- (1.) CHANDIGARH in ITA No. 507/Chd/2003 proposing following substantial questions of law : "Whether, the Tribunal is right in law and facts of the case, in deleting the addition treating the unexplained accretion in the capital account of the partner as his income and not of the firm, when his explanation with regard to source of funds has been held to be unsatisfactorily -
(2.) DURING the course of assessment, the AO doubted the entry regarding investment of Rs. 6,10,000 by the partner of the firm Suresh Bhandari, who claimed to have made deposit with the firm out of the amount he received as gift from NRIs. The AO rejected the claim of gift and made addition to the income on the amount claimed to have been deposited by the partner with the firm.
(3.) ON appeal, the CIT(A) accepted the genuineness of the claim. On further appeal by the Revenue, the Tribunal set aside the finding of CIT(A) with regard to validity of the gift, but in para 7 of its order, the Tribunal noticed that the partner admitted to have made investment to the firm and the said partner had been duly assessed to the tax. It was held that in such a situation, addition to the income of the firm was not called for. Learned counsel for the Revenue relies upon the judgment of Allahabad High Court in Jagmohan Ram Ram Chandra vs. CIT (2005) 193 CTR (All) 153 : (2005) 274 ITR 405 (All), wherein it was observed that if the firm fails to give explanation regarding source of deposit, the firm was liable to be taxed.;