COMMISSIONER OF INCOME TAX Vs. METACHEM INDUSTRIES

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961 (for short, "the Act"), at the instance of the Revenue and the following question of law has been referred for answer by this court :

(2.) THE brief facts necessary for disposal Of this reference are that the asses-see is a partnership firm. During the accounting year relevant to the assessment year under consideration, it was found that there was a credit of Rs. 11,000 in the account of Shri S. K. Gupta, Certain credits in the accounts of the partners were found as under : <FRM>JUDGEMENT_160_ITR245_2000Html1.htm</FRM>

(3.) ON appeal, the Commissioner of Income-tax (Appeals) examined the matter in detail and found that Shri S. K. Gupta was the real owner of the business. The explanation given by the assessee was found to be satisfactory and he deleted the aforesaid three entries. The same finding of fact has been affirmed by the Tribunal. ONce it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee-firm is over. The assessee-firm cannot ask that person who makes investment whether the money invested is properly taxed or not. The assessee is only to explain that this investment has been made by the particular individual and it is the responsibility of that individual to account for the investment made by him. If that person owns that entry, then the burden of the assessee-firm is discharged. It is open to the Assessing Officer to undertake further investigation with regard to that individual who has deposited this amount.