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Income Tax Appellate Tribunal, ‘B’ /SMC BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE-
आदेश / O R D E R
This appeal filed by the assessee is arising out of order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi vide appeal No. ITBA/APL/S/250/2023-24 / 1056954787(1) dated 10.10.2023.
The assessment was framed by the Income Tax Officer, Ward - 1(1), Krishnagiri for the assessment year 2006-07 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act”) vide order dated 30.12.2008. The sole grievance of the assessee is confirmation of addition of Rs.15 Lacs which represent capital contribution by two partners to the assessee firm.
During assessment proceedings, the assessee was directed to prove the source of capital contribution of Rs.15 Lacs, Rs.13.50 Lacs & Rs.1.50 Lacs as contributed by its three partners viz. M. Ameer Jan, Zafreen Zehra and Mir Athar Ali.
One of the partners M. Ameer Jan submitted that the same was sourced out of gift received. The same was accepted. However, the other two partners denied having made any capital contribution. The same resulted into addition of Rs.15 Lacs in the hands of the assessee.
During appellate proceedings, the assessee submitted that addition, if any, was to be assessed in the hands of the partners. However, this argument was rejected by Ld. CIT(A) and the assessment was confirmed against which the assessee is in further appeal before me.
The Ld. AR, inter-alia, argued that the impugned capital has been introduced in AY 2005-06 and therefore, this addition could not be sustained in this year. The Ld. AR also argued that the source for the firm was capital contribution and the addition, if any, has to be made only in the hands of the partners.
Finding substance in both the pleas of Ld. AR, I direct Ld. AO to reconsider this issue in the light of arguments made before me. If the capital has been introduced in AY 2005-06, no such addition could be made in this year. Secondly, Ld. AO may also consider assessability of the same in the hands of the assessee-firm after affording opportunity of hearing to the assessee. The assessee is expected only to prove the source and not source of source in this year.
The appeal stand allowed for statistical purposes.