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2017 (11) TMI 674 - AT - Income TaxAmount received as beneficiary of firm - addition u/s 68 - assessee is one of the beneficiaries in the Estate of late Shri M.S. Kotwal who is partner in the partnership firm - addition on the ground as the amount received by the assessee is from the firm which has not paid any taxes on the transaction of introduction of capital by new partners and transferred property there off relating to the firm and since the assessee did not pay the taxes it is the income and it should be treated as the income of the assessee and should be taxed u/s. 68 - . Alternatively, AO concluded that the investments made by the assessee should be treated as unexplained investment u/s. 69 Held that:- AO's conclusion is not permissible under law. If the Assessing Officer was of the view that there is distribution/transfer of assets by the Firm appropriate action should be taken in the hands of the Firm. The assessee has fully explained the sources of the amounts received by her which were invested by her in purchase of properties and therefore none of the conditions laid down in the provisions of section 68/69 are attracted so as to invoke the said sections. Ld.CIT(A) taking note of the fact that the assessee received amount from the partnership firm as a beneficial owner to the Estate of her grandfather who was a partner of the partnership firm and also taking note of the fact that even the amount received by the assessee from the Firm is exempted u/s. 10(2A) as business income and further taking note of the fact that assessee has not received these amounts during the current Assessment Year, he rightly held that the provisions of section 68 and 69 have no application to the facts of the case. We also find force in the contentions of the Ld.CIT(A) if at all if any proceedings are to be instituted under the Act it is in the case of the partnership firms but not in the case of the assessee. Thus we hold that the Assessing Officer is not justified in making addition u/s. 68 of the Act in respect of the amounts received by her from the Firm as a beneficiary. We further find that the assessee explained the source of investments made in the residential flats and therefore the investments made in such residential flats cannot be treated as unexplained investment u/s. 69 of the Act. In view of what is stated above we uphold the order of the Ld.CIT(A) in deleting the addition made u/s. 68 of the Act. - Decided in favour of assessee.
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