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AROCHEM INDUSTRIES,VAPI vs INCOME TAX OFFICER, WARD 1, VAPI | BharatTax

AROCHEM INDUSTRIES,VAPI vs. INCOME TAX OFFICER, WARD 1, VAPI

ITA 1345/SRT/2024Status: DisposedITAT Surat25 March 2025AY 2016-17Bench: SHRI SIDDHARTHA NAUTIYAL (Judicial Member), SHRI BIJAYANANDA PRUSETH (Accountant Member)1 pages

AI SummaryAllowed

Facts

The Assessing Officer made an addition of Rs. 20,37,140/- to the assessee's income, considering it as unexplained cash deposit in a bank account. The assessee contended that the bank account belonged to Shri Anup S. Gandhi, brother of a partner, and the PAN was wrongly quoted by the bank. The Assessing Officer did not agree, finding the source of cash deposits unexplained.

Held

The Tribunal noted that the issue was covered by a previous decision of the Jurisdictional Surat Tribunal in the assessee's own case for A.Y. 2017-18 and 2015-16, where similar additions were deleted. The previous order stated that it was the bank's mistake to use the assessee's PAN for the account of Anup S. Gandhi, and thus the transactions did not belong to the assessee firm.

Key Issues

Whether the addition made by the Assessing Officer on account of cash deposits in a bank account, where the assessee claims the account does not belong to it due to a bank error in quoting the PAN, is justified.

Sections Cited

142(1), 69A, 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI SIDDHARTHA NAUTIYAL & SHRI BIJAYANANDA PRUSETH

For Appellant: Shri Rasesh Shah, C.A

For Respondent: Shri Mukesh Jain, Sr. DR

Pronounced: 25.03.2025

(Assessment Year: 2016-17) Arochem Industries, Vs. Income Tax Officer, Plot No. 154, GIDC, Vapi, Ward-1, Gujarat-396195 Vapi [PAN No.AAEFA9359E] (Appellant) .. (Respondent) Appellant by : Shri Rasesh Shah, C.A. Respondent by: Shri Mukesh Jain, Sr. DR 24.03.2025 Date of Hearing Date of Pronouncement 25.03.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:

This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 26.11.2024 passed for A.Y. 2016-17.

2.

The brief facts of the case are that during the course of assessment, the Assessing Officer noted that on the basis of information available om record, the assessee had deposited cash amounting to Rs. 20,37,140/- in his bank account maintained with Bank of Baroda bearing A/c. No. 03900100007445. In response to notice issued under Section 142(1) of the Act, the assessee submitted that on enquiring with the bank, the assessee found out that the bank account referred to by the Assessing Officer in his 142(1) notice, was a saving bank account in the name of Shri Anup S.

Arochem Industries vs. ITO Asst.Year –2016-17 - 2– Gandhi, who is the brother of the partner Shri Nilesh S. Gandhi. The assessee firm submitted that Mr. Anup Gandhi is not involved in the business of Arochem Industries. It was on account of a mistake committed by the bankers that they had quoted the PAN of the assessee i.e. Arochem Industries, instead of Mr. Anup Gandhi. Accordingly, since this account does not belong to the assessee, it was only on account of mistake committed by the bankers that the PAN of the assessee had been incorrectly quoted in such bank account, no addition is liable to be made in the hands of the assessee. However, the Assessing Officer did not agree with the reply filed by the assessee and confirmed the additions in the hands of the assessee, with the following observations:

“7. I have heard the rival arguments made by both the sides and perused the material available on record. Admittedly, the Assessing Officer during the assessment proceedings, wrongly made addition in the hands of assessee-firm, as the assessee-firm, was not in in existence, during the assessment year (AY).2017-18. The assessee was partnership firm engaged in the business of manufacturing of Chemicals. It was converted into a Private Limited Company namely Arochem Industries Private Limited, under part IX of the companies Act 2013 on date 12.03.2014. On receiving the notice u/s 148, the assessee filed a written submission before the assessing officer stating this fact and that since the firm had ceased to exist after conversion, it was not required to file its return of income for AY.2016-17 and 2017-18. During the course of assessment, the AO informed that there were cash deposits to the tune of Rs.17,82,600/- made by assessee in savings account with Bank of Baroda Account No.03900100007445, during the year under consideration. The AO had himself called for the details regarding this bank account and he found that it was a savings account in the name of Anup S Gandhi. However, the PAN mentioned in this savings account as per the records of the bank, was of the assessee-firm Arochem Industries. Now, Mr. Anup S. Gandhi is the brother of partner of the assessee- firm Mr. Nilesh S. Gandhi. But Mr. Anup was not at all involved in the business of Arochem Industries and had nothing to do with the assessee-firm. Actually Arochem Industries was banking with Bank of Baroda C P Tank Branch for the last three decades, and so since Anup was a member of Gandhi family, the bankers may have put the PAN of Arochem Industries while opening his savings bank account. It is absolutely illogical and impossible to believe that the partnership firm could have a savings bank account considering the guidelines of RBI. So it is the banker’s mistake that they used the PAN of the assessee- firm to open this savings bank account in the name of Anup S Gandhi. The transactions in this account do not belong to the assessee-firm and so cannot be considered as the transactions of the assessee firm just because the bankers recorded wrong PAN number. Based on these factual position, I delete the addition of Rs.17,82,600/-.