DCIT, Kanpur V. M/s. Lal Mohar & Others, Ist Group, Kanpur

ITA 565/LKW/2009

• Counselvise Citation: 56523714 RSA 2009
• Duration Of Justice: 4 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-07-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 06-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.565/LKW/2009 ASSESSMENT YEAR:2001 - 02 DY.C.I.T. - 1, KANPUR. VS. M/S LAL MOHAR & OTHERS, 1 ST GROUP 24/4, THE MALL, KANPUR. PAN:AAAAL1959L (APPELLANT) (RESPONDENT) ITA NO.566/LKW/2009 ASSESSMENT YEAR:2001 - 02 DY.C.I.T. - 1, KANPUR. VS. M/S RAJENDRA KUMAR & OTHERS, 1 ST GROUP 24/4, THE MALL, KANPUR. PAN:AAAAR5030N (APPELLANT) (RESPONDENT) ITA NO.567/LKW/2009 ASSESSMENT YEAR:2001 - 02 DY.C.I.T. - 1, KANPUR. VS. M/S RAJENDRA KUMAR & OTHERS, IIIRD GROUP 24/4, THE MALL, KANPUR. PAN:AAAJR0720M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI MANOJ KUMAR GUPTA, CIT, D.R. RESPONDENT BY SHRI SHYAM SUNDER GUPTA, FCA SHRI ASHISH JAISWAL, ADVOCATE DATE OF HEARING 04/07/2014 DATE OF PRONOUNCEMENT 2 1 /08/2014 2 O R D E R PER A. K. GARODIA, A.M. ALL THESE THREE APPEALS ARE FILED BY THE REVENUE, WHICH ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF LEARNED CIT(A) - I, KANPUR ALL DATED 21 / 08 /20 09 FOR THE SAME ASSESSMENT YEAR I.E. 200 1 - 0 2 IN RESPECT OF THREE DIFFERENT ASSESSEES AS NOTED ABOVE. SINCE THE FACTS AND THE ISSUE INVOLVED IS IDENTICAL IN ALL THE THREE APPEALS, ALL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIND THA T THE GROUNDS RAISED BY THE REVENUE ARE IDENTICAL IN ALL THE THREE APPEALS EXCEPT THE AMOUNT AND HENCE, WE REPRODUCE THE GROUNDS RAISED BY THE REVENUE IN THE CASE OF M/S LAL MOHAR & OTHERS, IST GROUP I.E. I.T.A. NO.565/LKW/09. THE GROUNDS ARE AS UNDER: 1 ( 1 ) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS . 92,32,000 / - MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF UNEXPLAINED CAPITA L I NTRODUCED IN THE BOOKS OF THE AOP IN THE NAME OF ITS MEMBERS, WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON THE RECORD BY THE ASSESSING OFFICER. 1(2) IN DOING SO, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN WRONGLY RELYING THE DECISION OF THE JURISDICTIONAL HIGH COURT, GIVEN IN THE CASE OF CIT VS. JAISWAL GRAIN STORES (2005) 272 ITR WITHOUT APPRECIATING THAT TH E FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THE FACTS OF THE AFORESAID DECISION IN AS MUCH AS THE ASSESSEE FAILED TO ESTABLISH THAT CASH HAD IN FACT BEEN RECEIVED FROM THE MEMBERS OF AOP AS IT HAD FAILED TO FURNISH THE DATES AND AMOUNTS OF SUCH CA SH CONTRIBUTIONS AND 3 ALSO AVOIDED TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER. 1(3) IN DOING SO , THE LD COMMISSIONER OF INCOME TAX (APPEALS) - I , KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE AOP HAD FAILED TO PROVE THAT THE CASH CREDITS STANDING IN THE NAME OF MEMBERS IN THE BOOKS OF THE FIRM ACTUALLY BELONG TO THE PARTNERS AND AS SUCH THE RATIO OF DECISION OF HON'BLE HIGH COURT, ALLAHABAD IN THE CASE OF CIT VS KAPOOR BROS. REPORTED IN 118 ITR 741 AND THE DECI SION OF THE HON'BLE PATNA HIGH COURT REPORTED IN 142 ITR 133 WAS SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE. 2. IN DOING SO, THE LD COMMISSIONER OF INCOME TAX (APPEALS) - I , KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF SHREELEKHA BANERJEE V. CIT [1963] 49 ITR 112 (SC) IN WHICH IT IS HELD THAT WHEN A CASH CREDIT ENTRY APPEARS IN THE ASSESSEE'S BOOKS OF ACCOUNT IN AN ACCOUNTING YEAR, THE ASSESSEE HAS A LEGAL OBLIGATION TO EXPLAIN NATURE AND SOURCE OF SUCH CREDIT. 3. IN DOING SO, THE LD. COMMISSIONER THE OF INCOME TAX (APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN IGNORING THAT THE ASSESSEE HAD FAILED TO PROVE THE SOURCE AND GENUINENESS OF THE CAPITAL CONTRIBUTION AND THE MEMBERS OF TH E AOP WERE PETTY SHOP KEEPERS HAVING MEAGER AMOUNT OF INCOME AND WERE UNABLE TO PROVE THE SOURCE OF CASH ALLEGEDLY CONTRIBUTED BY THEM AS CAPITAL OF THE AOP. 4. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR BEING ERRONEOUS IN LA W AND ON FACTS, BE VACATED AND THE ORDER U/S 254/143(3) OF INCOME TAX ACT, 1961 DATED 28.12.2007 PASSED BY THE ASSESSING OFFICER RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 4 3. IN THE CASE OF M/S RAJENDRA KUMAR & OTHERS, IST GROUP I.E. I.T.A. NO.566/LKW/2009, THE AMOUNT IN DISPUTE IS RS.96.02 LAC S AND SIMILARLY IN THE CASE OF M/S RAJENDRA KUMAR & OTHERS, IIIRD GROUP I.E. I.T.A. NO.567/LKW/2009 , THE AMOUNT IN DISPUTE IS RS.126.96 LAC S . 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO PLACED RELIANC E ON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS KAPUR BROTHERS [1979] 118 ITR 741 (ALL) AND ALSO ON A DECISION OF HON'BLE PATNA HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS ANUPAM UDYOG [1983] 142 ITR 133 (PAT) . HE ALSO SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED TO FOLLOW THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS JAISWAL GRAIN STORES [2006] 272 ITR 136 (ALL) . 5. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO PLACED RELIANCE ON A RECENT JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF ABHYUDAYA PHARMACEUTICALS VS COMMISSIONER OF INCOME - TAX [2013] 350 ITR 358 (ALL) . HE AL SO SUBMITTED THAT IN THIS CASE , HON'BLE HIGH COURT HAS DULY CONSIDERED THE DECISION CITED BY LEARNED D.R. OF THE REVENUE HAVING BEEN RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS KAPUR BROTHERS [1979] 118 ITR 741 (ALL) . HE ALSO SUBMITTED THAT IN T HIS CASE , HON'BLE ALLAHABAD HIGH COURT HAS GIVEN A FINDING IN PARA 13 THAT THE JUDGMENT OF ALLAHABAD HIGH COURT RENDERED IN THE CASE OF KAPUR BROTHERS (SUPRA) IS DISTINGUISHABLE . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT S CITED BY BOTH THE SIDES. SINCE THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS KAPUR BROTHER AS CITED BY LEARNED D.R. OF THE REVENUE HAS 5 BEEN DULY CONSIDERED BY HONBLE ALLAHABAD HIGH C OURT WHILE DECIDING THE ISSUE IN THE CASE OF ABHYUDAYA PHARMACEUTICALS (SUPRA), WE FEEL IT PROPER THAT FIRST WE DISCUSS THE APPLICABILITY OF LATEST JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF ABHYUDAYA PHARMACEUTICALS (SUPRA). IN THAT CASE , THE PARTNERSHIP FIRM WAS CONSTITUTED ON 05/07/90 AND THE PARTNERS INTRODUCED CAPITAL ON 07/07/90. THIS CREDIT IN THE BOOK OF THE FIRM BEING CAPITAL OF THE PARTNERS WERE ADDED BY THE ASSESSING OFFICER IN THE INCOME OF THE ASSESSEE FIRM AFTER REJECTING THE EXPLANATION FURNISHED BY THE PARTNER IN RESPECT OF THE SAID AMOUNT. UNDER THESE FACTS, THIS ISSUE WAS DECIDED BY HON'BLE ALLAHABAD HIGH COURT IN FAVOUR OF THE ASSESSEE ON THE BASIS THAT THE FIRM COULD NOT HAVE ANY INCOME AT THE TIME OF ITS FORMATION. TH E RELEVANT PARAS OF THIS JUDGMENT ARE PARA NO. 12 TO 20 WHICH AS REPRODUCED HEREUNDER FOR THE SAKE OF READY REFERENCE: 12. CIT V. JAISWAL MOTOR FINANCE [1983] 141 ITR 706 (ALL) IS A DIVISION BENCH AUTHORITY OF THIS COURT WHEREIN IT HAS BEEN LAID DOWN TH AT IF THERE ARE CASH CREDIT ENTRIES IN THE BOOKS OF THE ASSESSEE - FIRM IN WHICH ACCOUNTS OF AN INDIVIDUAL PARTNER EXISTS, AND IT IS FOUND AS A FACT THAT THE CASH WAS RECEIVED BY THE FIRM FROM ITS PARTNERS THEN IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THEY WERE PROFITS OF THE FIRM, IT COULD NOT BE ASSESSED IN THE HANDS OF THE FIRM. THE LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT THE AFORESAID DECISION APPLIES WITH FULL FORCE TO THE FACTS OF THE CASE ON HAND. NOTICEABLY, THIS WAS ALSO A CASE W HERE IT WAS THE FIRST YEAR OF ASSESSMENT OF THE FIRM. THE OBSERVATIONS MADE THEREIN IF READ IN THE CONTEXT OF THE FACTS OF THE PRESENT CASE, THE SUBMISSION OF THE APPELLANT'S COUNSEL IS WELL FOUNDED. THE RELEV ANT EXTRACT IS REPRODUCED BELOW : 'IT APPEARS TO BE WELL SETTLED THAT IF THERE ARE CASH CREDIT ENTRIES IN THE BOOKS OF THE FIRM IN WHICH THE ACCOUNTS OF THE INDIVIDUAL PARTNERS EXIST AND, IT IS FOUND AS A FACT THAT CASH WAS RECEIVED BY THE FIRM FROM ITS PARTNERS THEN IN THE ABSENCE OF A NY MATERIAL TO INDICATE THAT THEY WERE PROFITS OF THE FIRM, IT COULD NOT 6 BE ASSESSED IN THE HANDS OF THE FIRM. WE ARE, THEREFORE, OF THE OPINION THAT THE TRIBUNAL DID NOT COMMIT ANY ERROR OF LAW AND RIGHTLY HELD THAT THE DEPOSITS SHOWN IN ITS ACCOUNTS W ERE SATISFACTORILY EXPLAINED.' 13. AT THIS STAGE, THE LEARNED STANDING COUNSEL FOR THE DEPARTMENT PLACES RELIANCE UPON ANOTHER DIVISION BENCH DECISION OF THIS COURT IN THE CASE OF KAPUR BROTHERS [1979] 118 ITR 741 (ALL). IT IS APT TO EXAMINE THE FACTS O F THE CASE OF KAPUR BROTHERS (SUPRA). THE ASSESSING OFFICER FOUND A DEPOSIT OF CERTAIN AMOUNT WHILE MAKING ASSESSMENT OF M/S. KAPOOR BROTHERS. THE AMOUNT WAS DEPOSITED IN THE NAME OF ITS PARTNERS. THE DEPOSITS WERE ENTERED AS ON OCTOBER 20, 1966. THE A CCOUNTING PERIOD FOR THE ASSESSMENT YEAR 1967 - 68 ENDED ON NOVEMBER 11, 1968. THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND SATISFACTORY. IN THIS FACTUAL BACKGROUND, IT WAS NOTICED THAT THE ENTRIES WERE MADE ABOUT THREE WEEKS PRIOR TO THE END OF THE ACCOUNTING PERIOD. IN THIS FACTUAL BACKGROUND THE HIGH COURT HELD THAT CASH CREDIT ENTRIES STANDING IN THE NAME OF THE PARTNERS IN THE ACCOUNT BOOKS OF THE FIRM WOULD VALIDLY BE TREATED AS INCOME OF THE FIRM FROM UNDISCLOSED SOURCE. 14. ON A FIRST FLASH, IT APPEARS THAT THE RATIO OF THE AFORESAID DECISIONS GIVEN IN THE CASE OF KAPUR BROTHERS [1979] 118 ITR 741 (ALL) AND JAISWAL MOTOR FINANCE [1983] 141 ITR 706 (ALL) IS CONFLICTING, BUT ON A MEANINGFUL READING THEREOF, WOULD SHOW THAT THEY WERE RENDERED IN DIFFERENT FACTUAL MATRIX. THE RATIO LAID DOWN IN THE CASE OF KAPUR BROTHERS [1979] 118 ITR 741 (ALL) WILL BE APPLICABLE IN A CASE WHERE A PARTNER BRINGS CAP ITAL AMOUNT AT THE FORMATION OF THE FIRM ITSELF, BEFORE THE COMMENCEMENT OF BUSINESS BY THE FIRM. IT WOULD NOT BE APPLICABLE IN A CASE WHERE THE DEPOSIT IS REFLECTED IN THE ACCOUNT BOOKS OF THE FIRM DURING THE CURRENCY OF THE BUSINESS OF THE FIRM. THE UNDERLYING IDEA IN THE CASE OF KAPUR BROTHERS [1979] 118 ITR 741 (ALL) IS THAT WHEN THE ASSESSEE - FIRM HAS NO BUSINESS, IT CANNOT POSSIBLY HAVE ANY INCOME. THEREFORE, IN SUCH A CASE THE QUESTION OF PRESUMPTION OF INCOME OF THE ASSESSEE - FIRM WOULD NOT ARI SE GENERALLY. BUT IT IS NOT APPROPRIATE WHEN THE ASSESSEE - FIRM IS EARNING INCOME FROM ITS BUSINESS AND IN THAT SITUATION THE ASSESSEE - FIRM HAS TO EXPLAIN THE CASH CREDIT STANDING IN ITS 7 ACCOUNT. IF THE ABOVE LINE OF DISTINCTION IS KEPT IN MIND, WE FIND T HAT BOTH THE DECISIONS ARE STANDING ON A DIFFERENT FACTUAL BACKGROUND. 15. IT IS INTERESTING TO NOTE THAT THE AFORESAID TWO DECISIONS ONE GIVEN IN THE CASE OF JAISWAL MOTOR FINANCE [1983] 141 ITR 706 (ALL) AND ANOTHER IN THE CASE OF KAPUR BROTHERS [197 9] 118 ITR 741 (ALL) WERE AGAIN CAME UP FOR CONSIDERATION BEFORE A DIVISION BENCH OF THIS COURT IN THE CASE OF INDIA RICE MILLS V. CIT [1996] 218 ITR 508 (ALL). THE RELEVANT EXTRACT IS REPRODUCED BELOW (PAGE 510 OF 218 ITR) : 'HOWEVER, THE TRIBUNAL REL YING ON CIT V. KAPUR BROTHERS [1979] 118 ITR 741 (ALL), HELD THAT SINCE THE AMOUNT WAS CREDITED IN THE BOOKS OF THE ASSESSEE - FIRM, IT IS FOR THE ASSESSEE TO EXPLAIN THE SOURCE OF THE DEPOSITS AND AS THE ASSESSEE - FIRM FAILED TO DISCHARGE THAT ONUS, THE DEPOSITS WERE RIGHTLY TAKEN TO BE THE INCOME OF THE ASSESSEE - FIRM FROM UNDISCLOSED SOURCES BY THE ASSESSING AUTHORITY . ** ** ** RELIANCE ON KAPUR BROTHERS' CASE [1979] 118 ITR 741 (ALL) IS MISPLACED, INASMUCH AS IN THAT CASE DEPOSITS WERE ENTE RED IN THE BOOKS OF THE FIRM WHEN IT WAS ALREADY CARRYING ON ITS BUSINESS. THE FIRM WAS CALLED UPON TO EXPLAIN THE SOURCE OF THE DEPOSITS. THE EXPLANATION OF THE FIRM WAS THAT THE DEPOSITS REPRESENTED THE SALE PROCEEDS OF CERTAIN ASSETS BELONGING TO TH E PARTNERS. WHEN NO EVIDENCE WAS ADDUCED TO SUBSTANTIATE THAT EXPLANATION, THE ASSESSING AUTHORITY ADDED THE AMOUNT AS INCOME OF THE PARTNERSHIP FIRM. THESE FACTS ARE MATERIALLY DIFFERENT FROM THE FACT OF THE INSTANT CASE. MOST STRIKING FEATURE OF THE CASE ON HAND IS THAT ALL THE DEPOSITS CAME TO BE MADE DURING THE ACCOUNTING YEAR IN THE BOOKS OF THE ASSESSEE - FIRM BEFORE IT STARTED ITS BUSINESS. THEREFORE, THE ONUS WAS ON THE PARTNERS TO EXPLAIN THE SOURCE IN THE CASE ON HAND AND IF THEY FAILED, THE AMOUNT COULD HAVE BEEN ADDED IN THEIR HANDS ONLY AND NOT IN THE HANDS OF THE ASSESSEE FIRM .' 8 16. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE CONSIDERED OPINION THAT THE AUTHORITIES BELOW HAVE COMMITTED ERROR AS THEY HAVE FAILED TO TAKE INTO ACCOUNT THAT THIS WAS THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE - FIRM. THE PARTNERSHIP FIRM WAS FORMED ON JULY 5, 1990, AND ON JULY 7, 1990, MASTER SHISHIR GARG DEPOSITED RS. 1,90,000 AND RS. 72,000 AS CAPITAL MONEY WITH THE FIRM THROUGH BANK CL EARANCE OF TWO BANK DRAFTS. THE ACCOUNTING PERIOD BEING FINANCIAL YEAR, I.E., ENDING ON MARCH 31, 1991, THE FIRM COULD NOT HAVE ANY INCOME AT THE TIME OF ITS FORMATION. THE IDENTITY OF THE DEPOSITOR, I.E., MASTER SHISHIR GARG WAS NOT IN ISSUE AT ANY POI NT OF TIME BEFORE THE INCOME - TAX AUTHORITIES. THEY TREATED THE SAID DEPOSIT BY MASTER SHISHIR GARG. THIS BEING SO, IF FOR ONE REASON OR THE OTHER, THEY WERE NOT SATISFIED WITH THE FINANCIAL CAPABILITY OF MASTER SHISHIR GARG, THE AMOUNTS COULD HAVE BEEN ADDED AT THE HANDS OF MASTER SHISHIR GARG AND NOT AT THE HANDS OF FIRM. 17. THE DECISION RELIED UPON BY THE LEARNED COUNSEL FOR THE DEPARTMENT IS CLEARLY DISTINGUISHABLE ON FACTS AS IT WAS NOT IN RESPECT OF FIRST YEAR OF THE BUSINESS AND HAS NO APPLIC ATION WHATSOEVER. THE ARGUMENT PUT BY HIM THAT THE INCOME WAS LIABLE TO BE ADDED IN THE HANDS OF FIRM AS MASTER SHISHIR GARG BEING MINOR COULD NOT BE PROSECUTED, HAS NO SUBSTANCE. 18. IT MAY BE NOTED THAT THE DECISION GIVEN IN THE CASE OF JAISWAL MOTOR (SUPRA) IS BEING CONSTANTLY FOLLOWED BY THIS COURT IN THE SUBSEQUENT DECISIONS. REFERENCE CAN BE MADE TO SURENDRA MAHAN SETH V. CIT [1996] 221 ITR 239 (ALL). 19. THE RAJASTHAN HIGH COURT IN CIT V. KEWAL KRISHAN AND PARTNERS [2009] 18 DTR 121 (RAJ) HAS ALSO TAKEN SIMILAR VIEW. 20. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT ON THE FACTS OF THE PRESENT CASE, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE UNEXPLAINED CASH CREDIT RECORDED IN THE ASSESSEE'S BOOKS BE ADDED IN THE HAND S OF THE ASSESSEE. WE, THEREFORE, HOLD THAT THERE WAS NO MATERIAL BEFORE THE TRIBUNAL IN HOLDING THAT RS. 1,90,000 INTRODUCED BY MASTER SHISHIR GARG AT THE TIME OF STARTING OF THE BUSINESS, AS INCOME OF THE ASSESSEE - FIRM. THE TRIBUNAL 9 ERRONEOUSLY CAME TO THE CONCLUSION THAT THE DEPOSITS REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE - FIRM. ALL THE THREE AUTHORITIES BELOW COMMITTED THE SAME MISTAKE AND IN THIS REGARD THEIR ORDERS CANNOT BE ALLOWED TO STAND. 6.1 NOW IN THE LIGHT OF THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT, WE EXAMINE THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, ALL THESE THREE ASSESSEES WERE CONSTITUTED AS PER PARTNERSHIP DEED DATED 01/04/2000 AS APPEARING ON PAGE NO. 120 IN I.T.A. NO.565/LKW/2009 , ON PAGE NO. 126 IN CAS E OF SECOND ASSESSEE I.E. M/S RAJENDRA KUMAR & OTHERS (I.T.A. NO.566/LKW/2009) AND ON PAGE NO. 123 FOR THE REMAINING THIRD CASE. WE ALSO FIND THAT IN ALL THESE CASES, THE AMOUNT IN DISPUTE WAS INTRODUCED BY THE MEMBERS OF THE AOP/PARTNERS OF THE FIRM ON THE FIRST DAY OF THE CONSTITUTION OF THE FIRM I.E. ON 01/04/2000. THIS FACT IS NOTED BY CIT(A) ON PAGE NO. 6 OF HIS ORDER IN I.T.A. NO.565/LKW/2009 WHERE HE HAS REPRODUCED THE RELEVANT PORTION OF THE ASSESSMENT ORDER. IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, AS CAN BE SEEN ON PAGE NO. 6 OF THE ORDER OF CIT(A) THAT ON PERUSAL OF THE CASH BOOK , IT IS NOTED THAT THE ASSESSEE HAS STARTED MAKING SALES ON 10/04/2000 WHEREAS THE FIRST PURCHASE IS DEBITED ON 29/04/2000 AND AS PER THE COPY OF CASH BOOK PRODUCED BY THE ASSESSEE, CASH CONTRIBUTION OF RS.92.32 LAC WAS DEPOSITED FROM THE MEMBERS ON 01/04/2000 AND CASH OF RS.50 LAC WAS DEBITED AND PAID TO GIRDHARI LAL FOR PAYMENT OF LICENSE FEE ON THAT DATE. ALTHOUGH IT IS NOTED BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER THAT THERE IS NO EVIDENCE THAT THE ENTIRE CASH OF RS.92.32 LAC WAS DEPOSITED BY THE MEMBER AS ON 01/04/2000 APART FROM THE ENTRIES MADE IN THE CASH BOOK BUT IN RESPECT OF THE AMOUNT OF RS.50 LAC S , IT IS ADMITTED POSITION THA T THE SAME WAS PAID TO SHRI GIRDHARI LAL FOR PAYMENT OF LICENSE FEES ON 01/04/2000. IT IS ALSO NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AVAILABLE ON THE SAME PAGE OF CIT(A), THAT THE ASSESSEE HAS STARTED 10 MAKING SALES ON 10/04/2000 WHEREAS TH E FIRST PURCHASE IS DEBITED ON 29/04/2000. THESE FACTS FROM THE ASSESSMENT ORDER ESTABLISH THAT THE AMOUNT IN QUESTION HAS BEEN RECEIVED BY THE ASSESSEE FIRM/AOP ON THE VERY FIRST DAY OF ITS FORMATION I.E. 01/04/2000 ALTHOUGH THE ASSESSING OFFICER DOUBTED THIS FACT BUT NO ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD BY HIM TO HOLD OTHERWISE BECAUSE THE SAME IS SUPPORTED BY ENTRIES IN THE CASH BOOK. SIMILARLY IN THE CASE OF THE SECOND ASSESSEE I.E. M/S RAJENDRA KUMAR & OTHERS, IST GROUP I.E. I.T.A. NO.566/L KW/2009 ALSO, THE SAME FACTS ARE NOTED BY CIT(A) ON PAGE NO. 6 OF HIS ORDER, WHICH IS ALSO REPRODUCTION FROM THE ASSESSMENT ORDER. IN THE CASE OF THE THIRD ASSESSEE I.E. M/S RAJENDRA KUMAR & OTHERS, IIIRD GROUP, I.E. I.T.A. NO.567/LKW/2009 ALSO, SIMILAR FACTS ARE NOTED BY THE CIT(A) ON PAGE NO. 23 OF HIS ORDER. HENCE, IT IS SEEN THAT IN ALL THE THREE CASES, THE ASSESSEE FIRM WAS CONSTITUTED ON FIRST DAY OF APRIL, 2000 AND THE CAPITAL AMOUNT IN DISPUTE WAS ALSO INTRODUCED ON THE SAME DAY I.E. 1 ST APRIL, 2 000. THEREFORE, THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF ABHYUDAYA PHARMACEUTICALS (SUPRA). IN THIS CASE, HON'BLE ALLAHABAD HIGH COURT HAS ALREADY CONSIDERED THE EARLIER JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF KAPUR BROTHERS (SUPRA) AND JAISWAL MOTOR FINANCE [1983] 141 ITR 706 (ALL) . THE JUDGMENT IN THE CASE OF KAPUR BROTHERS WAS DISTINGUISHED ON THE BASIS THAT IN THAT CASE , THE AMOUNT WAS DEPOSITED IN THE BOOKS OF THE FIRM WHEN IT WAS ALREADY CARRYING ON ITS BUSINESS BUT IN THE PRESENT CASE, WE HAVE SEEN THAT THE CAPITAL WAS INTRODUCED BY THE MEMBERS ON THE FIRST DAY OF THE FORMATION OF AOP/FIRM AS IN THE CASE OF ABHYUDAYA P HARMACEUTICALS . IT WAS HELD BY HON'BLE ALLAHABAD HIGH COURT IN THIS CASE IN PARA 16 OF THIS JUDGMENT THAT IF FOR ANY REASON , THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE FINANCIAL CAPABILITY OF THE PARTNERS, THE AMOUNTS COULD HAVE BEEN ADDED IN THE HA NDS OF THE CONCERNED PARTNER BUT NOT IN THE HANDS OF THE FIRM. 11 RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT, WE HOLD THAT IN THE PRESENT CASE ALSO , THE AMOUNT IN DISPUTE CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE AOP ALTHOUGH THE SAME COULD HAVE BEEN ADDED IN THE HANDS OF THE CONCERNED MEMBER IF SUCH MEMBER IS NOT ABLE TO ESTABLISH HIS FINANCIAL CAPABILITIES. WE HOLD ACCORDINGLY IN ALL THE THREE CASES AND WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) IN ALL THE THREE CASES. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE REVENUE STAND DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 2 1 /08/2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR