DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(2), KOLKATA, AAYKAR BHAWAN POORVA vs. PRF UDYOG, SIKKIM

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ITA 17/KOL/2026Status: DisposedITAT Kolkata24 April 2026AY 2017-184 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) deleted the addition, finding that the capital introductions were fully explained by the partner's cash book, past savings, and bank withdrawals. The Tribunal upheld the CIT(A)'s order, finding no infirmity in its well-reasoned decision.

What were the facts?

The assessee, a partnership firm, declared Nil income. The Assessing Officer (AO) added ₹3,15,49,120/- as unexplained cash credit, treating it as capital introduced by a partner. The AO believed this amount was in cash or represented expenses incurred by the partner on behalf of the firm.

What were the issues?

Whether the capital introduction by a partner, partly in cash and partly as expenses incurred, constituted an unexplained cash credit under Section 68 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D”BENCH KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “D”BENCH KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.17/Kol/2026 Assessment Year: 2017-18 DCIT, Central Circle-3(2), Kolkata..………...……...........................……….……Appellant vs. PRF Udyog………………………….…..….……………………...……...…..…..Respondent Singtam Bazar East Sikkim, Singtam Forest Block East Sikkim, Singtam S.O, Gangtok-737134. [PAN: AASFP7539B] Appearances by: Shri Siddharth Agarwal, Adv., appeared on behalf of the appellant. Shri S. B. Chakraborthy, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : April 20, 2026 Date of pronouncing the order : April 24 ,2026 ORDER Per Rajesh Kumar, Accountant Member: This is an appeal preferred by the revenue against the order of the CIT(A)-21, Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 22.09.2025 passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’) for the A.Y 2017-18.

2.

At the outset, we note that there is delay of 1 day in filing the appeal by the revenue. After hearing both sides, we find the reasons for delay to be bonafide and reasonable and accordingly the delay is condoned.

3.

The only issue raised by the revenue is against the order of ld. CIT(A) deleting the addition as made by the AO in respect of capital introduction by the Partner of ₹ 3,15,49,120/-.

ITA No.17/Kol/2026 04. Brief facts of the case are that the assessee is a partnership firm and engaged in the business of manufacturing of aluminium structure for civil construction. The assessee filed return of income for the assessment year under consideration declaring an income of Nil. The case of the assessee was selected for scrutiny under CASS and statutory notices alongwith questionnaire were issued and served upon the assessee. The assessee furnished all the information and details as called for by the Assessing Officer. The AO observed that the capital of ₹ 7,50,49,120/- and ₹ 1,00,000/- were introduced by the partners of the firm. TheA AO noted that the assessee has received ₹ 4,35,00,000/- in the bank account which was introduced by the Shri Sunil Kumar Aggarwal from his bank account. The AO noted that as per the capital account of Shri Sunil Kumar the total introductions were ₹ 7,50,49,120/-. Therefore the AOP treated the balance of ₹ 3,15,49,120/- which were in the form of cash or expenses incurred by the partners were treated as unexplained cash credit. The assessment was completed u/s 143(3) of the Act and the Assessing Officer made an addition of Rs.3,15,49,120/- u/s 68 of the Act as capital introduced by the partner alleging the transactions done in cash or expense incurred by the partners on behalf of the firm.

5.

The ld. CIT(A) allowed the appeal of the assessee by directing the AO to delete the addition as the introductions in the form of cash from his cash book and incurring expenses for which the sources were available with the partners. The ld. CIT(A) extracted the details of introductions on page 10 to 14 of the appellate order. The ld. CIT(A) recorded a categorical finding that

ITA No.17/Kol/2026 all the introductions were fully explained with the books of the partners and bank account.

6.

After hearing the rival submissions and perusing the facts as placed before us, we observe that the assessee is a partnership firm and is engaged in the business of civil construction. The Assessing Officer noted that the assessee firm has received an amount of Rs.4,35,00,000/- from Shri Sunil Kr. Agarwal in the bank account of the firm whereas the total capital introduced by Shri Sunil Kr. Agarwal was Rs.7,50,49,120/- as per the capital account. Accordingly, the assessee was called upon to submit details and sources thereof alongwith bank statement etc. According to the AO , the assessee had only explained the source of Rs.4,35,00,000/-, therefore, the balance of Rs.3,15,49,120/- remained unexplained. We also note that the Assessing Officer issued notices u/s 133(6) to Shri Sunil Kr. Agarwal on 05.12.2019 to submit the sources of income and partner’s capital accounts which were duly complied by filing all the details. We note that the ld. CIT(A) in the appellate order has given a detailed findings on this issue by noting that the assessee has made the introduction out of cash book of the partner Shri Sunil Kr. Agarwal, out of past savings and withdrawals from bank statements of Central Bank of India, State Bank of India & Union Bank of India which were furnished by the assessee during the appellate proceedings. We also note that all these details were also available before the Assessing Officer. The ld. CIT(A) held that the introduction by partners into the firm were fully explained. Thereafter, the ld. CIT(A) relied on various decisions such as PCIT vs. Jogia Jewellers 153 taxmann.com 184, Satty

ITA No.17/Kol/2026 and Associates vs. ACIT 170 taxmann.com 432, CIT vs. Odedara Construction 45 taxmann.com 65 and JMG Green Promoters and Developers Vs CIT (2024) 164 taxmann.com 1018 (Chandigarh Tri). After taking into account the facts of the assessee, the evidences furnished before us, ratio laid in the above decisions, we do not find any infirmity in the order of ld. CIT(A) which is otherwise very speaking and well reasoned order. Therefore, we are inclined to uphold the appellate order by dismissing the appeal of the revenue.

7.

In the result, the appeal of the revenue is dismissed.

Kolkata, the 24th April, 2026. Sd/- Sd/- [Pradip Kumar Choubey] [Rajesh Kumar] Judicial Member Accountant Member

Dated: 24.04.2026. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches

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