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2016 (9) TMI 1069 - AT - Income TaxAddition made on account of cash deposit in bank account u/s 69A - assessmnet of partners share in partnership firm - Held that:- We find that as far as source of the cash deposit in the saving bank account of the assessee is concerned, it is explained as the cash sales of the partnership firm, namely, M/s Moti Mahal Restaurant, in which the assessee is one of the partners. The objection of the Revenue is, however, that the section 19(2) of the Partnership Act, 1932 prohibits opening of an account by a partner in his own name on behalf of the firm. Also as objected by the Revenue that opening of the account in the name of partner was not in accordance to the terms of the partnership deed of M/s Moti Mahal Restaurant. According to the section 19(2)(b) of the Indian Partnership Act, 1932, in absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to open a bank account on behalf of the firm in his own name. The implied authority of the partner binds the firm against the acts of the firm. This restriction on the implied authority of the partner is subject to the usage or custom of the trade, therefore, in absence of evidences of usage or custom of the trade, we cannot say that there was any violation of section 19(2) of the Indian partnership Act, 1932. In our opinion, what is important is that in deposit of trading receipts of the firm in the bank account of the partner, the assessee has not violated any of the provisions of the Income Tax Act, even if it may be a violation of the section 19(2) of the Indian Partnership Act, 1932, and further, there is no dispute that the money belonged to the partnership firm and after deposit, the money was transferred to the partnership firm, in such circumstances, no addition is called for in the case of partner of the firm. - Decided in favour of assessee
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