Bank’s Failure to Update PAN Cannot Justify Section 69A Addition: ITAT Agra

Vinod Kumar Agarwal Vs ITO (ITAT Agra)

Old PAN in Bank Account Cannot Make New Firm’s Cash the Partner’s Personal Money: ITAT Deletes ₹30 Lakh Demonetisation Addition u/s 69A

Summary: The Agra Bench of the Income Tax Appellate Tribunal has held that cash deposited in the bank account of a partnership firm could not be assessed as unexplained money in the individual partner’s hands merely because the bank had failed to replace the PAN of the erstwhile proprietor with the PAN of the newly constituted firm.

Since the audited accounts, partnership deed, income-tax return and bank particulars established that the proprietorship concern had been converted into a partnership firm with effect from 01.04.2016 and that the cash belonged to the firm, the addition of ₹30 lakh u/s 69A r.w.s. 115BBE in the individual’s hands was deleted.

₹30 Lakh Deposited During Demonetisation

The assessee, Vinod Kumar Agarwal, had carried on business under the name M/s ESS ESS Brassware as a proprietary concern up to 31.03.2016. With effect from 01.04.2016, the proprietary concern was converted into a partnership firm comprising the assessee and Mrs. Kamlesh Agarwal as partners.

The case was selected for limited scrutiny to verify a cash deposit of ₹30 lakh made on 17.11.2016, during the demonetisation period, in Current Account No. 2375201001129 maintained with Canara Bank.