TaxTMI 
TaxTMI 
2000 (8) TMI 19
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....ax Act, 1961?" A perusal of the record shows that the assessee is a partnership concern comprising the following partners: Per cent. (i) Sh. Gurbax Singh 10 (ii) Smt. Jas Kaur 10 (iii) Sh. T. R. Batra 10 (iv) Smt. Dhan Raj &nb....
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....he income of the assessee by deleting the additions of Rs.35,000. Shri R. P. Sawhney argued that the Tribunal has gravely erred in deleting the additions of Rs.35,000 shown as credits in the accounts of six partners, namely, Smt. Dhan Raj, S/Sh. Sampuran Singh, Harmail Singh, Manohar Singh, Hari Singh and Gurdev Singh, because no tangible explanation had been offered by the assessee in respect of those credits. Learned counsel further argued that the view taken by the Tribunal is contrary to the decision of this court in Smt. Shanta Devi v. CIT [1988] 171 ITR 532 and, therefore, the question sought by the Revenue may be framed and decided by this court. We have thoughtfully considered the arguments of learned counsel. While dealing with the issue relating to the credits shown in the names of six partners, the Tribunal referred to the provisions of section 68 of the Act and observed as under: "11. In our opinion, for establishing the genuineness of cash credits the assessee is required to prove the following ingredients: (1) Proof of identity of his creditors; (2) Capacity of creditors to advance money; (3) Genuineness of the transaction. It means that the asses....
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....t through the records he is able to show that he sold paddy worth Rs.30,000 and received cash in lieu of the same but he was further required to prove through the evidence that it was this very particular amount of Rs.30,000 which was available to him from the sale of paddy which he had introduced in the assessee-firm as cash amount of Rs.10,000 each (total Rs.30,000) in the assessee-firm in his own name as well as in the names of his two sons. 14. On the other hand, we find that Shri Sampuran Singh, Shri Harmail Singh and Shri Manohar Singh have not been able to bring on record any evidence to show that on the date of investment they had in their possession a sum of Rs. 30,000 (Rs. 10,000 each) and from that amount they have made the investment in the capital account. On further perusal of the capital account of Shri Sampuran Singh, we find that on May 16, 198 1, he deposited a sum of Rs.10,000 by cash and his credit balance stood at Rs.48,803.50 and thereafter every year profits/losses were credited and debited in the account. Ultimately, up to March 31, 1988, his capital balance was shown at Rs.46,963.78 which means that this capital account (for the year April 1, 1978 to Mar....
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....hat the assessee has been able to properly explain the cash credits to the extent of Rs.15,000 in total invested by the above creditor and the assessee is not able to explain the cash credit of Rs.15,000, i.e., Rs.5,000 each by Shri Sampuran Singh, Harmail Singh and Manohar Singh. 17. We are of the opinion that if it is found upon confirmation by the partners that the money was, in fact, received from them by the firm, in the absence of any material to indicate that it is the profit of the firm, it cannot be assessed as the firm's income though it may be assessed in the hands of individual partners as unexplained investment, if that is permissible under section 68 of the Income-tax Act, 1961. Hence, we conclude that since the Revenue has failed to establish the availability of funds at the time of investment with the assessee-firm but since it stands established that these partners admitted to have made these investments in the assessee-firm and further because the Revenue failed to bring on record any material to indicate that these unexplained investments were the profits of the firm then the amount of Rs. 15,000 each invested by Shri Sampuran Singh, Shri Harmail Singh and Shr....