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2022 (12) TMI 303 - AT - Income TaxUnexplained cash credit u/s. 68 - partnership firm requirement to explain source of income for partners regarding amount contributed by them towards capital of firm - HELD THAT:- Assessee has filed all requisite details at the time of hearing before ld. CIT(A). The assessee has filed copies of return of the partners who introduced capital, their respective bank statements were furnished and the confirmations of the three partners were also furnished before CIT(A). CIT(A) made a specific noting that on examination of the bank account for each of the three partners, it is apparent that there was no cash deposit before the cheque/transfer of funds by the respective partners to the assessee firm. The CIT(A) has also made a nothing that the assessee firm has submitted name/address/bank statement/acknowledgement of ITR and also confirmation of ledger accounts of the respective partners. In the case of Principal Commissioner of Income-tax-4 v. Vaishnodevi Refoils & Solvex [2018 (1) TMI 861 - GUJARAT HIGH COURT] High Court held that when assessee had furnished details with regard to source of capital introduced in firm and concerned partner had also confirmed such contribution, it could be concluded that assessee had duly discharged onus cast upon it. Therefore, if Assessing Officer was not convinced about creditworthiness of partner who had made capital contribution, inquiry had to be made at end of partner and not against firm. Notable, the SLP filed by the Department against the above order has also been dismissed by Hon'ble Supreme Court [2018 (7) TMI 651 - SC ORDER] Again the High Court in the case of CIT v. M. Venkateswara Rao [2015 (3) TMI 153 - ANDHRA PRADESH HIGH COURT] held that contribution made by partners to capital of assessee-firm would constitute very substratum for business of firm and it is difficult to treat pooling of such capital, as credit. The High Court held that it is only when entries are made during course of business that can be subjected to scrutiny under section 68. Therefore, partnership firm is not required to explain source of income for partners regarding amount contributed by them towards capital of firm. Thus, in view of the above discussion, the assessee has sufficiently charged the onus against upon him in the instant set of facts. Accordingly, we find no infirmity in the order of CIT(A) who has taken into consideration all the details filed by the assessee and thereby deleted the additions. Appeal of the Revenue is dismissed.
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