2026 (8) TMI 961

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.... assessee is engaged in the wholesale and retail business of pure pattu sarees and other silk fancy sarees filed its return of income for the A.Y.2017-18 on 28.08.2017, declaring total income of Rs. 13,720/-. The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that the partners of the appellant firm, Sri Chinni Badari Anil and Sri Chinni Maruti Subhash introduced capital of Rs. 26,71,600/-. The AO called upon the assessee to file relevant details and also details of partners to prove their identity, genuineness of transactions and creditworthiness of the parties. In response, the assessee has filed various details in support of its case. The AO, after considering relevant submissions observed t....

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....that the capital contribution by the partners to the partnership firm cannot be assessed as unexplained cash credits in the hands of the firm. If at all the partners are unable to prove the source, then the same may be assessed in the hands of the partners and not in the hands of the firm. In this regard, he relied on the decision of Hon'ble High Court of Telangana in the case of Nova Medicare Vs. Income Tax Officer [2023] 459 ITR 477 (Telangana). 6. Shri A.P. Babu, the Ld.Sr.AR for the Revenue on the other hand, supporting the order of the Ld.CIT(A) submitted that the whole issue should be looked into in a holistic manner and going by the year of cash deposit, the appellant firm has deposited cash into the bank account during demonetiza....