MR. P RAGHUNATHAN,SALEM vs. DCIT CIRCLE III SALEM (PRESENTLY ACIT CENTRAL CIRCLE 1), SALEM

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ITA 1771/CHNY/2018Status: DisposedITAT Chennai07 February 2020AY 2011-124 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the matter needed re-examination by the Assessing Officer, especially since the assessee claimed to be a partner and this was accepted for a subsequent assessment year. The issue was remitted back for fresh consideration.

What were the facts?

The assessee, a partner in a firm, had sale proceeds of the firm deposited in his individual bank account. The Assessing Officer treated these deposits as unaccounted income under Section 68.

What were the issues?

Whether deposits in an individual partner's account, representing firm's sale proceeds, can be treated as unaccounted income under Section 68 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

For Respondent: Shri. J. Pavitran Kumar, IRS, JCIT

आदेश / O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER

1.

This appeal of the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), Salem dated 12.03.2018 and pertains to the assessment year 2011-12.

2.

Shri. T.S. Lakshmi Venkatraman, the ld. Representative for the assessee submitted that assessee is a partner in M/s. S. A Poultry Farm. The sale proceeds of the partnership firm was deposited in the individual account of the assessee with Indian Bank, in SB No. 711791958, Gugai Branch, Salem. Referring to Section 14 of the Indian Partnership Act, the ld. Representative submitted that any money deposited in the name of partner belongs to the partnership firm. Therefore, it cannot be treated as unaccounted deposit u/s.68 of the Income Tax Act, 1961 (in short ‘’the Act’’). On a query from the Bench, when the Assessing Officer finds that the assessee is not a partner in the partnership firm, how the deposit could be treated as that of the firm, the ld. Representative very fairly submitted that the matter may be remitted back to the file of the Assessing Officer for reconsideration and the assessee is ready and willing to prove that the assessee is also one of the partner in partnership before the Assessing Officer. The Ld. Representative further submitted that for the assessment year 2012-2013, the Assessing Officer after reopening the assessment found that the money deposited in the very same bank account belongs to the partnership firm.

3.

On the contrary, Shri. Pavitran Kumar, ld. Departmental Representative submitted that assessee is not a partner in the partnership firm and there was no transaction with the partnership firm also. The assessee engaged himself in the business of textile and he is not connected with the partnership firm. Therefore, the Assessing Officer rightly treated the entire amount as his income u/s.68 of the Act.

4.

Having heard the Ld. Representative of the assessee and ld. Departmental Representative, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer since assessee specifically claimed that he is a partner in M/s.

S.A. Poultry Farm and the Assessing Officer also accepted his contention for the assessment year 2012-2013. Accordingly, the orders of both the authorities below are set aside and the entire issue raised by the assessee is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter on the basis of the copy of the partnership deed that may be filed by the assessee, thereafter decide the issue afresh in accordance with law after giving reasonable opportunity of hearing to the assessee.

5.

In the result, the appeal filed by the assessee is allowed for statistical purpose.

4 -: Order pronounced in the open court on 7th February, 2020, at camp at Coimbatore.

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