TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 863
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....n pronouncing the law on the subject. 1.2 The Ld. CIT(A) has failed to appreciate that the Hon'ble Supreme Court in the case of CIT vs. Bharat Engineering & Construction Company (supra) had rather observed that :In the absence of satisfactory explanation from the assessee the Income-tax Officer may assume that cash credit entries in its books represent income from undisclosed sources. 1.3 The Ld. CIT(A) has failed to appreciate that a partnership is a compendium of partners and the partnership is created as such by there is an agreement between the partners to carry on business. 1.4 The Partnership Act does not mandate that such agreement has to necessarily be in writing, it could be oral too so that date of registration of the partnership deed is not paramount if the cumulative facts showed that there was existence of partnership even before that date. 1.5 The Ld. CIT(A) has failed to appreciate that the partner of the assessee firm had admitted to have negotiated the said land deal on behalf of the firm and the payment was also made on behalf of the firm. 1.6 The Ld. CIT(A) had failed to appreciate that even if cash payment was made by one of the partners, it was pa....
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....ount of Rs. 4,01,00,000/- was added to the total income of the appellant as undisclosed investment being the proportionate payment of purchase of land having Survey No. 197/1 and 198/2 out of the total payment of Rs. 5,50,00,000/-. Relevant to mention that the remaining amount of Rs. 1,49,00,000/- pertaining to the land lying and situated at Survey No. 199/2 was not purchased by the appellant. 4. It was the case of the assessee that the unaccounted funds have been applied for the purchase of land for the project 'Savvy Solaris' undertaken by the appellant firm, jointly by Savvy Group and Maruti Group; the same were out of unaccounted receipt of Savvy Infrastructure, another firms promoted by the Savvy and Maruti Group. The Ld. AO was of the view that since the land has been purchased in the name of the appellant firm, and the final sale deed was executed in the name of the appellant, and above all cheques payments were made by the appellant, the logical corollary would be that it is none but the appellant had borne the cash amount too. Apart from that one Amit Patel was negotiating the land deal in the capacity of the partner of the appellant firm and he has accepted and confirmed....
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.... hand, the Ld. DR relied upon the order passed by the Ld. AO. It was his sole contention that since the last sale deed registered in the name of the appellant company was upon making payment of consideration by the assessee company through banking channel, the logical corollary would be that none but the assessee had paid the cash amount too. However, he failed to explain as to how the addition of on money to the tune of Rs. 4.01 crores is sustainable in the hands of the assessee when such amount was paid to the venture of the land much before the formation of the appellant firm. 7. We have heard the rival submission made by the respective parties and we have perused the relevant materials available on record. 8. The case of the assessee is this that the partners of the firm have invested in the land for and on behalf of the firm out of undisclosed receipt of Savvy Infrastructure. It is also the further case of the assessee that the firm was incorporated on 23.02.2007 and majority payments in respect of such purchase of land was made prior to the date of incorporation and therefore, the same is not out of the undisclosed income of the firm. It is an admitted position that the ap....
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....year of incorporation of business of the appellant, no addition towards unexplained cash credit can be made under Section 68 in the first year of incorporation of business. In the absence of huge capital available with the assessee firm the addition of Rs. 4.01 crore on the ground of unaccounted payment for purchase of land lying and situated at Survey No. 197/1 and 198/2 is non-application of mind and not justified under Section 68 of the Act. Moreso, the amount paid by cheque was also introduced by the partners of the appellant firm as their capital and payment was made by the appellant firm out of the said amount. It is further evident from the following chart that the major portion of such cash amounts paid to the owners of land on various dates was before the date of incorporation of the appellant firm on 23.02.2007:- Date Payments made to Amount (Rs.) 19.07.2006 Baldev, Shailesh, Mukesh & Sanjay 1530924 06.09.2006 Baldev, Shailesh, Mukesh & Sanjay 2843143 06.09.2006 Baldev, Shailesh, Mukesh & Sanjay 2916044 09.10.2006 Baldev, Shailesh, Mukesh & Sanjay 3645055 18.10.2006 Baldev, Shailesh, Mukesh & Sanjay 1822528 13.11.2006 Baldev, Shailesh, Muk....
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....vt. Ltd., reported in [2008] 217 CTR 401 and the judgment passed by the Madras High Court in the case of CIT vs. Pandian Distributors [2003] 259 ITR 428 where it has been held that no addition can be made under Section 68 of the Act in the first year of business as there cannot be any source of making unaccounted payment against cheque received as unsecured loan or share capital by assessee have been confirmed by us. 13. Thus, taking into consideration the entire aspect of the matter, the particular facts that the assessee firm was incorporated only on 23.02.2007 and gained the legal status as a firm only on that particular date upon such incorporation and, thus, the assessee company did not exist when the impugned income was earned. Thus, the assessee cannot be made responsible for evasion of tax on the ground of alleged payment made prior to such incorporation and/or registration of the partnership firm. The present addition has been made in the case of the appellant also states that one payment of Rs. 25 lakh is made on 01.04.2007 which falls in A.Y. 2008-09 and not in A.Y. 2007-08 and therefore, even balance payment cannot be considered as undisclosed payment in the hands of ....
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....t of the findings or direction given by the revisionary, appellate or judicial authorities, prescribes that "the provisions of" inter alia section 151(1) "shall not apply to the assessments, reassessments and recomputations which may, subject to the provisions of sub-section (2A) be completed at any time where the assessment, reassessment or recomputation is made on the assesse or any person in consequence of or to give effect to any finding or direction contained in an order, under sections 250, 254, 260, 262, 263 or 264 1535or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act". In other words, when effect of a finding or direction of an revisionary, appellate or judicial authority is to be given, that exercise can be carried out any point of time de hors the time limits specified in section 153(1). However, even this relaxation of time limits is subject to certain riders, including rider contained in Explanation 3 to Section 153(3) which provides that, where by a revisionary, appellate or judicial order of the above nature, an income is excluded from the income of one assesse and held to be income of the other assessee, the asses....