MANDER JAIN,NEW DELHI vs. INCOME TAX OFFICER, NEW DELHI

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ITA 7124/DEL/2025Status: DisposedITAT Delhi22 May 2026AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that while the partnership firm was likely dissolved, the nexus between the dissolution amount and the bank deposit needed further verification. The issue was restored to the AO for de novo examination.

What were the facts?

The assessee deposited Rs. 33,83,000/- in their bank account during demonetization, which was treated as unexplained cash by the AO. The assessee claimed this amount was received from the dissolution of a partnership firm.

What were the issues?

Whether the cash deposits in the assessee's bank account during demonetization were adequately explained as amounts received from the dissolution of a partnership firm.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI

Hearing: 24/02/2026Pronounced: 24/02/2026

आयकर अपीलीय अधिकरण धिल्ली पीठ “सी”, धिल्ली श्री धिकास अिस्थी, न्याधयक सिस्य एिं श्री ब्रजेश कुमार स िंह, लेखाकार सिस्य के समक्ष IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER आअसं.7124/धिल्ली/2025(धि.ि. 2017-18) ITA No.7124/DEL/2025 (A.Y.2017-18) Mander Jain, C-12, Radhey Colony, Block-C, Krishna Nagar, Delhi 110051 ...... अपीलार्थी/Appellant PAN: AIOPJ-9177-D बिाम Vs. Income Tax Officer, Ward-59(5), .....प्रधििािी/Respondent Vikas Bhawan, IP Estate, Delhi 110002 अपीलार्थी द्वारा/ Appellant by: Shri Kailash Khemani, Chartered Accountant प्रधििािीद्वारा/Respondent by: Shri Dayainder Singh Sidhu, CIT-DR सुििाई की धिधर्थ/ Date of hearing : 24/02/2026 घोषणा की धिधर्थ/ Date of pronouncement : 24/02/2026 आिेश/ORDER PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 12.09.2025, for AY 2017-18.

2.

The assessee in appeal has assailed addition of Rs.33,83,000/- made by the Assessing Officer (AO) u/s 69A r.w.s. 115BBE of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on account of alleged unexplained cash deposits during demonetization and confirmed by the CIT(A).

3.

Shri Kailash Khemani, appearing on behalf of the assessee narrating facts of the case submitted that the assessee had entered into partnership with Shri

2 ITA No.7124/DEL/2025 (A.Y.2017-18) Rajveer Singh on 14th July, 1999 to run a petrol pump under the name and style of M/s. Adarsh Service Station at Ghaziabad. A copy of partnership deed is at pages 27 to 31 of the paper book. As per the partnership deed, the assessee was having 51% share in the partnership firm and the remaining 49% share was held by Shri Rajveer Singh. The said partnership firm was dissolved by both the partners with mutual consent vide dissolution deed dated 26.08.2016 (at pages 38 to 40 of the paper book). Prior to execution of deed of dissolution, both the partners had entered into an agreement to dissolve the partnership firm on 26.08.2016, a copy of the said agreement is at pages 35 to 37 of the paper book. As per balance sheet of the firm drawn on 26.08.2016, the capital account of the assessee showed balance of Rs.38,99,513.62/-. The firm paid Rs.37,26,823.65/- in cash to the assessee to settle the account. Thereafter, partnership firm under the name and style of M/s. Adarsh Service Station was dissolved and its business was entirely taken over by Shri Rajveer Singh as sole proprietor of the firm. The ld. AR further referred to the letter from Indian Oil Corporation allowing reconstitution of dealership of M/s. Adarsh Service Station indicating Shri Rajveer Singh as 100% owner of the firm. The said letter is at page 41 of the paper book. The ld. AR submitted that the amount deposited by the assessee in his bank account Rs.33,83,000/- during the period of demonetization was the amount received from Shri Rajveer Singh on dissolution of the partnership firm. The ld. AR submits that the facts were explained before the AO. However, the AO failed to appreciate the documentary evidences filed by the assessee in the right perspective and made addition of cash deposited in the bank account of the assessee by rejecting assessee’s contentions.

3 ITA No.7124/DEL/2025 (A.Y.2017-18) The assessee carried the issue in appeal before the CIT(A), but remained unsuccessful. The ld. AR submits that the assessee had furnished relevant documents before the authorities below to substantiate that the partnership firm between the assessee and Shri Rajveer Singh stood dissolved and the amount received by the assessee on dissolution of partnership firm was deposited by the assessee in his bank account, which is now sought to be taxed as unexplained money credited in the bank account u/s 69A of the Act.

4.

Per contra, Shri Dayainder Singh Sidhu representing the Department vehemently defending the impugned order submits that during assessment proceedings, the assessee was asked to furnish bank statement of M/s. Adarsh Service Station indicating withdrawal of amount of Rs.38,99,513/-, copy of balance sheet, capital account, trading and profit & loss account of the firm, confirmation from M/s. Adarsh Service Station, PAN and income-tax particulars of Shri Rajveer Singh for further verification. The assessee failed to furnish relevant documents before the AO. Therefore, in absence of any documentary evidence to support the assessee’s contentions, the AO made the addition. Thus, the ld. DR prayed for dismissing appeal of the assessee.

5.

Both sides heard, orders of the authorities below examined. Various documents referred to by the ld. AR of assessee during the course of submissions have been considered. A perusal of the assessment order reveals that the partnership deed and copies of dissolution deed and agreement were furnished by the assessee before the AO. The AO rejected the same pointing out certain defects in execution of the said documents. However, considering the entire factual matrix and also the fact that letter was issued by IOCL accepting M/s. Adarsh Service

4 ITA No.7124/DEL/2025 (A.Y.2017-18) Station as sole proprietorship concern of Shri Rajveer Singh, it can be inferred that the partnership firm between Shri Rajveer Singh and the assessee was dissolved. The infirmities pointed by AO in execution of Deed of Dissolution of partnership are not fatal for adjudication of the issue in hand. What is required to be established is the nexus between the amount received by the assessee on dissolution of partnership firm and the amount deposited in the bank account of the assessee. Considering entire facts of the case, we deem it appropriate to restore this issue to the AO for de novo examination.

6.

The assessee shall furnish confirmation from Shri Rajveer Singh regarding the amount paid to the assessee in cash and shall also furnish relevant documentary evidence to establish creditworthiness of Shri Rajveer Singh at the time of payment of said amount.

7.

The AO before deciding this issue afresh shall grant reasonable opportunity of making submissions to the assessee, in accordance with law.

8.

In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose, in the terms aforesaid. Order pronounced in the open court on Tuesday the 24th day of February, 2026. Sd/- Sd/- (BRAJESH KUMAR SINGH) (VIKAS AWASTHY) लेखाकार सिस्य/ACCOUNTANT MEMBER न्याधयक सिस्य/JUDICIAL MEMBER धिल्ली / Delhi, धििांक/Dated 22/05/2026 NV/-

5 ITA No.7124/DEL/2025 (A.Y.2017-18)

प्रतितिति अग्रेतििCopy of the Order forwarded to : अपीलार्थी/The Appellant , 1. प्रधििािी/ The Respondent. 2. 3. The PCIT धिभागीय प्रधिधिधि, आय.अपी.अधि., सिल्ली /DR, ITAT, धिल्ली 4. गार्ड फाइल/Guard file. 5.

BY ORDER,

//True Copy//

(Asstt. Registrar) ITAT, DELHI

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