TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 301
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...."the Act"], for the Assessment Year (A.Y.) 2017-18, whereby the CIT(A) confirmed the addition of Rs. 13,03,738/- made by the Assessing Officer [hereinafter referred to as "AO"] under section 69A of the Act vide his order dated 27.12.2019 passed under section 143(3) r.w.s. 147 of the Act. Facts of the Case 2. The assessee is a partnership firm, which was engaged in the business of sales and service of Kinetic brand scooters. It was a regular assessee filing its returns up to A.Y. 2013-14. For A.Y. 2013-14, the assessee filed return of income on 28.03.2014 declaring a loss of Rs. 39,49,349/- and the same was accepted. The firm subsequently closed its business operations w.e.f. 01.04.2014 due to disputes among the partners. Consequently, no....
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....of income, and unaudited accounts for A.Ys. 2014-15 to 2016-17 to demonstrate that no business activity had taken place and that the firm had no taxable income during those years. 6. The AO, however, rejected the explanation on the ground that such a large cash balance could not be held unutilized for more than two years. The AO was of the view that the explanation was improbable and inconsistent with human conduct. Consequently, he treated the entire deposit of Rs. 13,03,738/- as unexplained money under section 69A of the Act and taxed the same under section 115BBE. Penalty proceedings under section 271AAC were also initiated separately. 7. The assessee preferred appeal before the CIT(A), and reiterated the submissions made before the AO....
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....erred in law and or on facts in upholding the addition of Rs. 13,03,738/- as unexplained income u/s 69A made by A.O. 2.3 That in the facts and circumstances of the case, the ld. CIT(A), ought not to have upheld the addition of Rs. 13,03,738/- as unexplained income u/s 69A made by A.O. It is therefore prayed that the additions of Rs.13,03,738/- upheld by the CIT(A) may kindly be deleted." 9. The Authorised Representative (AR) of the assessee reiterated the factual background and submitted that the source of cash was fully explained, based on the balance sheet and cash book. The AR submitted that due to closure of business operations w.e.f. 01.04.2014 and internal disputes among partners, the business came to a standstill. As a result....
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....-15 to A.Y. 2016-17, coupled with the lack of books or records, it was reasonable to presume that the cash deposit was not explained, thereby justifying the addition made under section 69A of the Act. 11. We have carefully considered the rival submissions and perused the material available on record. The sole issue involved in the present appeal is whether the cash deposit of Rs. 13,03,738/- made during the demonetization period (09.11.2016 to 30.12.2016) in the bank account of the assessee-firm can be considered as explained or remains unexplained within the meaning of section 69A of the Act. The assessee is a partnership firm which had carried on the business of sale and service of scooters and had filed return of income for A.Y. 2013-14....
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.... verifiable documentary evidence. 14. On the other hand, we find that the AO has also not made any effort to verify this claim by recording the statement of any of the partners or by calling for further clarification during assessment proceedings. Thus, the matter appears to have been concluded on presumptive assumptions on both sides without full inquiry into the factual matrix. 15. It is also noticed that the CIT(A) has primarily rejected the assessee's explanation based on non-filing of returns for A.Ys. 2014-15 to 2016-17 and the claim of cash retention being improbable. While non-filing of returns alone cannot render the earlier year's cash balance as unexplained, it is equally true that reliance on unsigned and unaudited balance she....