TaxTMI 
TaxTMI 
2018 (5) TMI 135
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....Innaiah function plaza for a consideration of Rs. 1,90,00,000/- on 29.10.2012 in the hands of partnership firm. The sale deed was registered by document No.16189 of 2012 dated 29/10/2012 from Y. Seshagiri Rao and 3 others in the name of M/s. Nagothu Innaiah function Plaza a partnership firm represented by its Managing partner Mr. N. Balashowraiah with other three partners. The A.O. asked for the sources of investment of Rs. 84,73,715/-, capital account balances of the partners and the assessee replied explaining the sources but the A.O. observed from the return of income filed by M/s. Nagothu Innaiah function plaza as on 31.10.2013 that all the columns of Return of Income of the partnership such as partners capital, loan funds, fixed loans and investments were filled with zero. Therefore, the A.O. viewed that entire outstanding capital balances of the partners in the capital accounts amounting to Rs. 84,73,515/- was related to the assessee and accordingly made the addition of Rs. 84,73,515/- in the hands of the assessee. 3.1 Similarly, there were unsecured loans shown in the case of partnership firm M/s. Nagothu Innaiah function plaza amounting to Rs. 38,40,123/-. The assessee f....
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.... partners contributed Rs. 13,00,000/each and the same was deposited in the bank and paid to the seller and sources for this partner share of Rs. 13,08,878/- is nothing but a collection from and loan taken on pledge of gold. The assessee and his three sons has filed the return of income for A.Y. 2010-11 onwards and all the transactions were duly reflected in the books of account. In view of the detailed discussion of the facts, the A.O's contention is that Rs. 84,72,505/- shown as capital of the assessee in the absence of proper valid and evidentiary material not justifiable. The contention of the A.O is an amount of Rs. 38,40,112/- shown as amount taken from unsecured loan and entire amount of Rs. 52,50,000/- from his sons, totaling to Rs. 1,72,63,627/- treating as unaccounted income. But the contention of the assessee is that the investments in Plaza are total investments and source for purchase of function plaza is total Rs. 2,06,17,423/- out of that the assessee has taken loan from Indian Bank to the extent of Rs. 1,07,00,000/and the advance given by the partners of the firm namely N. Balasowraiah, N. Mariya Kishore Babu, N. Mariay Dasu and M. Kira....
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.... N. Kishore Babu 20.18 Rs.12,33,350 15,00,000/- N. Mariyadas 19.60 Rs. 13,14,800 10,00,000/- N. Kiran Sundraju 15.82 Rs. 10,79,350 27,50,000/- N. Mounika --- --- 41,800/- Total 66.35 Rs.51,60,356/- 52,91,800/- The Nagothu Innah Function Plaza is a partnership firm consists of four partners namely N. Balashowraiah , N. Kishore Babu, N. Mariyadas, N. Kiran Sundraju, with equal sharing ratio and that plaza has purchased by the firm for total consideration of Rs. 2,06,17,423/- dt. 29.10.2012, source has follows. 1. Loan from Indian Bank at Rs. 1,07,00,000/-, 2. Partners Capital total at Rs .84,73,515/- N. Balashowraiah at Rs.44,80,878/- N. Kiran Sundara Raju Rs.13,05,878/- N. Kishore Babu at Rs.13,05,878/- N. Mariyadas at Rs.13,80,878/- 3. Unsecured loans Rs. 38,40,112/- Regarding the unsecured loans confirmation letters were filed, explaining the sources, genuineness of the transaction and long loans were taken through Indian Bank. All the partners of the firm are IT assessee and regularly filing ROl from A.Y.....
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....se, in our view, the assessee satisfactorily discharged the primary onus which lay on him to prove the nature and sources of the credit. There cannot be any inference under the law that the confirmatory letter given by the assessee are bogus. Learned Counsel for the Revenue has relied on a decision of the Calcutta High Court in the case of CIT Vs. Precision Finance Pvt., Ltd., (1994) 208 ITR 465. The facts of the case were altogether different as in that case the A.O had conducted enquiries through the inspector; but in the instant case, no enquires were made by the revenue. In view of the detailed discussions of the facts, circumstances and court judgments as the only and major source of income is agricultural income and out of the agricultural income only the properties were acquired by the partners, mostly accumulated agricultural income. So, the addition made by the A.O on account of gifts, investments, creditors and unsecured loans for Function Plaza and three stored residential building is not tenable. Hence, the addition made by the A.O is deleted and assessee's ground of appeal is allowed. 5. Similarly, in the case of unsecured loans, the CIT(A) observed tha....
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....an Sundar Raj, N.Kishore Babu and N. Maria Das. The outstanding in the partnership firm under the head capital accounts is as follows: N. Bala Showraiah Rs. 44,80,878.75 N. Kiran Sundar Raj Rs. 13,05,878.75 N. Kishore Babu Rs. 13,05,878.75 N. Maria Das Rs. 13,80,878.75 Rs.84,73,515/- 9. All the partners and the partnership firm are assessed to tax and filed their returns of income. As per the details furnished before the CIT(A), the sources of income and the total income of the assessee for the period from 2006-07 to 2013-14 is as under: N. Bala Showraiah Rs. 45,52,205/- N. Kishore Babu Rs. 66,14,166/- N. Maria Das Rs. 31,99,751/- N. Kiran Sundar Raj Rs. 28,37,691/- 10. The CIT(A) has analyzed year wise income of all the partners and observed that all the partners are having substantial income to support the contribution of the capital in the partnership firm. Apart from the above the partners have disposed of their agricultural lands, realized the advances given by them and taken loans and pooled the funds for investing in partnership firm. M/s. Nagothu Innaiah function plaza a partner....
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....o delete the same. 11. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The assessee is an individual filed his return of income admitting total income of Rs. 2,73,710/- and agricultural income of Rs. 4,55,166/-. During the previous year relevant to the assessment year the assessee along with his 3 sons acquired the property of a function plaza known as M/s Nagothu Innaiah function plaza in the capacity of partnership firm. The assessee along with his sons entered into partnership firm on 14th day of June, 2012 in the name and style of M/s. Nagothu Innaiah function plaza. The assessee has filed the partnership deed vide page Nos.64 to 67 of the paper book evidencing the existence of the partnership firm. As per the partnership deed, the following are equal partners: N. Bala Showraiah N. Kishore Babu N. Maria Das N. Kiran Sundar Raj 12. M/s Nagothu Innaiah function plaza was purchased for a consideration of Rs. 1.90 crores and total investment works out to Rs. 2.06 crores. As at the end of the financial year 2013, the capital account balances of the partners is as....
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....t issue in ground No.2 is unsecured loans appearing in the balance sheet of the partnership firm M/s. Nagothu Innaiah function plaza amounting to Rs. 38,40,112/-, which was brought to tax in the hands of the assessee by the A.O. As per the Ld.CIT(A) order, the assessee has furnished the confirmations letters from the creditors. The Ld. A.R. established that the unsecured loans appearing in the partnership firm are related to the partnership and the firm is separately assessed to tax and the sources were explained in the books of the partnership firm. Since the partnership firm and the assessee are separately assessed to tax, the same cannot be assessed in the hands of the assessee. Further, the CIT(A) also examined the sources of investments made by the assessee and the partners in partnership firm M/s Nagothu Innaiah function plaza. The unsecured loans are appearing in the books of the partnership firm but not in the books of the assessee. The only investment made by the assessee is contribution to capital which was explained in his hands. If the sources of unsecured loans are unexplained, the addition should be made in the hands of the partnership firm but not in the hands of the....
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....50,000/- Gift given to father on 5.5.2012 - Rs. 15,00,000/- 3. Nagothu Kiran Sundar Raju: S.No. Name of the Debtor Date of credit Amount (in Rs.) 1. N. Milki Raju 04.04.2012 4,00,000/- 2. Lurdu Raju 04.04.2012 4,00,000/- 3. P. Prakash Babu 04.04.2012 4,50,000/- 4. P. Prakasa Rao 04.04.2012 4,50,000/- 5. G. Subba Reddy 04.04.2012 3,00,000/- 6. SK. Subani 04.04.2012 3,00,000/- 7. P. Pratap 04.04.2012 3,00,000/- 8. P. Anthone Souri Babu 04.04.2012 5,20,000/- TOTAL 31,20,000/- Gift given to father on 05.05.2012 - Rs. 27,50,000/- 17. Since the donors have received the cash as realization from the debtors before giving the gift to his father the AO suspected the sources of gifts and brought to tax in the hands of the assessee. According to the assessing officer, realization of debtors is an afterthought and the gifts received by the assessee was from his own sources. 18. Aggrieved by the order of the A.O. the assessee went on appeal before the CIT(A) and the Ld. CIT(A) observed that the gifts received by the assessee from his thr....
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....at the time of assessment as well as before the Ld.CIT(A). The CIT(A) having satisfied the sources for investment in the partnership firm has deleted the addition. In any case, since the gifts were given by the donors, who are assessed to tax, the same should not be assessed in the hands of the assessee. The A.O. without making any verification of the donors and sources simply made the addition which is highly illogical and argued that the same should be deleted. 22. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. In this case, the assessee has received the gifts of Rs. 52,50,000/- as under: Sl. No. Name of the Donor Amount of Gift (in Rs.) Dt. Of Gift Mode of receipt 1 Nagothu Mariya Kishore Babu 15,00,000/- 05.05.2012 Cash 2 Nagothu Mariya Das 10,00,000/- 05.05.2012 Cash 3 Nagothu Kiran Sundara Raju 27,50,000/- 05.05.2012 Cash 4 Nagothu Mounika 41,800/- 07.09.2012 Cash TOTAL 52,91,800/ 23. All the donors are having agricultural income and they are also assessed to tax. They are having suffi....