Case Law Details
Shivam Developers Vs DCIT (ITAT Ahmedabad)
In the case of Shivam Developers vs DCIT (ITAT Ahmedabad), the Income Tax Appellate Tribunal (ITAT) made a significant ruling by deleting the addition under Section 69C of the Income Tax Act, which pertained to the capital introduced by a partner.
The dispute arose when the Learned Counsel representing Shivam Developers challenged the addition of Rs. 17,14,000 under Section 69C of the Income Tax Act, which was made by the Assessing Officer (AO) on account of the capital introduced by a partner, Dhawal B. Patel. During the hearing, the Counsel presented arguments contesting the decision of the Learned Commissioner of Income Tax (Appeals) [CIT(A)] to uphold the addition.
The CIT(A) had concluded that the sources of the capital introduced by the partner were not satisfactorily explained with supporting evidence. Moreover, the non-filing of returns by the partner was cited as evidence of their lack of creditworthiness. Despite the appellant’s reliance on judgments of the Hon’ble High Court of Gujarat, specifically CIT Vs. Pankaj Dyestuff Industries and Odedara Construction, the CIT(A) rejected their applicability.
The appellant argued that the CIT(A) had overlooked crucial principles established in the judgments cited. They emphasized that the partner had adequately explained the source of funds for the capital introduction. The appellant also asserted that if the department was unsatisfied with the partner’s explanation, the amounts should be assessed in the partner’s individual hands.
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