SHRI. VIJAY MAHANTESH TRADING COMPANY,NAVALGUND vs. INCOME TAX OFFICER, WARD-1(2), HUBBALI

ITA 2414/BANG/2025Status: DisposedITAT Bangalore05 March 2026AY 2018-19Bench: SHRI WASEEM AHMED (Accountant Member), SHRI KESHAV DUBEY (Judicial Member)1 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided sufficient documentary evidence, including the JDA and bank statements, to explain the source of the capital. The Tribunal noted that the withdrawals followed the deposits and that the revenue had not produced contrary material. It was also held that if the source of funds introduced by a partner is not satisfactorily explained, the issue should be examined in the hands of the partner, not the firm.

What were the facts?

The assessee firm introduced capital of Rs. 33,90,000/- from a partner, Ms. Shivaleela S. Bagi. The source of this capital was claimed to be a refundable deposit received under a Joint Development Agreement (JDA). This deposit was credited to the bank account of the partner's son, Mr. Vijay Mahantesh Bagi, and subsequently withdrawn and introduced as capital in the firm.

What were the issues?

Whether the addition of capital introduced by a partner, sourced from a third-party bank account, is sustainable under Section 68 of the Income Tax Act in the hands of the firm.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

For Appellant: Shri Rajeev C Nulvi, Advocate
For Respondent: Shri Ganesh R Ghale, Advocate – Standing
Hearing: 23.02.2026Pronounced: 05.03.2026

PER WASEEM AHMED, ACCOUNTANT MEMBER:

The present appeal has been instituted by the assessee against the order of the Ld. CIT(A) passed u/s 250 of the Act dated 01.09.2025

2.

The assessee in the memorandum of appeal has raised 6 grounds, which we for the sake of brevity and convenience are not inclined to reproduce here. The grounds raised by the assessee are interconnected and pertains to the addition made by the AO under section 68 of the Act amounting to Rs. 33,90,000/- only. Since all the grounds revolve around the same issue relating to the treatment of the said amount as unexplained cash credit, they are taken

The order continues below.

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