TaxTMI 
TaxTMI 
2015 (11) TMI 389
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....ch, Patna, in I.T.A. No.26/PAT/2002 for the assessment year 1991-92, by which the appeal of the assessee has been allowed setting aside the addition made in the hands of the firm with regard to the amounts related to capital account of the partners in the books of the firm. The facts of the case noted by the CIT appeal while confirming the order of the Assessing Officer are that the return in question was the first return filed by the partnership firm, by which it claimed the availability of opening capital by three partners aggregating to Rs. 2,67,789/- and additional capital brought in was shown as Rs. 5,55,000/- which was paid through gift/loan. The said gift/loan amounts have been received all in cash for the period 1986- 87 and 1987....
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....ory recognition to the nature and source of cash credits where they stand in the assessee's account or in the account of a third party. The question of burden of proof cannot be made to depend exclusively upon the fact of a credit entry in the name of the assessee or in the name of a third party. In either case, the burden lies upon the assessee to explain the credit entry, though the onus might shift to the ITO under certain circumstances. Where, for instance, the assessee shows that entries regarding cash credits in a third party's account are genuine and the sums were in fact received from the third party as loans or deposits, he has discharged the onus; and in that case it is for the third party to explain the source of the mone....
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....luding the aforesaid amount as income of the assessee partnership firm since the partner on enquiry had failed to show the source of such funds. On the other hand, learned counsel for the respondentassessee submits that the decision in the case of Anupam Udyog (supra) supports the stand of the respondent and since admittedly this was a first return filed by the firm and the amounts are shown to have been brought in by the partners of the firm, they could not be treated as the income of the firm itself and the Tribunal had rightly held that if at all the said amounts could not be explained then the assessment could only be made on the partners and not on the firm. In support of the same, learned counsel for the respondent relies upon a....
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....ame can be treated as income. In this case, the amount, that is sought to be treated as income 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. 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 ....