TaxTMI 
TaxTMI 
2026 (8) TMI 37
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the partner and the assessee-firm as bank accounts are not conclusive books of account of the assessee-firm. 3) The CIT(A) failed to appreciate that the AO has given due, credit for an amount of Rs. 5.21 Crores being the amount of withdrawals made by the partner Sri. A. Ravi Kumar in his bank account favouring the assessee-firm and only added the difference amount of Rs. 65.97 Crores towards unexplained cash credits u/s. 68 of the I.T. Act, 1961. 4) The CIT(A) failed to appreciate that having substantial sale proceeds on account of transaction made by the partner towards hi share with M/s. Microsoft Corporation Ltd cannot come to the rescue of partner to explain the introduction of capital by him to the firm. 5) The CIT(A) failed to appreciate that through the identify and creditworthiness of the transaction made by Sri. A. Ravi Kumar was established, the core element of genuineness of the same was not established by the assessee-firm. 6) Any other ground that may be urged at the time of hearing." 3. The solitary issue arises in the appeal of the Revenue is whether in the facts and circumstances of the case the learned CIT(A) has erred in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontended before the learned CIT(A) that the partner was having sufficient funds to make the said payment of Rs. 65.79 crores in respect of the land purchased by the assessee partnership firm, which was credited in the capital account of the partner as introduction of the capital. The learned CIT(A) accordingly deleted the addition made by the Assessing Officer and aggrieved by the order of the learned CIT(A), the Revenue has filed the appeal before the Tribunal. 6. The learned DR has submitted that the Assessing Officer has given the reasons that, except the bank account transfer by Sri Akula Ravi Kumar of Rs. 5,21,36,000/- the assessee failed to produce the supporting evidence to explain the source of the remaining amount for the introduction of capital in the hands of the partners. He has further submitted that the assessee has failed to produce any record to authorise the partner for making the said payment on behalf of the assessee firm in respect of the alleged purchase of land. He has relied upon the Order of the Assessing Officer and submitted that despite various opportunities given by the Assessing Officer the assessee failed to substantiate its claim with the help of s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s produced before the Assessing Officer. The learned CIT(A) has deleted the addition by considering all these facts manifest from the record. The learned Authorised Representative for the Assessee has referred to the sale deed dated 30.09.2021 placed at Page nos. 281 to 404 of the paper book, whereby the partner Sri Akula Ravi Kumar as well as the assessee firm, transferred their respective shares in the land in favour of M/s. Microsoft Corporation (India) Private Limited and the partner received the consideration of Rs. 126.19 crores, which is duly reflected in the said sale deed, and therefore, the source in the hands of the partner was also duly explained for making the payment of subsequent purchase of land on behalf of the assessee firm. The department has accepted the said transaction of sale of land by the partner for a consideration of Rs. 126.19 crores and the same was also assessed by the Assessing Officer to tax in the hand of the partner Sri Akula Ravi Kumar while passing the assessment order u/sec. 143(3) r.w.s. 144B of the Act dated 21.03.2024. He has filed copy of the said assessment order. 8. We have considered the rival submissions and carefully perused the rele....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ital introduced in the assessee firm during the year) is being treated as Unexplained cash credits u/s. 68 of the Act and hence, added back to the total income of the assessee for the year under consideration. [Addition: Rs. 68,75,39,255/-]" 8.1. It is pertinent to note that the Assessing Officer has taken the closing balance in the capital account of the partners of the assessee firm, the details of which, are as under: S. No. Name of the Partner Op. Balance Invested during the year (Net of drawings) Remuneration Share of Profit Closing Balance 1 Mr A Ravi Kumar 1,47,20,011 65,79,04,725 - 1,55,86,640 68,82,11,376 2 Mrs A Vasantha 1,64,88,072 - 6,00,000 1,55,86,640 3,26,74,712 3 Mr A Varun Kumar 20,02,527 - 12,00,000 1,55,86,640 1,87,89,167 TOTAL 3,32,10,611 65,79,04,725 18,00,000 4,67,59,919 73,96,75,255 8.2. From these details, it is clear that there was an opening balance in the partner's capital account to the tune of Rs. 3,32,10,611/- and a credit amount of share of the profit to the tune of Rs. 4,67,59,919/- as well as a credit of Rs. 18 lakhs on account of remuneration....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l and capital asset u/s. 2(14) of Income Tax Act, 1961 and as to why the capital gain on such transfer of capital asset should not be chargeable to tax. In accordance with aforesaid conclusion the pieces of land sold to M/s MICROSOFT CORPORATION (INDIA) PRIVATE LIMITED during the F.Y. 2021-22 relevant to A.Y. 2022-23 is considered Capital Asset u/s. 2(14) of the Income Tax Act, 1961. As such profits and gains from such transfer of capital asset is taxable under the head Capital Gain. Even after repeated requirement through notice u/s. 142(1) the assessee did not furnish the calculation of gain from property transfer. However, from material gathered u/s. 133(6) same is calculated below: Rs. Rs. Sale consideration of property transferred to M/s MICROSOFT CORPORATION (INDIA) PRIVATE LIMITED 1,27,47,09,413 Cost of acquisition (50,01,000 + 21,50,000 + 45,00,000 + 9,22,500 + 30,45,000) 1,56,18,500 Cost of conversion (295988 + 14625+24000) 3,34,613 1,59,53,113 Long Term Capital Gain 125,87,56,300 The assessee has failed to offer the Long Term Capital ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere directly transferred to the bank account of the appellant firm for the purpose of its business by partner Shri Ravi Kumar. The details of capital introduced by the partner Sri Akula Ravi Kumar were submitted before the AO along with bank statement as well as its source. However, not satisfied with the explanation submitted by the appellant, AO made the impugned addition u/s. 68 of the Act. 5.3. It is the contention of the appellant that AO has not considered and accepted the entire capital introduction in spite of documentary evidences submitted in support of the capital introduced by the partner in the books of appellant firm ignoring the basic fact that the capital introduced by the partner of the firm has clear sources. That AO has accepted only the amounts which is reflecting the name of the firm as 'Sai Balaji Developers' and rest of the amounts paid by the partner for the purpose of business of appellant firm was not considered. Appellant has submitted the following details in respect of capital introduced by the partner Sri Akula Ravi Kumar as under: S. No. Particulars Amount (in Rs.) a. Transfer of funds by the partner Shri. Akula Ravi Ku....
X X X X Extracts X X X X
X X X X Extracts X X X X
....50200027323037 Annexure-5 (page no. 1) Total (1) 4,43,40,000 2) From partner HDFC A/c No-50200061880094: S. No. Date Amount (in Rs.) Appeared in Firm Bank account Reference page bank number of statement 1 07-10-2021 3,50,00,000 HDFC 50200017303375 Annexure-7 (page no. 5) 2 13-10-2021 50,00,000 HDFC 50200017303375 Annexure-7 (page no. 5) 3 29-10-2021 1,00,00,000 HDFC 50200017303375 Annexure-7 (page no. 6) 4 12-11-2021 2,00,00,000 HDFC 50200017303375 Annexure-7 (page no. 6) 5 28-03-2022 25,00,000 HDFC 50200017303375 Annexure-7 (page no. 11) 6 21-10-2021 18,62,000 HDFC 50200027323037 Annexure-8 (page no. 1) Total (2) 7,43,62,000 Grand Total (1+2) - A 1,81,02,000 The above bank statement 50200061880094 of the partner is enclosed as Annexure 9. B. Payments made by the partner for the lands purchased by the Appellant firm: The details of payments made by the partner through his HDFC A/c No: 50200061880094 for the lands purchased by the Appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....source is from sale of agricultural land and the amount is clearly appearing in the bank account of the partner Sri Akula Ravi Kumar which is received from the well-known Multi National Company which is evidenced by the sale deed and bank account of the partner. 5.5. I have carefully gone through the grounds of appeal, facts of the case, assessment order passed by the AO, written submission as well as documentary evidences uploaded and judicial decisions relied upon by the appellant. After verification of the Balance Sheet and its annexed statements, it is found that the increase in capitals of the partners was Rs. 15,79,04,725/- and not the amount of Rs. 70,64,64,644/- as calculated by the assessing officer. The difference amount in the partner's capital account of Rs. 4,85,59,919/- represents the remuneration paid to Sri A. Varun Kumar of Rs. 12,00,000/- & Smt. A. Vasantha of Rs. 1,00,000/-. The balance amount of Rs. 4,67,59,919/- represents the share of profit credited to the partner's capital account. Thus the net increase in capital by way of introduction was only Rs. 15,79,04,725/-. And this amount was stated to be introduced by the partner Sri A. Ravi Kumar.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le amounted to Rs. 127,47,09,413, which was the source for his additional capital introduction into the appellant firm. The appellant firm submitted copies of the registered sale deed and bank statements. AO has not questioned or doubted the transaction's genuineness during the assessment proceedings. However, AO has identified bank transfer entries by the partner total amounting to Rs. 5,21,36,000/- as genuine and noted that the remaining capital introduction amounts were not reflected in the bank account, hence, treated the balance amount as unexplained cash credit under Section 68 of Act. 5.7. From the perusal of documents available on record, it is apparent that Mr. A. Ravi Kumar partner of the firm had transferred funds directly to the accounts of the land owners on behalf of the appellant firm to expedite the transaction in respect of purchase of land. This fact was also brought to the notice of the AO during assessment proceedings in response to the query raised by the AO that partner Sri A. Ravi Kumar made payments totaling Rs. 54,10,12,725/- on behalf of the appellant firm to the land vendors, hence, this amount is treated as his capital contribution to the fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rce of credit entry found in the books of the appellant firm during the year under consideration, which is actually the capital introduced by the partner in the books of the firm. Further, the source of capital introduced by the partner Sri A. Ravi Kumar was also explained by the appellant during the assessment proceedings that Mr. A. Ravi Kumar, in the previous year under consideration had sold land jointly with other co-owners to M/s. Microsoft Corporation Ltd. This sale was made vide Registered Sale Deed No. 14652/2021, with a total sale consideration of Rs. 158,28,82,500/-. Mr. A. Ravi Kumar's share in this sale amounted to Rs. 127,47,09,413/-, which was the source for his additional capital introduction into the appellant firm during the year under consideration. The appellant firm had also submitted copies of the registered sale deed and AO did not question or doubted the genuineness of transaction during the assessment proceedings. Further, in this case the source of funds introduced stands owned and accepted by its partner Sh. A. Ravi Kumar. He is an individual and in such capacity assessed to tax independently. The source of funds from which the partner had advanced th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, the present appeal of the assessee is allowed to be withdrawn and the same is dismissed being withdrawn. 13. In the result, appeal ITA. No. 907/Hyd./2025 of the Assessee is dismissed as withdrawn. 14. To sum-up, appeal of the Revenue is dismissed and appeal of the Assessee is dismissed as withdrawn. A copy of this common order is placed in the respective case files. Order pronounced in the open Court on 03.06.2026 ============= Document 1 Statement of account HDFC BANK We understand your world MR AKULA RAVI KUMAR H NO-3-240 PADMAVATHI COLONY FAROOQNAGAR RANGAREDDY 509216 TELANGANA JOINT HOLDERS : Account Branch : SHADNAGAR FAROOQNAGAR Address : HDFC BANK LTD NO. 13-93/1, NEHRU NAGAR. SHADNAGAR, City : SHADNAGAR State : TELANGANA Phone no. : 18002026161 OD Limit : 0 Currency : INR Email : varun @ belonghospitality.com Cust ID : 38506403 Account No : 50200061880094 Imperia A/C Open Date : 28/09/2021 Account Status : Regular RTGS/NEFT IFSC: HDFC0004330 MICR : 509240202 Branch Code : 4330 Product Code : 1102 Nomination : Registered Date Narration Chq./Ref.No. Valne Dt Withdrawal Amt. Deposit Amt. Closing Balance 07/10/21 FT - DR - 5020....