AGM Brothers Vs ITO (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT), Delhi Bench, has sent back a case involving AGM Brothers to the Assessing Officer (AO) for re-examination of an addition of Rs.43,55,357 made under Section 68 of the Income Tax Act, 1961. The addition pertained to cash deposits made in a bank account. The tribunal’s decision came after the assessee argued that the bank account in question did not belong to the firm but to a former partner who continued the business as a proprietorship.
The appellant, AGM Brothers, is a partnership firm originally established on January 1, 2012, with Anupam Gupta and Mukesh Kumar as partners, engaged in wholesale and retail trading. According to the assessee’s submission before the ITAT, the partnership firm was effectively dissolved from April 1, 2016, when partner Mukesh Kumar exited. Anupam Gupta subsequently took over the assets, liabilities, and the business operations, continuing the venture as a proprietorship concern. The assessee provided documentation, including an amendment approved by the concerned DVAT authorities on April 28, 2016, to substantiate the change in the business constitution.
The core of the dispute for the assessment year 2017-18 revolved around cash deposits totaling Rs.43,55,357 that were made in a specific bank account. The AO, during the assessment proceedings, treated these cash deposits as unexplained cash credits under Section 68 of the Act and added the amount to the income of the firm, AGM Brothers. Section 68 of the Income Tax Act allows tax authorities to treat any sum found credited in the books of an assessee for which the assessee offers no satisfactory explanation about the nature and source as income.
