TaxTMI 
TaxTMI 
2023 (3) TMI 218
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.... This appeal has been preferred by the assessee as the appellant under Section 260A of the Income Tax Act, 1961 (briefly, 'the Act' hereinafter), against the order dated 28.10.2005, passed by the Income Tax Appellate Tribunal, Bench 'A' (SMC), Hyderabad (briefly, 'the Tribunal' hereinafter) in I.T.A.No.949/Hyd/03 for the assessment year 1998-99. 3. Though the appeal was admitted vide the order dated 30.10.2006 with an interim stay, no substantial question of law was framed. However, from the memo of appeal, we find that appellant has proposed the following questions as substantial questions of law: I. Whether on the facts and in the circumstances of the case, Tribunal was justified in upholding the investments made by the partne....
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....ssessment year under consideration is 1998-99. Assessee is engaged in the business of export of medicines and I.V.fluids etc. In the return of income for the said assessment year, assessee declared export turnover and claimed deduction under Section 80HHC of the Act. Thus, assessee declared nil income. Case of the assessee was selected for scrutiny and in the course of assessment proceedings it was found that assessee had claimed to have taken loans from the following parties and in the following manner: Name of the party Amount of cash credit Interest --------------------- --------------------------- ---------- Smt. K.Sujatha Rs. 2,00,000 Rs. 39,533 Smt. K.Shantha Kumari Rs. 1,00,000 Rs. 5,000 Sri K.P....
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....preferred further appeal before the Tribunal. By the order dated 28.10.2005, Tribunal held that there was no infirmity in the order of CIT (A) and accordingly dismissed the appeal thereby confirming the addition of Rs.4,70,966.00. 10. Learned counsel for the appellant Ms. K.Manasa submits that Tribunal was not justified in confirming the entirety of the addition. Referring to a judgment of this Court in Commissioner of Income Tax v. M.Venkateswara Rao [2015] 370 ITR 212 (Andhra Pradesh and Telangana) (Mag.) she submits that contribution of the partners of the firm cannot be added to the income of the firm under Section 68 of the Act even if the explanation is not satisfactory. At the most, such credits can be questioned in the assessment....
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.... of the Rajasthan High Court in Kishorilal Santoshilal (supra) is concerned, she submits that even in a case of share application money received by an assessee company from alleged bogus shareholders, Supreme Court has taken the view in Commissioner of Income Tax v. Lovely Exports (P.) Ltd [2008] 216 CTR 195 (SC) that in such a scenario, department would be free to proceed to reopen the individual assessment in accordance with law but would not be entitled to invoke Section 68 of the Act to add such share application money to the income of the assessee company. 13. Submissions made by learned counsel for the parties have received the due consideration of the Court. 14. After thorough consideration of all relevant aspects, we are of th....
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....source of credit entered in the books of account of any previous year, the same can be treated as income. In this case, the amount, that is sought to be treated as income of the firm, is the contribution made by the partners, to the capital. In a way, the amount so contributed constitutes the very substratum for the business of the firm. It is difficult to treat the pooling of such capital, 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. 9. Even otherwise, 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....
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.... regarding the amount contributed by them towards capital of the firm cannot be sustained in law. 11. As regards the other amount i.e., unexplained credit entries, the Tribunal took the view that the amount represented the security deposits made by the retail dealers, and the source thereof was properly explained. Nowhere in the order of assessment, the Assessing Officer recorded any finding to the effect that he verified the matter from the respective retail dealers and that such dealers have denied of making deposits. In the field of Arrack business, it is not uncommon that the retail dealers are required to keep security deposits with the supplier. At any rate, it is a pure question of fact. 12. Therefore, the appeal is....