S. 69A : Unexplained money-Demonetization-AIR information-Amount deposited to bank from earlier withdrawals-Addition was deleted-Cash Deposits in Partnership Firm’s bank Account-Amount transferred to partner’s account as withdrawal from capital-Addition cannot be made in the hands of partner. [S. 2(31)(iv), 133(6)]
The assessee has deposited cash in his bank account between 09/11/2016 to 30/12/2016 (i.e. during the demonetization period). The AO treated the cash deposit during the demonetization period as unexplained money under section 69A of the Act. The AO also made addition in the hands of partner in respect of cash was deposited in bank account of “Nivara Builders and Developers” (Partnership firm). The CIT(A) affirmed the order of AO . On appeal the honorable Tribunal held that as per the banks statements, the cash which was withdrawn by the Assessee was kept at his residents and due to demonetization on 08/11/2016, the assessee deposited the old bank notes into his Matunga (West) branch amounting to Rs.20 lakh on 10/11/2016. It is evident that the amount withdrawn by the assessee was much more than the amount deposited in the very same bank account. There was no record that the cash which was withdrawn was already utilized for any other purpose. Accordingly deleted the addition. Tribunal also held that merely on the basis that equivalent amount of cash amount deposited in the bank accounts of the firm was transferred within few days to the assessee (Partner), conclusion cannot be drawn that said cash deposits was unexplained money of the assesse (Partner). The transaction of cash deposit is made in the bank account of the firm, which is undoubtedly a separately assessed entity and the firm filed its separate return of income. Addition was deleted Referred Jaspal Singh Sehgal v. ITO, [2017] 83 Taxmann.com 246 (Mum)(Trib.), Sudhirbhai Pravinkant Thaker v. ITO, [2017] 88 Taxmann.com 382 (Ahd.) (Trib.). (ITA No.1599/Mum/2021, order dt. 29/08/2022) (AY. 2017-2018)
Ajit Bapu Satam v. Dy. CIT (Mum.)(Trib.) www.itatonline.org
[Coram : Hon’ble Shri S. Rifaur Rahman, Accountant Member and
Hon’ble Shri Sandeep Singh Karhail, Judicial Member]