M/S VERMA ELECTRIC STORE,KANGRA vs. ITO-WARD, DHARAMSHALA, DHARAMSHALA

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH VIRTUAL HEARING BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं. / ITA No.1705/CHANDI/2025 (िनधा�रण वष� / Assessment Year: 2015-16) M/s Verma Electric Store ITO Ward बनाम/ Vs. Dharamshala Road, Kangra Dharamshala Himachal Pradesh – 176001 �ायीलेखासं./जीआइआरसं./PAN/GIR No. AACFV-1563-D (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. J.S. Bhasin (Advocate) – Ld. AR ��थ�कीओरसे/Respondent by : Smt. Kusum Bansal (CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 19-05-2026 घोषणाकीतारीख /Date of Pronouncement 02-06-2026 : आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year 2015-16 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 14-11-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 147 r.w.s. 144 r.w.s. 144B of the Act on 03-03-2023. 2. The Ld. AR advanced arguments and referred to various documents as placed in the paper book. The Ld. CIT-DR also advanced arguments and referred to report of Ld. AO dated 18-05-

2026. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 3. The assessee being resident firm did not file its return of income. Pursuant to receipt of information about cash deposit of Rs.417.25 Lacs by the assessee-firm in its State Bank of India (SBI) Account, the case was reopened and a show-cause notice u/s 148A(b) was issued to the assessee on 19-03-2022. However, the assessee remained non- compliant. Forming an opinion about escapement of income, a notice u/s 148 was issued by Ld. AO to the assessee on 31-03-2022 which was followed by notices u/s 142(1) requiring the assessee to explain the source of cash deposits. The assessee filed return of income and some documents on 31-01-2023 but did not furnish any satisfactory reply as to sources of cash deposits and accordingly, the amount of Rs.417.25 Lacs was added as unexplained income of the assessee. 4. During first appeal, the assessee stated that the partnership firm stood dissolved w.e.f. 01.04.2006. The name and business of the firm was taken over by one of the partners namely Shri Ajit Kumar Verma having PAN AARPV-9512-F who was running the business as sole proprietor w.e.f. 01-04-2006. Since that date, Shri Ajit Kumar Verma had been maintaining his sole proprietorship bank account with SBI wherein he made cash deposits on different dates out of sales proceeds of Rs.620.13 Lacs. In support of these submissions, the assessee furnished a bank certificate confirming his PAN and proprietorship status. The assessee also furnished bank statement and cash flow chart to support the source of impugned cash deposits in the

bank account. It was further stated that Shri Ajit Kumar Verma had filed his return of income along with audited accounts wherein this bank account was duly reflected in his Balance Sheet and the said bank account had already been assessed under individual PAN of Shri Ajit Kumar Verma. The Ld. AO ignored various documents as filed by the assessee and wrongly made impugned addition in the hands of assessee-firm. However, Ld. CIT(A) rejected assessee’s claim on the ground that the assessee failed to submit the sale receipts / cash book, bills / vouchers of the product sold, confirmation of customers and relevant financial statements etc. No documentary evidence was submitted to demonstrate dissolution of the firm. Therefore, the addition made by Ld. AO was confirmed. The action of Ld. AO to reopen the case was held to be valid on the ground that reasons were duly recorded to reopen the case of the assessee after prior approval of competent authority. Aggrieved, the assessee is in further appeal before us. 5. It is the submissions of Ld. AR that the assessee-firm stood dissolved on 01-04-2006 which is evidenced by dissolution deed which is placed on Page Nos.30 to 32 of the paper book. It has further been stated that a letter intimating dissolution of firm was filed by the assessee with ITO, Dharmshala on 07-06-2006, a acknowledgement of which has been placed on Page No.33 of the paper book. The Ld. AR also drew attention to Bank Certificate dated 31-01-2023 issued by SBI, Kangra confirming the fact that the bank account was held under individual PAN of Shri Ajit Kumar Verma. Pertinently, the statement of

Shri Ajit Kumar Verma was recorded by ITO, Dharamshala u/s 131 on 13-08-2019 wherein he owned up impugned cash deposits during demonetization in the same bank account from his proprietorship concern. The cash flow has also been filed to demonstrate that the cash deposits were made out of cash book of proprietorship concern The same is also accompanied by ITR-V of Shri Ajit Kumar Verma and computation of income along with audited financial statements and audit report. All these documents have been placed on paper book. A cursory perusal of the same would indicate that the said bank account apparently belongs to Shri Ajit Kumar Verma under whose PAN the said bank account has already been reflected on his tax return. All these documents duly support the case of the assessee and have material bearing on the impugned addition. Since both the lower authorities have not taken cognizance of all these documents, we deem it fit to set aside the impugned order and restore the matter back to the file of Ld. AO for de novo assessment with a direction to the assessee to plead and prove its case forthwith. The Ld. AR has assailed reopening of the case on the ground that notice u/s 148 was issued in the name of dead entity. However, the said argument is bereft of any substance since the PAN of the assessee-firm was continued in the impugned bank account and the said PAN was never surrendered by the assessee firm which is evidenced by the fact that the assessee firm has filed its return of income under firm’s name in response to notice u/s 148. Therefore, no fault could be found in initiating

reassessment proceedings against the assessee. The legal grounds as urged by Ld. AR stand dismissed. We order so. 6. The appeal stands partly allowed for statistical purposes. Order pronounced on 02nd June, 2026.

-Sd- -Sd- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 02-06-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

ASSISTANT REGISTRAR

ITAT CHANDIGARH