Case Law Details
Kumar Construction Vs DCIT (ITAT Patna)
Claim of the assessee firm rejected by the AO merely on the ground that capital has not been introduced by the partners through banking account is unjustified. Therefore, it is perverse and liable to be rejected and to substantiate the claim of assessee, the AR relied on the decision of CIT vs Anupam Udyog dated 21st December, 1982, 142 ITR 130 (Patna High Court), where Hon’ble High Court held that there are cash credit in the books of firm in the accounts of the individual partners and it is found as a fact that cash was received by the firm from its partners other than in absence of any material to indicate that there are the profits of the firm, the cash credits cannot be assessed in the hands of the firm though they may be assessed in the hands of individual partners. Further, the AR submitted that the AO had already rejected the books of accounts u/s 145(3) of the Act and income has been presumed on presumptive basis. Therefore, all the income expenses assets and liabilities have been accounted for and in such circumstances capital introduced by partners into firm’s capital and added its total income of the firm is bad in law. Therefore, the contention of the AO is not justified and liable to be set aside.
We after considering the rival submission of the parties on this issue and material available on record as well as going through the Paper Book submitted by the assessee to substantiate its claim and also perusing the affidavit filed by the individual assessee in this regard and the order passed by the Hon’ble Patna High Court, we find force in the submission made by the assessee. Therefore, we allow the claim of the assessee and directed the AO to delete the addition of Rs. 12,20,000/- in the hands of the assessee.
FULL TEXT OF THE ORDER OF ITAT PATNA
The captioned appeals preferred by the assessee for the A.Y. 2005-06 is directed against the order passed u/s 143(3) of the Income-tax Act, 1961 passed by OSD, CIT(A) dated 26.06.2014. The assessee has taken the following revised ground of appeal for A.Y. 2005-06 as under:
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