Sanmar Group Corporate Finance Vs Assessment Unit (Madras High Court)
Madras High Court held that petitioner has placed on record sufficient evidence proving financial capability of partners for capital contribution. Accordingly, order set aside and matter remanded back for reconsideration.
Facts- The petitioner is a partnership firm which has six partners. During assessment year 2022-2023, the petitioner asserts that capital contributions were received from four of those partners, namely, Mrs.Bhavani Kumar, Mathura Kumar Properties Private Limited, Serenity Trust and V S Trading and Consultancy Private Limited. According to the petitioner, in response to the show cause notice and preceding notices u/s. 142(1) of the Income-tax Act, 1961, the petitioner had provided an adequate explanation and enclosed all relevant documents to establish the capacity of the partners and the flow of funds to the partnership firm. Since the impugned order was issued proposing variations in respect of the above in spite of such submissions, the present writ petition was filed.
Conclusion- Held that the petitioner has placed on record sufficient evidence of the financial capability of the partners. In certain cases, the flow of funds has been established whereas it has not been established in others. By taking into account the fact that an addition of about Rs.24.50 crores has been made, the interest of justice warrants that the petitioner be provided another opportunity by remanding the matter. For reasons set out above, the impugned order dated 29.03.2024 is set aside and the matter is remanded for reconsideration.
