TaxTMI 
TaxTMI 
2023 (4) TMI 137
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...." 2. The assessee is a partnership firm engaged in the business of running of a flour mill. On 23.01.2018, a search and seizure operation under Section 132 of the Act was carried out at the business premises as well as residential premises of MG Oils Group of Khandwa including the assessee and other concerns/ business associates on 23.01.2018. Thereafter, notices under Section 153A of the Act were issued for the A.Y. 2012-13 to 2017-18 and notice under Section 143(2) of the Act was issued for the A.Y. 2018-19. The income-tax return of the assessee for the A.Y. 2018-19 was filed on 31.10.2018 claiming loss of Rs. 39,82,122/-. The Ld. AO during the course of assessment proceedings observed that the assessee did not submit any documentary evidences regarding source of capital introduced by its partners and accordingly made addition of Rs. 2,59,28,791/- to the total income of the assessee on account of capital introduced by partners by treating it as unaccounted and unexplained credit under Section 68 of the Act. The same was deleted by the Ld. CIT(A) in appeal preferred by the assessee. Hence, the instant appeal has been filed before us. 3. The Revenue through this sole ground of a....
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.... CIT(A). We have heard the respective parties and perused the relevant material available on record. 7. The Ld. Counsel for the assessee submitted that the Ld. AO during the course of assessment proceedings never required the assessee to furnish the details of source of capital introduced by the partners as a result of which the assessee was deprived of an effective opportunity to justify the source of capital introduced by its partners. The Ld. Counsel further submitted it was for the aforesaid reason that the assessee filed ample corroborative documentary evidences during the course of appellate proceedings including confirmation of accounts, bank statements and income-tax returns of the partners so as to justify the identity and creditworthiness of the partners as well as genuineness of the transactions as entered into with them. The assessee also filed copy of capital/ ledger account of the partners in the books of the firm, M/s Motilal Gopikishan so as to justify the source of source of funds introduced by the partners in the assessee firm. Hence, the Ld. Counsel contended that the assessee properly discharged the primary onus cast upon it under section 68 of the Act and acc....
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....l in the respondent firm which in itself justifies that the assessing officer was satisfied with the source of capital contributed in the respondent firm. Further, the observation of the assessing officer that books of accounts of M/s Motilal Gopikishan had been treated as suspicious during the course of assessment proceedings since several documents related to cash loan and register related to unaccounted investment had been found during the course of search has no relevance since the assessing officer herself did not make any addition to the total income of M/s Motilal Gopikishan on this count which in itself contradicts the assertions of the assessing officer. 1.4] It is also pertinent to note that the assessing officer never asked the respondent firm to furnish the details regarding source of capital introduced by the partners either in the notice issued under section 142(1) of the Income-Tax Act, 1961 or in the show cause notice issued during the course of assessment proceedings. 1.5.1] Detail of capital introduced by the partners of the respondent firm during the Financial Year 2017-18 relevant to Assessment Year 2018-19 is as under: S. No Name of the partners Amo....
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.... 2.1 Confirmation of accounts 49 2.2 Relevant pages of bank statement duly highlighting the amount of capital introduced 50-57 2.3 Acknowledgement of income-tax return along with computation of income for the Assessment Year 2018-19 58-60 2.4 Capital account in the books of the firm, M/s Motilal Gopikishan so as to justify the source of introduction of capital 61-63 3 Rajendra Bansal [PAN: ABSPB5125E] - Capital of Rs. 43,29,379/- introduced during the year 3.1 Confirmation of accounts 64 3.2 Relevant pages of bank statement duly highlighting the amount of capital introduced 65-68 3.3 Acknowledgement of income-tax return along with computation of income for the Assessment Year 2018-19 69-71 3.4 Capital account in the books of the firm, M/s Motilal Gopikishan so as to justify the source of introduction of capital 72-74 4 Satyanarayan Maheshwari [PAN: AEEPM1117Q] - Capital of Rs. 93,00,000/- introduced during the year 4.1 Confirmation of accounts 75 4.2 Relevant pages of bank statement duly highlighting the amount of capital introduced 76-84 4.3 Acknowledgement of income-tax return along with co....
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....1 before the Ld CIT(A) in which the respondent firm duly explained the applicability of Rule 46A of the Income-tax Rules, 1962 in the present case in hand. Copy of submission dated 10-08-2021 is already been filed in page nos. 135-138 of paper book filed before the Hon'ble Bench. The Ld CIT(A) during the course of appellate proceedings after considering submissions and documentary evidences as filed by the respondent firm accepted the additional evidence as filed during the course of appellate proceedings and on the basis of the said evidences, deleted the addition of Rs. 2,59,28,791/- as made to the total income of the respondent firm on account of capital introduced by the partners. 1.6] Further, it is pertinent to mention that even if the assessing officer was of the opinion that the firm, M/s Motilal Gopikishan was having unaccounted cash, necessary action could have been taken in the case of the firm, M/s Motilal Gopikishan but no adverse inference can be drawn in the case of the respondent firm with respect to the source of capital introduced by the partners which stands duly justified with the requisite documentary evidences. Hence, the observations of the assessing offic....
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....ses v. ITO, Ward-1, Solan [2017] 184 TTJ 394 (Chandigarh - Trib.) (viii) Addl. CIT v. Unique Builders [2004] 2 SOT 589 (KOL.)(SMC) 10. It was further submitted that it is a well settled proposition of law that the Assessing Officer cannot ask the assessee firm to prove source of source i.e. source of capital introduced by the partners and if the assessee firm explains that the capital is contributed by the partners and the partners confirm the same, the onus of the assessee-firm stands discharged and the amount of capital introduced by the partners cannot be taxed as income of the assessee-firm and that if the partners are unable to satisfactorily explain the source of introduction of such capital in the firm, the impugned amount could have been added in the hands of the partners but not in the hands of the assessee-firm. He relied upon the following judicial precedents in support of his contentions: (i) CIT-I, Patna v. Anurag Rice Mills [2016] 282 CTR 200 (Patna) (ii) Laxmi Imaging & Medical Research v. ACIT, Circle-1, Jodhpur [2012] 150 TTJ 44 (Jodhpur - Trib.)(UO) (iii) Sarjan Corporation v. ACIT [2012] 25 taxmann.com 426 (Ahmedabad - Trib.) (iv) M/s Jaylaxmi Lan....
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....itional evidence as filed by the appellant was permitted and considered while adjudicating the ground of appeal. 4.4.1. The appellant firm filed confirmation of partner's capital duly signed, copy of bank account of the partner, Acknowledgement of income tax return as filed and ledger account in the book of the firm from where the partners received amount prior to introducing in form of capital in the appellant firm. On perusal of the documents as filed, I am of the considered view that the appellant firm has properly discharged onus lying on it. The identity of the partners were not doubted by the assessing officer. The creditworthiness and genuineness of the transactions have been proved by the appellant. Major amount of capital as introduced by the partners were withdrawal from the firm M/s Motilal Gopikishan which was also assessed by the same assessing authority. If the assessing officer was not satisfied with the source of amount paid by the firm M/s Motilal Gopikishan in that case, necessary addition can be made in the assessment of that firm but no adverse view was taken in that firm. Similarly, assessment of two partners were also made by the same assessing officer and ....
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....idences such as confirmation of accounts, bank statements and income-tax returns of the partners along with the copy of capital/ ledger account of the partners in the books of the firm, M/s Motilal Gopikishan and thus, the assessee satisfactorily discharged the primary onus cast upon it under section 68 of the Act. Accordingly, we of the considered opinion that there was no justification for making addition to the total income of the assessee on account of capital introduced by its partners since the assessee duly justified the identity and creditworthiness of the partners as well as genuineness of the transactions as entered into with them. 15. We also find force in the contentions of the Ld. Counsel that assessment in the case of two of the partners i.e. Shri Rahul Bansal and Shri Rajendra Kumar Bansal was also completed by the same Assessing Officer wherein the Assessing Officer did not take any adverse view in respect of the amount of capital introduced in the assessee firm which in itself justified that the Assessing Officer was satisfied with the source of capital introduced in the assessee firm. Further, assessment in the case of the partnership firm, M/s Motilal Gopikishan....