2024 (2) TMI 1331

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....unt of non deduction of TDS." 3. "On the facts and in the circumstances of the case and in law, the Id CIT has erred in sustaining the addition of Rs. 85,736 being 1/10th of conveyance expense and opening event expense." 4. "On the facts and circumstances of the case and in law, the ld. CIT has erred in charging special rate tax u/s 15BBE on above addition u/s68. 5. "The appellant craves leave, to add, urge, alter, modify or withdraw any ground/s before or at the time of hearing." 3. The Brief facts of the case culled out from the records are that the assessee has filed its Return of Income (ROI) on 08.11.2017 by declaring total income at Rs. 51,71,310/-. Subsequently, the case of the assessee was selected for complete security under 'CASS' and notice u/s. 143(2) was issued on 11.09.2018, then notices u/s. 142(1) a/w questionnaire were issued on various dates. The assessee filed written submissions which are placed on record after perusal. During the course of assessment proceedings Ld. AO also issued a show cause notice on 09.12.2019, which has been complied by the assessee. Finally, the Ld. AO completed the assessment proceedings u/s.143(3) on 29.12.2019 by making ....

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.... income tax return for the AY 2017-18 wherein Mr. Anand Ahuja have shown an income of Rs. 24,44,980/- & Mr. Ravi Ahuja have has shown an income of Rs. 24,00,000/-. The identity of the partners was not doubted by the Ld. AO, the creditworthiness of the partner was also not adversely alleged, even the genuineness of the transactions are also not commented upon by the Ld. AO. The addition was made merely on the ground that the bank statement of the partners could not be produced before the Ld. AO. In absence of any conclusive findings regarding fulfilment of basic elements i.e. identity and creditworthiness of the payer and genuineness of the transactions the addition u/s 68 r.w.s. 115BBE is against the settled principle of law, therefore, the addition made is liable to be quashed on this count itself. Ld. AR further submitted that in case the Ld. AO has any doubt further enquiries could have been conducted by calling the partners for explanations, the addition made was under preconceived assumptions which is not permissible. Ld. AR further submitted that if the Ld. AO was not satisfied with the explanations towards investment, since there was no dispute about the investment in capita....

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....of the Assessing Officer, as also the stand taken by the Hon'ble ITAT would not be sustainable and the same deserves to be and is accordingly set aside/quashed. The order passed by the CIT (Appeals) dated 30.06.2017 stands affirmed. NOVA MEDICARE vs. INCOME TAX OFFICER in ITTA No. 318 of 2006 dated 15.02.2023, HIGH COURT OF TELANGANA, reported in (2023) 333 CTR (Telangana) 748: (2023) 228 DTR (Telangana) 59 8. Sec. 68 of the Act no doubt directs that if an assessee fails to explain the nature and 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 s. 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 situ....

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.... the hands of the partners of the firm and not the firm itself. Such amounts could not have been treated as income of the firm by relying upon s. 68 of the Act. Deputy Commissioner of Income Tax vs. Sonthalia Rice Mill in ITA No.29/CTK/2021 dated 17.05.2022, wherein the coordinate bench of the tribunal ITAT, CUTTACK BENCH has observed as under: 13. From relevant part of the CIT(A) order, we observe that the learned CIT( dismissed the addition by observing that the assessee firm had duly discharged the onus cast upon it by the AO to establish the identity of the partners and their creditworthiness along with copies of IT returns of three partners, copies of bank accounts from where cheques were issued to the assessee firm, ledger accounts of the partners in the books of the assessee firm and the statement of income, balance sheet and cash flow statement of three partners had also been submitted of above three partners before the AO, the AO keeping aside or ignoring the relevant piece of evidence made addition in the hands of the assessee firm. The learned CIT(A) also observed that If the AO harboured doubts about the credit entries in the bank accounts of the respective partner....