TMI Blog2005 (7) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... right in law and on facts in deleting the addition of Rs.87,250/- deposits in the accounts of partners?" 1.1 The question as referred is not properly worded and the correct question should read as under : "Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.87,250/- being deposits in the accounts of partners?" The assessment year is 1984-85 and the relevant accounting period is the year which ended on 31st March 1984. The assessee is carrying on the business of manufacture and sale of colours and chemicals. The assessee filed return of income declaring a loss of Rs.1,07,118/-. On scrutiny of the balance sheet and partners' accounts, the Income Tax Officer found unexplained new deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-examine the cash creditors after giving an adequate opportunity of hearing. Against the deletion of addition of Rs.87,250/-, the revenue preferred appeal before the Income Tax Appellate Tribunal, and the Tribunal for the reasons stated in its order dated 11th March 1992, confirmed the findings of the Deputy CIT (Appeals) and dismissed the appeal. Mrs.M.M.Bhatt, the learned standing counsel appearing for the revenue reiterated the grounds stated by the Income Tax Officer for making the additions and submitted that no supporting materials had been produced by the assessee to show that the partners were in a position to deposit such huge amounts with the assessee firm. It was submitted that, accordingly, the Assessing Officer was j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed upon the decision of the Allahabad High Court in case of Commissioner of Income Tax v. Jaiswal Motor Finance (1983) 141 ITR 706, wherein it has been held as follows: "It appears to be well settled that if there are cash credit entries in the books of the firm in which the accounts of the individual partners exist and it is found as a fact that cash was received by the firm from its partners then in the absence of any material to indicate that they were profits of the firm, it could not be assessed in the hands of the firm." The Deputy CIT (Appeals), upon consideration of the submissions of the appellant, found that the partners had produced sufficient evidence to show the source for deposit in their accounts. Accordingly, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to state that the Tribunal committed any error when it confirmed the findings of CIT (Appeals) deleting the addition. The assessee offered an explanation. The said explanation is not found to be false. The Assessing Officer merely does not accept the explanation because he finds it not satisfactory. From that, legally there is no obligation, on the Assessing Officer, to treat the fixed deposits as income of the assessee." The Bombay High Court in case of Narayandas Kedarnath v. Commissioner of Income Tax, Central, [1952] 22 ITR 18 has, while dealing with the question as to whether certain amounts standing to the credit of some of the partners of the assessee firm could be treated as undisclosed profits of the firm itself, observed thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid decision in the case of Narayandas Kedarnath (supra) rendered by Bombay High Court on 28th March 1952 has precedential value equivalent to a decision of this Court and hence, is equally binding on this Court. The said decision though rendered under the Indian Income Tax Act, 1922, would not make any difference. Section 68 of the Act was introduced for the first time in the Act and there was no corresponding provision in the 1922 Act. However, as per settled legal position, Section 68 of the Act only gives a statutory recognition to the principle that cash credits which are not satisfactorily explained might be assessed as income. (See CIT v. Orissa Corporation Pvt. Ltd. [1986] 159 ITR 78). Applying the aforesaid principles to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rimary onus which was on it by offering explanation, which has not been found to be incorrect or false in any manner. The interest of the revenue is also safeguarded as the Income Tax Officer has been given the liberty to consider the said credits in the hands of the partners if he is not satisfied with the sources of investment of cash credits in the accounts of the partners. In these circumstances, it is not possible to find that the order of the Tribunal suffers from any infirmity which would require interference at the hands of this Court. Accordingly, it is held that the Tribunal was right in law and on facts in deleting the addition of Rs.87,250/- being deposits in the accounts of the partners. The question referred to this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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