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Commissioner of Income-tax Vs. Jaiswal Motor Finance - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 308 of 1977
Judge
Reported in(1983)37CTR(All)217; [1983]141ITR706(All)
ActsIncome Tax Act, 1961 - Sections 68
AppellantCommissioner of Income-tax
RespondentJaiswal Motor Finance
Excerpt:
- - the order was maintained by the aac as well. it appear to be well settled that if there are cash credit entries in the books of the firm in which the accounts of the individual partners exist and it is found as a fact that cash was received by the firm from its partners then in the absence of any material to indicate that they were profits of the firm, ie could not be assessed in the hands of the firm......of assessment of the firm, the ito found certain deposits in the accounts of the partners in the books of the assessee. the explanation of the assessee that the source of these deposits was agricultural income of the partners was rejected except in respect of one of the partners. the order was maintained by the aac as well. the tribunal, however, found that these deposits had been made by the partners as their capital, because without these investments they could not have become partners. consequently, according to the tribunal, the assessee had discharged the burden of explaining the deposits in its account books. it was further not required to explain the source of these deposits in the hands of the depositors. 3. having heard the learned counsel for the parties, we do not think that.....
Judgment:

R.M. Sahat, J.

1. The following question of law has been referred for the opinion of this court:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the onus placed on the assessee by Section 68 of the Income-tax Act had been duly discharged '

2. In 1971-72, the very first year of assessment of the firm, the ITO found certain deposits in the accounts of the partners in the books of the assessee. The explanation of the assessee that the source of these deposits was agricultural income of the partners was rejected except in respect of one of the partners. The order was maintained by the AAC as well. The Tribunal, however, found that these deposits had been made by the partners as their capital, because without these investments they could not have become partners. Consequently, according to the Tribunal, the assessee had discharged the burden of explaining the deposits in its account books. It was further not required to explain the source of these deposits in the hands of the depositors.

3. Having heard the learned counsel for the parties, we do not think that the Tribunal in construing Section 68 and holding that the assessee discharger its burden misdirected itself or committed any error of law. It appear to be well settled that if there are cash credit entries in the books of the firm in which the accounts of the individual partners exist and it is found as a fact that cash was received by the firm from its partners then in the absence of any material to indicate that they were profits of the firm, ie could not be assessed in the hands of the firm. We are, therefore, of the opinion that the Tribunal did not commit any error of law and rightly held that the deposits shown in its accounts were satisfactorily explained.

4. In the result, the question referred to us is answered in the affirmative in favour of the assessee and against the Department. The assessee shall be entitled to its costs which are assessed at Rs. 250.


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