The Amritsar bench of the Income Tax Appellate Tribunal (ITAT) ruled that the cash deposit of the company would not be added to the personal income of the partner excluding the investigation from the hands of the company. The grievance of the taxpayer Sh. Srijal Gupta was that the Id. AO added to the deposit of the cash of the firm M/s. Real Estate with the assessee’s total income.
The taxpayer specified that the cash deposit of the firm must not be added to the total income of the taxpayer who is the partner of the firm. The independent assessment must be performed in the firm account and as per that the addition must be called, as opposed by the taxpayer.
After hearing arguments from both sides, a bench including Dr M. L. Meena (Accountant Member) and Sh. Anikesh Banerjee (Judicial Member) sees that the reopening was incurred under tax section 148 related to the acquisition of property with the payment of Rs.9,53,750.
Post to finish the assessment the ld. AO accepted the taxpayer’s investment and would not add any amount concerned to the source of the funds for buying the property. AO revealed that the taxpayer is the co-owner of M/s. Real Estate. According to ld. AO, in the account opening form of the company in the bank the PAN that was specified by the firm, was not being validated by AST Module (IT database).
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PAN of the firm was not real, ld. AO concluded, that hence complete deposit in the bank account of the company is added back according to the profit sharing ratio of the partners and added back in the hand of the partners. Natural justice is being sought by the ld. AO for the case. How amount deposited in the account of the company gets back in the hand of the partner without any assessment of the company.
