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| The Tax Publishers2020 TaxPub(DT) 4796 (Bang-Trib) INCOME TAX ACT 1961
Section 68
Where identity of the creditor, creditworthiness of the creditor and genuineness of the transaction of withdrawal of money from a partnership firm in which assessee was a partner and introduction of same in its capital account was duly proved by assessee, no addition could be made under section 68.
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Income from undisclosed sources - Addition under section 68 - Identity, creditworthiness of the creditor and genuineness of the transaction duly proved -
Assessee introduced a sum in his capital account. Against this he explained that he was a partner in a partnership firm and had withdrawn money from the said firm. AO made addition under section 68 on the ground that the partnership firm formed by the assessee was a colourable entity created to legitimate the introduction of capital in cash in books of account. Held: Assessee had furnished details relating to receipt of compensation, bank account details of other partners, etc., AO also did not find fault with those documents, meaning thereby, the assessee had also proved source of sources. Further, partnership deed, the books of accounts of the firm, its fund position examined by AO would show that the assessee had proved identity, credit worthiness and genuineness of the transactions. In fact, the AO was also satisfied with the capacity of the other partners to make the capital contribution. Hence, addition made under section 68 was required to be deleted.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, BANAGLORE BENCH
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