Siddartha Girijashankar Vs ITO (ITAT Bangalore)
Cash Deposits in Partner’s Personal Bank Account Explained as Firm’s Business Receipts – Addition U/s 69A Deleted
The assessee, a managing partner of a petrol pump firm, had cash deposits of ₹6.18 crore in his personal bank accounts. During assessment proceedings, the AO accepted that ₹5.91 crore out of the deposits represented business transactions, as the amounts were transferred to Indian Oil Corporation Ltd. and the firm’s bank account. However, the balance ₹26.68 lakh was treated as unexplained and added u/s 69A on the ground that it was not transferred further and lacked specific documentary support.
The ITAT observed that once the major portion of deposits was accepted as business receipts, it was illogical to treat the remaining amount from the same stream as unexplained without any contrary evidence. The assessee demonstrated that the business of petrol retailing is predominantly cash-based, the firm had reported sales of ₹7.56 crore with normal GP, and the deposits were linked to the firm’s business activities.
The Tribunal further held that merely because the bank account was in the personal name of the partner, it does not automatically make the deposits unexplained. A partner may route business receipts through his account, and there is no prohibition under the Income-tax Act against such routing. Section 69A can apply only when the source of money remains unexplained, which was not the case here.
Accordingly, ITAT held that the addition was made on suspicion without disproving the assessee’s explanation, and therefore deleted the addition of ₹26,68,790 u/s 69A.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The present appeal has been instituted by the assessee against the order of the NFAC, Delhi passed u/s 250 of the Act dt. 26.09.2025 for the AY 2016-17.
