (5) TMI 25 - AT - Income Tax

Partnership Income: Excess Additions Removed

The additions made under other sources were deleted as the alleged investments were part of the firm's income and distributed to the partners. The appeals ... Additions to income under the head 'income from other sources' - assessment based on documents seized/found during search - voluntary disclosure under the Voluntary Disclosure Act and certificate under s. 8(2) - allocation of partnership receipts to partners and avoidance of double assessmentAdditions to income under the head 'income from other sources' - voluntary disclosure under the Voluntary Disclosure Act and certificate under s. 8(2) - allocation of partnership receipts to partners and avoidance of double assessment - Deletion of addition of Rs. 11,564 made for asst. yr. 1973-74 - HELD THAT: - The ITO made an addition on account of investments based on entries recorded in an exercise book found at the assessee's premises following a search. The firm, however, had voluntarily disclosed unrecorded cash receipts of Rs. 59,170 for asst. yr. 1973-74 under the Voluntary Disclosure Act and obtained a certificate under s. 8(2). The Tribunal found that the amounts noted by the ITO were referable to the undisclosed receipts of the firm which had been distributed to the partners. Since that income had been disclosed by the firm and the amounts charged to the assessee were traceable to that disclosed income, reassessment of the same sums in the hands of the partner was not permissible. The addition for 1973-74 was therefore deleted.Addition for asst. yr. 1973-74 deleted.Additions to income under the head 'income from other sources' - voluntary disclosure under the Voluntary Disclosure Act and certificate under s. 8(2) - allocation of partnership receipts to partners and avoidance of double assessment - Deletion of addition of Rs. 11,010 made for asst. yr. 1974-75 - HELD THAT: - The ITO made a similar addition for asst. yr. 1974-75. Though the firm's voluntary disclosure for 1974-75 showed a smaller amount, the Tribunal noted that substantial undisclosed receipts in 1973-74 had been withdrawn by the partners and remained available. The Tribunal accepted that the investment questioned for 1974-75 was referable to funds drawn from the firm's disclosed/unrecorded receipts and thus not exigible as fresh income in the partner's hands. On that basis the addition for 1974-75 was also deleted.Addition for asst. yr. 1974-75 deleted.Final Conclusion: Both appeals are allowed and the additions made for the assessment years 1973-74 and 1974-75 are deleted. The assessee objected to additions made under other sources based on investments not properly explained. The firm made a voluntary disclosure under the Voluntary Disclosure Act. The appeals were taken to the AAC and confirmed. The alleged investments were part of the firm's income and were distributed to the partners. The additions for both assessment years were deleted, and both appeals were allowed.