ACIT Vs Durga Granites (ITAT Hyderabad)
ITAT held that if the partners of the assessee-firm had introduced the cash in their respective books and thereafter transferred the same to the books of the assessee firm then probably the onus may be on the partners of the assessee firm to establish the source of the cash brought into their respective books and therefore addition may not be made in the hands of the assessee firm depending on the facts and circumstance of the case. However, in the case of the assessee it is apparent that the cash was never introduced in the books of the partners of the assessee firm, but it was merely introduced in the books of the assessee firm. Therefore, the onus is on the assessee firm to establish the genuineness of the cash introduced in its books. Since the assessee firm has failed to establish the genuineness of the cash introduced in its books obviously the addition has to be made in the hands of the assessee firm as held by the Ld. AO.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by the Revenue against the order of the Ld. CIT(A)-2, Hyderabad in appeal No. 0346/2016-17, dated 30/06/2017 passed U/s. 143(3) r.w.s 250(6) of the Act for the A.Y. 2014-15.
2. The Revenue has raised three grounds in its appeal however, the cruxes of the issue are that
(i) The Ld. CIT (A) has erred in deleting the addition made by the Ld. AO amounting to Rs. 3,25,50,207/- U/s. 68 of the Act being the unexplained partners investment in the assessee-firm.
(ii) The Ld. CIT (A) has erred in deleting the addition made by the Ld. AO for Rs. 27 lakhs U/s. 40(b) of the Act towards claim of interest debited to the P & L Account of the assessee firm with respect to the unexplained investment of the partners of the firm.
3. The brief facts of the case are that the assessee is a firm engaged in the business as contractor filed his return of income for the relevant AY 2014-15 on 30/09/2014 admitting total income of Rs. 1,84,08,230/-. Subsequently, the case of the assessee was taken up for scrutiny and assessment was completed U/s. 143(3) of the Act vide order dated 9/11/2016 wherein the Ld. AO made addition of Rs.3,25,50,205/- U/s. 68 of the Act and Rs. 27,00,000 U/s. 40(b) of the Act.
4. During the course of scrutiny assessment proceedings, it was observed by the Ld. AO that the partners of the assessee company had introduced cash into the firm during the relevant assessment year on various dates in the form of capital as detailed herein below for which the source was not explained:
