Addition U/s. 68 for Capital contribution to firm by partner cannot be sustained when partner has confirmed contribution.

Pr. CIT Vs. Vaishnodevi Re foils & Solvex (Gujarat High Court)

When the assessee has furnished the details with regard to the source of the capital introduced in the firm and the concerned partner had confirmed such contribution, the assessee had duly discharged the onus cast upon it. Thereafter, if the assessing officer was not convinced about the creditworthiness of the partner who had made the capital contribution, the inquiry had to be made at the end of the partner and not against the firm. The controversy involved in the present case, therefore, stands squarely covered by the decision of this court in the case of CIT v. Pankaj Dyestuff Industries in Income Tax Reference No. 241 of 1993.