TMI Blog2012 (5) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. Briefly, the facts of the case are that the assessee is a firm having three partners, namely, Sri Naresh Agarwal, Shri Harsh Agarwal and Shri S.B. Patel. During the year under consideration, Shri Naresh Agarwal, one of the partners, has introduced fresh capital of ₹ 45,45,000/- in the assessee firm, out of which a sum of ₹ 17,75,000/- has been deposited by him in cash on various dates. The AO treated the same to be unexplained. Shri Naresh Agarwal was examined u/s. 131 of the IT Act on oath and according to the AO, he could not explain the source of the capital introduced in cash satisfactorily. Therefore, the capital introduced in cash was added to the income of the assessee, which was introduced on several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als and cash in hand available with him. The appellant has submitted cash flow statement of Mr. Naresh Agarwal for the month of Nov. and Dec. 2006 alongwith his bank statement in support of its submissions. The bank account of Mr. Naresh Agarwal in UTI Bank, Gwalior shows that upto 05/12/2006 he was having credit balance of ₹ 3,412/- only. Deposits of ₹ 60,000/- and ₹ 40,000/- made on 6/12/2006 have been withdrawn on the same day itself vide cheque No. 133061 for ₹ 100,000/- which has been paid to M/s. MGR Automobiles and not to the appellant firm. Earlier submission of the appellant that withdrawal of ₹ 4,00,000/- made on 6/11/2006 covers the said deposit of ₹ 1,25,000/- on 6/12/2006 is also not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purpose of income tax. By relying on decision of Hon ble Allahabad High Court in case of Sundar Lal Jain vs. CIT (1979) 117 ITR 316, it has been held that the credit in the account of a partner is not a loan to the firm and is not assessable in the hands of the firm. It is open to the AO to undertake further investigation with regard to that individual who has deposited this amount. So far as the responsibility of the appellant firm is concerned, it is satisfactorily discharged. Respectfully following these decisions, addition of ₹ 17,75,000/- made in the case of the appellant firm on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troduction of the capital in the assessee firm in statement recorded u/s. 131 of the IT Act and is also assessed to tax. He has also filed affidavit in support of the same contention before the ld. CIT(A), which has not been disputed by the Revenue in the grounds of appeal. Therefore, the assessee is able to explain that the capital has been introduced by the partner through his own sources. Therefore the initial burden on the assessee firm explaining the capital contribution by one of the partners is discharged. The ld. CIT(A) rightly directed the AO to take action against the partner in his individual case if he was not satisfied about his creditworthiness. The decision cited by the ld. DR is with regard to the cash credit introduced by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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