The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) in ITO v. Bajaj Roadways, held that a Firm cannot be assessable to unexplained cash credits under Section 68 of the Income Tax Act in respect of the amount of capital introduced by the partners to the Firm.
In the instant case, the Assessing Officer made an addition of Rs.64,10,000/- as unexplained cash credit under section 68 of the Act in assessee, a Firms’ partners’ capital account. On first appeal, the Commissioner of Income Tax (Appeals) graned relief to the assessee.
The assessee contended before the Tribunal that the amount is taxable in the hands of the partners only.
Concluding the matter in favour of the Firm, the Tribunal held that “Suffice to say, various judicial precedents have settled the law that such addition has to be made in the concerned partners’ hands than in case of a firm assessee. We quote one of them CIT vs Metachem Industries in support. The CIT(A) has already granted liberty to the Assessing Officer to assess the very sum in case of assessee’s individual partners’ concerned. We make it clear that there is not an argument raised before us doubting assessee explaining all the impugned money coming from its partners’ capital account only.”
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) in ITO v. Bajaj Roadways, held that a Firm cannot be assessable to unexplained cash credits under section 68 of the Income Tax Act in respect of the amount of capital introduced by the partners to the Firm.
In the instant case, the Assessing Officer made an addition of Rs.64,10,000/- as unexplained cash credit under section 68 of the Act in assessee, a Firms’ partners’ capital account. On first appeal, the Commissioner of Income Tax (Appeals) graned relief to the assessee.
The assessee contended before the Tribunal that the amount is taxable in the hands of the partners only.
Concluding the matter in favour of the Firm, the Tribunal held that “Suffice to say, various judicial precedents have settled the law that such addition has to be made in the concerned partners’ hands than in case of a firm assessee. We quote one of them CIT vs Metachem Industries in support. The CIT(A) has already granted liberty to the Assessing Officer to assess the very sum in case of assessee’s individual partners’ concerned. We make it clear that there is not an argument raised before us doubting assessee explaining all the impugned money coming from its partners’ capital account only.”
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