RAJES KUMAR, J. - (1.) THIS is an ap­peal filed by the Commissioner of Income Tax-1, Agra under Section 260-A of the Income Tax Act, 1961 relating to the assessment year 1999-2000. The following Substantial Questions of Law have been raised in this appeal:- 1. Whether on the facts and in the circum­stances of the case the Tribunal is legally correct in upholding the finding of the CIT(A)-1, Agra in deleting the addition of Rs.7,74,000/- made under section 68 on ac­count of unexplained deposits in the books of the firm, by holding that action, if any, can be taken in the hands of the partners u/S. 69 of the IT Act, 1961? 2. Whether on the facts and circumstances of the case the Tribunal is legally correct in upholding the finding of the CIT (A), Agra who held that since the AO had made esti­mation of income after rejecting the books of account u/S. 145, the addition of Rs.67,104/-made u/S. 40A(3) was not called for ?"
(2.) THE assessee is partnership firm consti­tuted to carry on the business of construction of flats and has shown nil income on the ground that no sale was made and only con­struction had been carried on. It appears that to carry on the business, the partners intro­duced the capital in the partnership firm. During the course of the assessment proceed­ings, the Assessing Authority issued the no­tice to the partnership firm to explain the capi­tal investment made by the partners. The part­nership firm filed their reply. A part from ex­plaining the source of investment, it was con­tended that the partners were Income Tax Assessees in their own right and the capital investments were made to carry on the busi­ness. It was contended that the capital intro­duced by the partners was not the income of the partnership firm in as much as no income has been earned by the partnership firm and in the case of doubt about the source of amount, necessary enquiry may be made from the part­ners. The Assessing Authority has not accepted the explanation of the assesee and made on addition of Rs.7,74,000/- towards in cash cred­its under Section 68 of the Act. However, no business income has been assessed. Being aggrieved by the assessment or­der, the assessee filed the appeal before the Commissioner Income Tax (Appeal) which has been allowed and additions have been deleted.
(3.) AGAINST the said order, the revenue filed an appeal before the Income Tax Appellate Tribunal, Agra Bench, Agra which has been dismissed by the impugned order.;