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TMI Blog2023 (11) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered email ID. 3. Since I was using email ID of another person, I was not having direct access to the mail received in respect of my Income Tax matters. 4. It was only when my consultant visited the Portal to give reply to an outstanding demand, he came to know that the appellate order has been passed by the CIT(A). I immediately changed the email ID and has given my office email ID for the future correspondence. 5. Since I did not receive the order, I could not file an appeal in time. 6. My tax consultant had visited the site on 23rd May, 2023 and downloaded the order. As per his advised I immediately requested him to prepare the appeal to be filed before The Income Tax Appellate Tribunal. 7. There is a delay in filing of an appeal by 47 days. There was no malafide intention nor was a deliberate act to delay the matter. The delay was due to inadvertent mistake in not verifying day to day email 8. The appellant has not in any way benefited by delaying the appeal. The appellant therefore request that the delay may be condoned and appeal may be admitted. Whatever stated above is true and correct to the best of my knowledge and belief." 3. In view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so." 6. Respectfully following the ratio laid down in the above judgment, we condone the delay in filing the appeal and decide the appeal on merits. 7. Brief facts of the case are, assessee filed its return of income on 26.12.2014 declaring total income of Rs.. Nil. The return was processed u/s. 143(1) of Income-tax Act, 1961 (in short "Act"). Subsequently, the case was selected for scrutiny under CASS and notices u/s. 143(2) and 142(1) of the Act were issued and served on the assessee. In response Authorised Representative of the assessee attended and submitted the relevant information as called for. 8. Assessee has declared income under the head "Income from Business" "capital gains" and "other sources". The assessee is a partner in M/s. Sri Jagannath Steel Co. and M/s. Gurunanak Metal Works. During the assessment proceedings, Assessing Officer observed that assessee has claimed interest of Rs.. 31,55,304/- against the remuneration received of Rs.. 15,00,000/- from partnership fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order of the AO, the following major facts emerge from the order of the AO, which need careful consideration and analysis:- i. The appellant has not produced any documentary evidence or proof, in support of raising of unsecured loans of Rs. 3.67 Crores, from third parties. Mere filing of a self- prepared balance sheet is not a credible and reliable evidence. ii. No confirmations in this regard have been filed from the lenders/creditors. iii. No lender/creditor has verified or confirmed any loan given to the appellant before the assessing authority or the appellate authority. iv. There is no third-party verification/confirmation on record, except the mutual arrangement between appellant and the firm, namely M/s Sri Jagannath Steel. v. No audited accounts or audit report of the appellant or the firm have been filed or produced before the assessing authority or the appellate authority, for examination or verification vi. No bank accounts reflecting the transactions relating to loan taken, loan given and interest paid on such loan taken/given, of the appellant or the firm, have been produced before the assessing authority or the appellate authority, for examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of Rs.. 2,49,23,869/- in M/s. Sri Jagannath Steel Co. and Rs.. 29,27,184/- in M/s. Gurunanak Metal Works and also he brought to our notice loan creditors outstanding of Rs.. 2.47 crores. He submits that in the immediately previous assessment year the assessee has shown the similar loan outstanding and submitted that A.Y.2013-14 is the first assessment year in which the present issue was raised. He submitted that only marginal increase of loan creditor during the current Assessment Year. In this regard he relied on the decision of the Coordinate Bench in the case of Santosh Kumar Agrawal v. ACIT in ITA. No. 2925 and 2926/Mum/1997 dated 13.07.2000 where the similar issue was decided in favour of assessee. Copy of the order is placed on record. 15. On the other hand, Ld. DR relied on the orders of the lower authorities, particularly Page No. 9 of the Appellate Order where the Ld.CIT(A) has questioned the genuineness of the loan taken by the assessee from the various creditors. 16. Considered the rival submissions and material placed on record, we observe that assessee has paid interest of Rs.. 31,55,304/- to the various loan creditors and only source of income was remuneration f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiction to all its logical consequences. The objection raised by the Revenue authorities is that the interest is not paid for the purpose of earning the remuneration. The answer to this objection is that strictly speaking, there cannot be a contract of service in law, between a firm and its partners. The firm is not a legal person even though it is recognised as a unit of assessment for the purpose of IT Act. Any payment of salary to a partner is only a mode of sharing the profits. The salary paid to a partner retains the same character of the income of the firm. These principles have been laid down by the Supreme Court in the case of CIT vs. R.M. Chidambaram Pillal Etc. 1977 CTR (SC) 71: (1977) 106 ITR 292 (SC). It has been held in this decision, that the salary of a partner is only an alias for the return by way of profits for the human capital-sweat, skill and toil--which the partner has brought in for the common benefit. The immediate reason for payment of salary may be the service contract, but the causa causans is the partnership. The Supreme Court held that when an arrangement is made by which a partner works and receives amounts as wages for services rendered, the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X
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