TMI Blog2023 (4) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... them. We also find force in the contentions that assessment in the case of two of the partners was also completed by the same Assessing Officer wherein the AO did not take any adverse view in respect of the amount of capital introduced in the assessee firm which in itself justified that the AO was satisfied with the source of capital introduced in the assessee firm. Assessment in the case of the partnership firm from where the partners of the assessee firm withdrew cash/ obtained loan and thereafter introduced capital in the assessee firm was also completed by the same Assessing Officer and that no adverse view was taken in the case of partnership firm in respect of the amount withdrawn by the partners for contributing capital in the assessee firm which further justified that the AO was satisfied with the source of capital introduced in the assessee firm - no reason to sustain addition to the total income of the assessee on account of capital introduced by partners since source of capital introduced by the partners stood duly explained. Addition made by the Ld. AO on account of capital introduced by partners cannot be said to be justified in view of the observations made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,791/- made by the Ld. AO on account of capital introduced by partners by treating it as unaccounted and unexplained credit under Section 68 of the Act. 4. The brief fact leading to the case is this that the Ld. AO during the course of assessment proceedings observed that all the partners had introduced capital in the assessee firm during the year under consideration and no documents except for the ledger account of the partners had been submitted to justify the source of capital introduced in the firm. The Ld. AO further observed that Shri Rahul Bansal and Shri Rajendra Bansal had withdrawn amount from the partnership firm, M/s Motilal Gopikishan and had thereafter introduced capital in the firm. The Ld. AO reiterated the fact that books of accounts of M/s Motilal Gopikishan had been treated as suspicious during the course of assessment proceedings since several documents related to cash loan and register related to unaccounted investment had been found during the course of search. Accordingly, in the absence of supporting documentary evidences regarding source of capital introduced by its partners, the Ld. AO added the amount of capital introduced by partners of Rs. 2,59,28,79 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition to the total income of the assessee on account of capital introduced by its partners. We have further considered inter alia the following submission made by the assessee in the synopsis submitted before us: 1.1] The Department in the ground of appeal has challenged the action of Ld CIT(A) of deleting the addition of Rs. 2,59,28,791/- as made to the total income of the respondent firm by the assessing officer on account of capital introduced by the partners by treating it as unaccounted and unexplained credit under section 68 of the Income-Tax Act, 1961 even when the said addition of Rs. 2,59,28,791/- as made by the assessing officer on account of capital introduced by the partners was made without allowing set-off of capital withdrawn. 1.2] The assessing officer while passing the assessment order observed that all the partners had introduced capital in the firm during the year under consideration and no documents except for the ledger account of the partners had been submitted to justify the source of capital introduced in the firm. The assessing officer further observed that Shri Rahul Bansal and Shri Rajendra Bansal had withdrawn amount from the partnership f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount of capital introduced [in Rs.] 1 Madhusudan Tiwari 43,95,000 2 Rahul Bansal 38,30,000 3 Rajendra Bansal 43,29,379 4 Satyanarayan Maheshwari 93,00,000 5 Yash Tiwari 40,74,412 Total 2,59,28,791 1.5.2] Detail with respect to source of capital introduced by the partners in the firm is as under: S. No Name of the partners Amount of capital introduced [in Rs.] Source of introduction of capital 1 Madhusudan Tiwari 43,95,000 The said amount of capital was introduced out of loan taken from the firm, M/s Motilal Gopikishan and also out of current year income and past savings of the partner 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced during the year 2.1 Confirmation of accounts 49 2.2 Relevant pages of bank statement duly highlighting the amount of capital introduced 50-57 2.3 Acknowledgement of income-tax return along with computation of income for the Assessment Year 2018-19 58-60 2.4 Capital account in the books of the firm, M/s Motilal Gopikishan so as to justify the source of introduction of capital 61-63 3 Rajendra Bansal [PAN: ABSPB5125E] Capital of Rs. 43,29,379/- introduced during the year 3.1 Confirmation of accounts 64 3.2 Relevant pages of bank statement duly highlighting the amount of capital introduced 65-68 3.3 Acknowledgement of income-tax return along with computation of income for the Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 68 of the Income-Tax Act, 1961 and therefore, no addition is sustainable to the total income of the respondent firm on account of capital introduced by the partners. 1.5.5.1] The said documents as submitted during the course of appellate proceedings were also forwarded to the assessing officer for his comments. However, the assessing officer in his remand report dated 03-08- 2021 failed to comment on merits of the documentary evidences as filed by the respondent firm. Rather, the Assessing Officer in the entire remand report re-iterated the fact that additional evidences filed during the course of appellate proceedings were beyond the purview of Rule 46A of the Income-Tax Rules, 1962 and therefore, those additional evidences were required to be rejected. Copy of remand report dated 03-08-2021 is already been filed in page nos. 133-134 of paper book filed before the Hon ble Bench 1.5.5.2] The respondent firm in response to remand report as submitted by the assessing officer duly filed its submission 10-08-2021 before the Ld CIT(A) in which the respondent firm duly explained the applicability of Rule 46A of the Income-tax Rules, 1962 in the present case in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is well settled that once the assessee furnishes the details with regard to the source of capital introduced in the firm and the concerned partner confirms such contribution, the assessee is considered to have duly discharged the onus cast upon it and that the law is no more res integra that once the firm offers an explanation and establishes that the capital is contributed by the partners, the same cannot be assessable in the hands of the firm. He relied upon the following judicial precedents in support of his contentions: (i) Pr. CIT v. Vaishnodevi Refoils Solvex [2018] 96 taxmann.com 469 (SC) Pr. CIT-4 v. Vaishnodevi Refoils Solvex [2018] 89 taxmann.com 80 (Gujarat) (ii) CIT v. Metachem Industries [2000] 245 ITR 160 (Madhya Pradesh) (iii) CIT v. Jaiswal Motor Finance [1983] 141 ITR 706 (Allahabad) (iv) Narayandas Kedarnath v. CIT [1952] 22 ITR 18 (Bombay) (v) CIT Versus Pankaj Dyestuff Industries [Income Tax Reference No. 241 of 1993] (vi) CIT v. Taj Borewells [2007] 291 ITR 232 (Madras) (vii) Deluxe Enterprises v. ITO, Ward-1, Solan [2017] 184 TTJ 394 (Chandigarh - Trib.) (viii) Addl. CIT v. Unique Builders [2004] 2 SOT 58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers were added to the total income of the firm. During the course of appellate proceedings, it was stated by the appellant that no show cause notice was issued by the assessing officer prior to making addition in respect of capital as introduced by the partners. The details in respect of capital as introduced by the partner was provided by the appellant firm itself. Shri Rahul Bansal and Shri Rajendra Bansal was assessed by the same assessing officer and no addition was made in respect of capital introduced by them in the appellant firm. The appellant firm during the course of appellate proceeding provided complete details in respect of capital as introduced by the partners which was forwarded to the assessing officer for his comments. The assessing officer in his remand report challenged the legality of the acceptance of additional evidence as per Rule 46A of the Income Tax Rules but no reply on merit was filed. The assessing officer at the end of the remand report stated that additional evidence may be accepted in the appellate proceeding. In the interest of substantial justice, additional evidence as filed by the appellant was permitted and considered while adjudicating the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of assessment proceedings to justify the source of capital introduced by the partners. The Ld. CIT(A) rightly admitted the additional evidences furnished by the assessee during the course of appellate proceedings. Further, on perusal of the remand report annexed on Page No. 133-134 of the Paper Book, we find that the Ld. AO in the remand report merely challenged the acceptance of additional evidence as per Rule 46A but he utterly failed to comment on merits of the documentary evidences furnished by the assessee during the course of appellate proceedings to justify the identity and creditworthiness of the partners as well as genuineness of the transactions as entered into with them. Hence, we observe that there are no adverse remarks of the Ld. AO regarding source of capital introduced by the partners in the assessee firm except for the fact that no documentary evidences were furnished by the assessee during the course of assessment proceedings to justify the source of capital introduced by the partners. 14. On merits, we find that the assessee filed ample corroborative documentary evidences such as confirmation of accounts, bank statements and income-tax returns of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
