TMI Blog2011 (5) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ame in the hands of the partners only and not in the case of the firm. - Decided in favor of assessee. - IT APPEAL NO. 4022 (AHD.) OF 2008 - - - Dated:- 10-5-2011 - T.K. SHARMA, A.N. PAHUJA, JJ. S.P. Talati for the Appellant. M.J. Shah for the Respondent. ORDER A.N. Pahuja, Accountant Member This appeal by the Revenue against an order dated 19-09-2008 of the ld. CIT(Appeals)-II, Surat for the Assessment Year 2005-06, raises the following grounds:- [1] "On the fact and circumstances of the case and in law, the learned CIT(A)-II, Surat has erred in holding that the assessee had furnished all the details to substantiate its claim for introduction of capital in accounts of the partners without appreciating the fact that the assessee had only furnished copy of Income-tax Acknowledgement and copy of Cash Book of the partners but has not furnished any evidences "which may explain the sources of cash introduced by the partners" [2] On the fact and circumstances of the case and in law, the learned CIT(A)-I, Surat has erred in holding that the A.O. was not competent to examine the Cash Book of the partners without appreciating the fact the assessee had credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexplained cash credit. In response, the assessee submitted as under:- "2. Shri Ashvinbhai Chandubhai Patel has been working with The Surat Dist. Co-Op. Bank for last many years. He has also been filing his Income Tax Return for last several years. His gross salary is Rs. 4,17,202/- for F Y. 2002-2003 (A.Y. 2003-2004), Rs. 4,55,639/- for F.Y. 2003-2004 (A.Y. 2004-2005) and Rs. 4,59,013/- for F.Y. 2004 2005 (A.Y. 2005-06). The said amount of Rs. 2.00 lacs is brought in by him as a capital from savings made out of him regular income and past savings. 2.2 Shri Mahendra Patel has been working with District Panchayat Office, Surat for last twenty years. He has also been filing his Income Tax Return for last several years. His gross salary is Rs. 92,734/- for F.Y. 2002 2003 (A.Y. 2003-2004), Rs. 1,05,546/-for F.Y, 2003-2004 (A.Y. 2004- 2005) and Rs. 1,09,392/ for F.Y. 2004-2005 (A.Y. 2005-2006). We are enclosing herewith the capital account (Annexure - 1) of Mahendra C. Patel from our hooks of accounts for your ready reference. On perusal of this, your honour will find that fresh / new capital of only Rs. 2,72,500/- is introduced in the firm. As your honour will note that Rs. 1,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition in the following terms:- "4. In the written submissions, it has been contended by the AR that all relevant documents as also the books of account of individual partners, their cash books and bank pass books had been furnished. The balance-sheet of all the partners for the financial year 2003-04, and the computations of income had also been submitted, II is the contention of the AR that all the partners had sufficient cash balance in their respective cash books from which capital was introduced into the Assessee firm. In support of his contentions, the AR has placed reliance on the following case-laws. 1. CIT v. Jaiswal Motor Finance - 37 CTR 217 (All.) 2. CIT v. Metachem Industries - 161 CTR 444 (MP) 3. CIT v. Rameshwar Dass Suresh Pal Cheeka - 208 CTR 459 (P H) 4. Jalan limbers v. CIT 117 CTR 649 (Gau.) 5. Narayandas Kedarnath v. CIT - 22 ITR 18 (Bom.) 6. CIT v. Orissa Corporation I'. Ltd. - 52 CTR 138 7. CIT v. Taj Borewells J9.I ITR 232 8. CIT v. Metal Metals of India - 208 CTR 457 (P H) Decision: 5. I have carefully considered both the positions. From the observations of the AO in the assessment order as also the submissions of the AR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid four partners in the books of account of the assessee. We find that the ld. CIT(A) after analyzing the facts of the case found that in this case copies of capital accounts of the partners, their individual cash books, bank pass books/bank statements, their balance-sheets, computation of Income and acknowledgments of the returns of income filed by them for different assessment years, including the year under consideration, had all been submitted and thus, all the partners were found to be assessed to income tax. The relevant income tax particulars of these partners have been duly identified by the assessee and the respective partners have confirmed the introduction of funds in the firm to the extent indicated. Accordingly, the ld. CIT(A) concluded that there was no justification to invoke provisions of section 68 of the Act. The Revenue have not placed before us any material controverting these findings of facts recorded by the learned CIT(A). As regards onus in respect of amounts found credited in the books of the firm, in CIT v. Kishorilal Santhoshilal [1995] 216 ITR 9 (Raj), it was categorically held that the burden of proof in respect of cash credits found in the partners' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho constitute the firm itself. In such a case, the onus was on the assessee to establish that the partners had actually deposited the money and that the entries were not fictitious. 5.2 It is clear that until and unless the partners of a firm are able to categorically establish the sources of the cash credits introduced in their names in the books of the firm and the manner in which such cash had been earned by them, the question of shifting of the burden on to the Department cannot arise. Hon'ble jurisdictional High Court in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360/[2003] 127 Taxman 523 (Guj) held that the unsatisfactoriness of the explanation does not automatically results in deeming the amount credited in the books as income of the assessee. In the case under consideration, the ld. CIT(A) found that the assessee has discharged the initial onus laid down upon the firm and had furnished an explanation that the amount was brought in by the respective partners. The identity of the partners and the evidence regarding sources of income has been placed before the lower authorities. All the four partners are stated to be assessed to tax on their independent income and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the assessee had discharged the primary 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. 15. 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 is, accordingly, answered in the affirmative i. e. in favour of the assessee and against the revenue." 5.4. In the light of aforesaid decision of the Hon'ble jurisdictional High Court in Pankaj Dyestuff Industries (supra) and undisputed findings of the learned CIT(A), especially when Revenue have not placed any material before us, controverting the findings of the ld. CIT(A) and all the four partn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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