TaxTMI 
TaxTMI 
2015 (6) TMI 390
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....mmissioner of Income-tax (Appeals) erred in law and on facts in recording the following finding in para 4.2, page No. 5 of his order as below: "In appeal the learned Authorized Representative withdrew his claim of being a proprietary concern and admitted to being a partnership firm." 3.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in dismissing the ground of appeal relating to an addition of Rs. 1,00,000/- u/s 68 on the basis that the same was not pressed 3. Ground No.4 of the assessee's appeal reads as under:- 4.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming the addition of Rs. 8,08,938/- in respect of opening capital balance as on 1st April, 2004. 4. The facts of the case are that for the year under consideration i.e. Assessment Year 2005-06, Shri Navnitbhai B Patel HUF has filed the return of income as Proprietor of M/s. Patel Beverages. On verification of the return of income and its enclosures, the Assessing Officer found that the assessee is a partnership firm and its part....
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....i Viral N. Patel claiming the source of the credit entries in the capital account. In view of the fact that there is no evidence on record to explain the credit entries of Rs. 8,08,938/-, the addition made by the Assessing Officer is confirmed. Through the amount discussed in the body of the order is Rs. 8,08,938/- the addition made is Rs. 8,03,938/- which is patently a typing mistake. Hence the amount of Rs. 8,08,938/- is confirmed." 6. At the time of hearing before us, the ld. Counsel for the assessee contended that the assessee is a partnership firm and therefore, the cash credit in the account of partner cannot be assessed as unexplained cash credit of the firm. The Assessing Officer can make necessary inquiries in the case of partners but he cannot treat the same as unexplained cash credit of the firm. In support of this contention, he relied upon the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Pankaj Dyestuff Industries vide Income Tax Reference No.241 of 1993. However, when at the time of hearing the Bench asked the assessee to prove that the ....
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..... The interest of the revenue is also safeguarded as the Income Tax Officer has been given the liberty to consider the said credits in the hands of the partners if he is not satisfied with the sources of investment of cash credits in the accounts of the partners." 7. From the above, it is evident that in the above mentioned case, the assessee has furnished the details which discharged the onus which lay upon the assessee. In that case, the genuineness of the firm and the credit in the account of the partners was not in dispute. However, in the case of the assessee, the series of incident raises serious doubt about the genuineness of the partnership firm as well as the credit balance in the account of the partners. The assessee appears to be partnership firm as per the balancesheet, but filed the return for the year under consideration in the status of HUF. In the account of the partners, there is opening balance but the assessee did not file the return of the partnership firm for Assessment Year 2004-05, though the return was filed by Shri Navnitbhai B Patel, as Proprietor of M/s. Pa....
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....sallowance at Rs. 3,24,921/- out of the total disallowance of Rs. 9,74,514/-. 11. We have carefully considered the arguments of both the sides and perused the material placed before us, including the order of the CIT(A). We are of the opinion that the CIT(A) considered each and every expenses and has sustained the disallowance only when the expenditure was not allowable. The ld. Counsel for the assessee was unable to controvert the findings recorded by the CIT(A). Accordingly, the same is sustained and Ground No.5 of the assessee's appeal is rejected. 12. Ground No.6 of the assessee's appeal, which reads as under, was not pressed by the ld. Counsel at the time of hearing. Accordingly, the same is rejected as not pressed. 6.0 Without prejudice to the Ground No. 5, the learned Commissioner of Income-tax (Appeals) erred in law and on facts in disallowing certain expenses by invoking the provisions of section 40A(3) of the Act, without issuing any Show Cause Notice to the assessee. 13. Ground No.7 of the assessee's appeal which reads as under:- &....