TaxTMI 
TaxTMI 
2021 (1) TMI 401
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....ng officer filed the condonation petition giving administrative reasons for delay. The Ld.AR expressed no objection for condoning the delay. Therefore, the delay is condoned and the appeal is admitted. 2. All the grounds in this appeal are related to the addition of Rs. 2,12,50,000/- made u/s 68 of the Income Tax Act, 1961 (in short 'Act') which was deleted by the CIT(A. During the assessment proceedings, the Assessing officer( AO) found that the assessee is a partnership firm having 8 partners with Sri Ch.Mahankali as the main partner. All the partners together have contributed the share capital of Rs. 2,25,50,000/- during the impugned assessment year as under : Name Percentage of Share Investment Ch.Mahankali 20 45,10....
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.... the creditors were mostly from fisherman and agriculturist having white ration card. Therefore, the AO disbelieved the credit worthiness and made the addition of Rs. 2,12,50,000/- to the returned income. 4. Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) found that the assessee has produced the unsecured creditors who were examined by the AO and did not find any specific defect in the submissions made by the creditors except stating that the persons gave stereotyped answers. The Ld.CIT(A) also observed that though the AO stated that all the creditors are fishermen and engaged in agricultural activities, having no means, the AO did not ask any question with regard to their financial capabil....
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....on in the hands of the firm. The Ld.DR further submitted that the creditors have given stereotyped answers and they were tutored, thus the statements given by the creditors cannot be relied upon. All of them are fishermen or agriculturists with white ration card thus argued that they have no means to give such large sums as loans and hence, argued that the AO rightly made the addition in the hands of the firm and requested to set aside the order of the Ld.CIT(A) and restore the order of the AO. 6. On the other hand, the Ld.AR relied on the order of the Ld.CIT(A) and argued that in the instant case, the AO has made the addition in the hands of the firm, though the capital was introduced by the partners. He argued that the partners have ex....
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....of them have accepted that they have given the loans to the partners, however, as observed by the AO, all the statements were stereotyped answers, hence, the AO viewed that the creditors were tutored and the source is unbelievable. No specific defect with regard to source, credit worthiness and genuineness of the creditors was brought by the AO in his finding in the order. Thus, we find from the order of the AO that the creditors and the partners have explained the sources to the satisfaction of the AO and the Ld.CIT(A). Therefore, we do not see any reason to interfere with the order of the Ld.CIT(A). 7.1. In addition to the above, as argued by the Ld.AR, in this case, the capital was introduced by the partners in the firm and the AO mad....
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....ave sufficient source for introducing the amounts into the business towards their capital contribution and current account contribution and the investments made by the partners are added in the name of the firm as unsubstantiated cash credits under section 68 of the Act. On appeal before the ld.CIT(A), it was submitted that all the partners filed their affidavit and having PAN numbers and also their return of incomes, and therefore, if at all addition has to be made, it is to be made in the hands of the partners and not in the hands of the firm. Ld. CIT(A) by considering the submissions of the assessee and also by following the judgment of the Hon'ble Jurisdictional High Court in the case of M. Venkateswara Rao (supra), deleted the addi....
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....1tratum for the business of the firm It is difficult to treat the pooling of such capita!, 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. 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 of the Act, the Assessing Officer has proceeded to identify the source for the respective partners, to make that contribution. Such an enquiry can, at the most be conducted against the individual partners. If the partner is an assessee the concer....