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of <h1>AO unjustified in treating bank transactions as unexplained cash credit without proper verification, addition deleted</h1> <h3>M/s Vasant Traders Versus Income Tax Officer, Ward-2 (1) (5), Surat</h3> M/s Vasant Traders Versus Income Tax Officer, Ward-2 (1) (5), Surat - TMI Issues Involved:1. Addition of Rs. 1,27,61,000/- on account of entire credit entries in bank.2. Deletion of penalty under section 271(1)(c) r.w.s. 274 for concealment of income.Summary:Issue 1: Addition of Rs. 1,27,61,000/- on account of entire credit entries in bank:The appeal is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which arises from the assessment order passed by the National Faceless Assessment Centre under section 144 r.w.s. 147 of the Income Tax Act, 1961. The Assessing Officer (AO) had added Rs. 1.27 crores as unexplained cash credit based on information that the assessee had made cash deposits in its bank account. The assessee contended that the partnership firm was dissolved on 01.04.2008, and the business was taken over by a sole proprietorship concern. The AO did not accept the explanation due to the absence of the original dissolution deed and treated the bank account as belonging to the partnership firm.The Tribunal found that the assessee had provided sufficient evidence, including a certificate from the bank, indicating that the PAN of the partnership firm was erroneously linked to the bank account during data migration. The Tribunal noted that the bank account was duly disclosed in the audit report of the proprietary concern and that all transactions were considered in the return of income. The Tribunal concluded that the AO was not justified in making the addition without verifying all facts and allowed the appeal on this ground.Issue 2: Deletion of penalty under section 271(1)(c) r.w.s. 274 for concealment of income:The Tribunal did not specifically address the issue of penalty under section 271(1)(c) r.w.s. 274, as the primary ground of appeal was allowed. The adjudication on the alternative submissions regarding the penalty became academic.Conclusion:The appeal of the assessee was allowed as the Tribunal found that the addition of Rs. 1.27 crores was not justified without proper verification of facts. The order was pronounced in the open court on 05/02/2024.
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