TaxTMI 
TaxTMI 
2018 (1) TMI 1732
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....win Patel, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short "the Act". Case called twice. None appears at assessee's behest. The registry has already sent an RPAD notice to the assessee. Its copy is already on record. We therefore proceed ex parte against the assessee. 2. Learned Departmental Representative vehemently contends that the CIT(A) has erred in law as well as on facts in deleting the impugned Section 68 addition made by the Assessing Officer qua assessee's partner's contribution in its capital as under: "3.1. The AO in his order has stated that one of the partners of the appellant firm namely Shri Ashwin Babarbhai Patel, had introduced capital in the firm during the year amounting to Rs.1,26,11,000/-. The AO p....
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....AO provided a final opportunity to produce all the relevant records along with books of account and supporting evidences. Again, no compliance was made on 28.03.2014 and 31.03.2014. Subsequently, the AO made addition of this amount in the hands of the firm by observing as follows: "8. On verification of the capital account, it is noted that the partner of the firm Shri Ashwinbhai B Patel has an opening balance of Rs.50,48,322/-. The assesses has introduced capital of Rs. 1,26,11,000/- which comprises of cash and bank receipts in his bank account and out of the same, repayment of HUDCO loan is shown to be made from partner's bank account. The total introduction by banking channels amounts to Rs. 1,22,88,000/-and the balance amount of ....
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....acity of the partner to introduce this capital account in the books and to prove the genuineness of such transactions. Whether capital introduced by the partner in the books of account of the firm can be assessed as income of the firm u/s 68 of the Act or not is to be decided in the light of the ratio laid down by the Jurisdictional High Court in the case of M/s. Odedara Construction 362 ITR 338 (Gujarat). In this decision the Court has held as follows: "4. Having heard the learned counsel Mr. Pranav Desai for the Revenue and having perused the orders, we see no reason to interfere. In view of the findings of the CIT (Appeals) and the Tribunal, it clearly emerges that the capital was introduced by the partners. The Assessing Officer did ....
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....n-acceptance of that explanation does not, however, provide material for finding that the said sum represented income of the assessee firm. As held by the Allahabad High Court in case of Jaiswal Motor Finance (supra), in the absence of any material to indicate that there were profits of the firm, the amount credited to the partners' accounts could not be assessed in the hands of the firm. Once the partners have owned that the monies deposited in their accounts are their own, the Income Tax Officer is entitled to and may proceed against the partners and assessee the same in their hands, if their explanation is not found satisfactory." 3.1.2. Thus, the facts of the present case are required to be examined in the light of the above deci....