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Facts
A partnership firm, Sunshine Enterprise, dissolved on 06.05.2016. A partner, Abhishek Dutta, continued the business as a proprietorship under the same name and operated a bank account associated with it. Cash deposits of Rs.4,31,000/- in this account were treated as turnover of the dissolved partnership firm by the AO, despite the proprietorship having accounted for them.
Held
The Tribunal held that since the bank account belonged to the individual proprietorship and the transactions were disclosed and explained by the proprietor, the addition could not be made in the hands of the dissolved partnership firm. The AO was directed to delete the addition.
Key Issues
Whether an addition made to a dissolved partnership firm for cash deposits in a bank account, which was subsequently used and declared by the individual proprietorship continuing the business under the same name, is sustainable.
Sections Cited
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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI GEORGE MATHAN
O R D E R This is an appeal filed by the assessee against the order dated 27.02.2025 passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-2018.
Shri D.K.Sen, ld.AR appeared on behalf of the assessee and Shri Shankar Naskar, ld. Sr. DR appeared on behalf of the revenue.
It was submitted by the ld. AR that the assessee is a firm which was dissolved on 06.05.2016. It was the submission that after dissolution one of the partner namely Abhishek Dutta carried on the business under the proprietorship and holding the same under the name Sunshine Enterprise. It was the submission that one of the bank accounts being the current account maintained in Allahabad Bank bearing Account No.50165499509 was also operated by the proprietor. There were cash deposit of Rs.4,31,000/- in the said bank account. The AO treated the said amount as the turnover of the partnership firm. It was the submission that this amount has also been considered by the individual proprietorship firm and the same has also shown in the balance sheet of the proprietor. The said balance sheet and profit and loss account was shown at page 17 & 18 of the paper book which reads as follows :-
4. It was the submission that the said bank account belonged to the proprietor and the firm is no longer exist, therefore, the addition could not be made in the hands of the firm.
In reply, ld. Sr. DR submitted that it is a case of non-representation before the ld. CIT(A). It was the submission that the issues may be restored to the file of ld. AO or ld. CIT(A).
I have considered the rival submissions. A perusal of the facts in the present case shows that the said bank account belonged to the firm has been shown in the proprietorship business of the individual. The bank account having been shown and the same have also been explained before the AO. It no more can be considered as an account of the firm. As the individual proprietorship has also disclosed the said bank account and the transaction therein in its books of accounts, in my view the addition cannot be made in the hands of the firm. Therefore, the AO is directed to delete the addition as made and confirmed by the ld. CIT(A).
In the result, appeal of the assessee is allowed.