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M/s. Core Jewellery Pvt. Ltd. GJ-04, SDF VII, SEEPZ, Andheri (East) Mumbai. Vs. The DCIT 8(1), Mumbai
January, 29th 2015
                                `E' : NEW DELHI
                    DELHI BENCH `E

                               GARG, JUDICIAL MEMBER

                        ITA No.
                      Assessment Year : 2009-

M/s Mahesh Enterprises         Vs.    Income Tax Officer,
(R.F.),                               Ward-1(4),
39, Naya Ganj,                        Ghaziabad.
     (Appellant)                          (Respondent)

            Appellant by       :     Shri C.S. Anand and
                                     Ms. Shinka Nagpal, Advocates.
            Respondent by      :     Shri P. Dam Kanunjna, Sr.DR.


     This appeal by the assessee is directed against the order of
learned CIT(A), Ghaziabad dated 7th August, 2012 for the AY 2009-10.

2.   Since the grounds of appeal raised by the assessee were not
clear, the assessee filed the revised grounds of appeal. Ground Nos.1
to 4 of revised grounds of appeals are all against the estimation of
business income of the assessee at `6,35,800/- by the learned CIT(A)
as against `4,47,895/- declared by the assessee.

3.   At the time of hearing before us, it is submitted by the learned
counsel that the rejection of books of account as well as the estimate
of profit by the Assessing Officer was not justified and the CIT(A) was
also not justified in rejecting the books of account and estimating the
profit, of course, on a lesser amount than the Assessing Officer.
                                   2                        ITA-5780/Del/2012

However, due to smallness of the disputed additions which remain
after the order of learned CIT(A), the assessee does not want to pursue
these grounds of appeal any further. Since the learned counsel for the
assessee has not pursued the grounds against the estimation of profit
by the CIT(A), the order of learned CIT(A) in this regard is upheld and
ground Nos.1 to 4 of the assessee's revised grounds of appeal are

4.    Ground Nos.5 to 9 of the revised grounds of appeal are against
the addition of `17,50,000/- made by the Assessing Officer for
unexplained credit.

5.    At the time of hearing before us, it is submitted by the learned
counsel that during the year under consideration, the assessee which
is a partnership firm had received the sum of `17,50,000/- from its two
partners Shri Ashish Garg and Shri Manish Garg. That Shri Ashish Garg
and Shri Manish Garg both are assessed to income tax separately and
they are carrying on the business in their individual capacity. That the
Assessing Officer as well as learned CIT(A) doubted the carrying on of
the business by the partners on the ground that the partners filed the
return in form No.3 which is not for business income. He stated that if
the partners have filed the return in a wrong form, the assessee, which
is a partnership firm, cannot be held responsible for the same.          He
stated that the partners are assessed to income tax and therefore, the
source of the money given by them to the firm can be examined in
their case. In support of this contention, he relied upon the decision of
Hon'ble Apex Court in the case of CIT, Orissa Vs. Orissa Corporation
P.Ltd. ­ [1986] 159 ITR 78.
                                    3                         ITA-5780/Del/2012

6.    Learned DR, on the other hand, relied upon the order of
authorities below.

7.    We have carefully considered the submissions of both the sides
and perused relevant material placed before us. In the case of Orissa
Corporation P.Ltd. (supra), their Lordships held as under:-

       "That in this case the respondent had given the names
      and addresses of the alleged creditors. It was in the
      knowledge of the Revenue that the said creditors were
      income-tax assessees. Their index numbers were in the
      file of the Revenue. The Revenue, apart from issuing
      notices under section 131 at the instance of the
      respondent, did not pursue the matter further.         The
      Revenue did not examine the source of income of the said
      alleged creditors to find out whether they were
      creditworthy. There was no effort made to pursue the so-
      called alleged creditors.     In those circumstances, the
      respondent could not do anything further. In the premises,
      if the Tribunal came to the conclusion that the respondent
      had discharged the burden that lay on it, then it could not
      be said that such a conclusion was unreasonable or
      perverse or based on no evidence. If the conclusion was
      based on some evidence on which a conclusion could be
      arrived at, no question of law as such arose. The High
      Court was right in refusing to state a case."

8.    The facts of the assessee's case are much better than the facts
of the case before the Hon'ble Apex Court.        In the said case, the
assessee had given the income tax number of the creditors upon
whom the notice could not be served by the Assessing Officer. Despite
these facts, it was held by the Hon'ble Apex Court that the assessee
has duly discharged the onus. In the case under appeal before us, the
creditors are the partners of the firm and are assessed to income tax in
their individual capacity. Merely because they have filed their return of
income in a wrong form or the business transaction in their hands was
in cash would be no ground for making the addition under Section 68 in
                                    4                         ITA-5780/Del/2012

the case of the assessee. Undisputedly, the partners are assessed to
income tax and therefore, the above decision of Hon'ble Apex Court in
the case of Orissa Corporation P.Ltd. would be squarely applicable so
far as the addition under Section 68 of the Act in the case of the
assessee firm is concerned.     Accordingly, we delete the addition of

9.    In the result, the appeal of the assessee is partly allowed.
      Decision pronounced in the open Court on 28th January, 2015.

                  Sd/-                                 Sd/-
     (CHANDRA MOHAN GARG)                            AGRAWAL)
                                               (G.D. AGRAWAL)
        JUDICIAL MEMBER                        VICE PRESIDENT

Dated : 28.01.2015

Copy forwarded to: -

1.    Appellant      M/s Mahesh Enterprises (R.F.),
                   : M/s
                     39, Naya Ganj, Ghaziabad.

2.    Respondent : Income Tax Officer,
                   Ward-1(4), Ghaziabad.
3.    CIT
4.    CIT(A)
5.    DR, ITAT

                              Assistant Registrar
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