Section 68 :Firm needed not to explain source of income of partners

Firm needed not to explain source of income of partners who had made capital contribution; sec. 68 additions deleted

[2015] 57 taxmann.com 373 (Andhra Pradesh and Telangana)

HIGH COURT OF ANDHRA PRADESH AND TELANGANA

Commissioner of Income-tax

v.

M. Venkateswara Rao

Section 68, of the Income-tax Act, 1961 - Cash credit (Firm, in case of) - Assessment year 1993-94 - Whether contribution made by partners to capital of assessee-firm would constitute very substratum for business of firm and it is difficult to treat pooling of such capital, as credit; It is only when entries are made during course of business that can be subjected to scrutiny under section 68- Held, yes - Whether partnership firm is not required to explain source of income for partners regarding amount contributed by them towards capital of firm - Held, yes [Paras 8 & 10] [In favour of assessee]