2017 (2) TMI 1307

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....tner of the Shri Kantilal Jayramdas Thakkar u/s. 68 of the Act. 3. Briefly stated the facts of the case are during the course of the assessment proceedings, the A.O. noticed that one of the partners Shri Kantilal Jayramdas Thakkar has introduced capital of Rs. 1,05,46,160/-. The A.O. asked the assessee to explain the credit entry in the light of Section 68 of the Act. The assessee filed a detailed reply which reads as under:- "One of the partner of the firm Mr. Kantilal Jayramdas Thakkar has introduced net capital of Rs. 1,05,46,160/- during the financial year 2009-10. We have already furnished the contra account of Vaishnodevi Refoils & Solvex from the personal books of account of Shri Kantilal Jayramdas Thakkar. He has been assessed to ....

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....aj Dyestuff Industries (supra) has relied upon the decision of the Hon'ble Bombay High Court in the case of Narayandas Kedarnath 22 ITR 18. The relevant part reads as under:- 12. The Bombay High Court in case of Narayandas Kedarnath v. Commissioner of Income Tax, Central, [1952] 22 ITR 18 has, while dealing with the question as to whether certain amounts standing to the credit of some of the partners of the assessee firm could be treated as undisclosed profits of the firm itself, observed thus: lf the department was satisfied that moneys, although paid in the names of the partners or strangers were really undisclosed profits of the firm and were not individual contributions made by partners or strangers, then it would be legitimate for ....

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....under the Indian Income Tax Act, 1922, would not make any difference. Section 68 of the Act was introduced for the first time in the Act and there was no corresponding provision in the 1922 Act. However, as per settled legal position, Section 68 of the Act only gives' a: statutory recognition to the principle that cash credits which are not satisfactorily explained might be assessed as income. (See CIT v. Orissa Corporation Pvt. Ltd. [1986] 1 59 ITR 78). 13.Applying the aforesaid principles to the facts of the present case, it is apparent that the assessee had furnished the details which would discharge the onus which lay on the assessee. .It is not the case of the revenue that the partners of the assessee firm are fictitious, The Inc....