M/S RAHUL PROPERTIES ,PUNE V. I.T.O WARD-6(1), PUNE, PUNE

ITA 2659/PUN/2024

AI Insights

The case involves M/s. Rahul Properties, a partnership firm engaged in real estate and construction, which appealed against the order of the CIT(A) / NFAC, Delhi, confirming an addition of Rs.2,30,00,000 to its income under section 68 of the Income Tax Act, 1961. This addition was initially made by the Assessing Officer, who questioned the genuineness of the capital introduced by the partners, noting that it was recorded as loans in the balance sheet. The CIT(A) dismissed the appeal for want of prosecution as the assessee failed to respond to notices. The Tribunal, considering the circumstances and the arguments presented, decided to restore the matter to the Assessing Officer for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32496 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI; ADDL
• Assessee Lawyers: S B.C. MALAKAR; DHANANJAY
• Section: 142(1); 143(2); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.2659/PUN/2024 Assessment year : 2016-17 M/s. Rahul Properties S No.153/14, Last Bus Stop Main Road, Dhayari – 411041, Maharashtra Vs. ITO, Ward 6(1), Pune PAN: AATFR1282J (Appellant) (Respondent) Assessee by : S/Shri B.C. Malakar, Dhananjay Jadhav, Yuvraj Chavan Department by : Shri Arvind Desai, Addl CIT-DR Date of hearing : 20-03-2025 Date of pronouncement : 21-03-2025 O R D E R PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 29.01.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2016-17. 2. There is a delay of 259 days in filing of this appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay which is due to the fracture in the leg of the assessee. The assessee has also filed a medical certificate to this effect. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld. DR, the delay in filing of the appeal is condoned and the appeal is admitted for adjudication. 2 ITA No.2659/PUN/2024 3. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in confirming the addition of Rs.2,30,00,000/- made by the Assessing Officer u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) being the capital introduced by the partners. 4. Facts of the case in brief, are that the assessee is a partnership firm engaged in business of purchase and sale of lands (real estate), besides carrying on construction business as builder and developer. It filed its return of income on 05.08.2016 declaring Nil income. The case was selected for scrutiny under CASS to verify whether the share capital is genuine and from disclosed sources. Accordingly, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the assessee filed certain details. After considering the various submissions filed by the assessee, the Assessing Officer noted that the partners have introduced capital of Rs.2,30,05,000/-, the details of which are as under: Sr. No. Name of the Partner Amount of Capital introduced 1 Manjula Satma Gudala Rs.83,00,000/- 2 Rahul Pokale Rs.5,000/- 3 Ramesh T Gudala Rs.65,00,000/- 4 Satam Vekati Gudala Rs.82,00,000/- TOTAL CAPITAL INTRODUCED BY THE PARTNERS Rs.2,30,05,000/- 5. He noted that the capital introduced has been advanced as loans as an amount of Rs.2,30,00,000/- has been shown as ‘Loans and Advances’ under the 3 ITA No.2659/PUN/2024 head ‘Assets’ side in the balance sheet. Rejecting the various explanations given by the assessee and observing that the assessee firm failed to substantiate the above amount received from the partners in terms of section 68, the Assessing Officer made the addition of Rs.2,30,00,000/- u/s 68 of the Act. 6. Since the assessee did not respond to the notices issued by the Ld. CIT(A) / NFAC, the Ld. CIT(A) / NFAC dismissed the appeal for want of prosecution. 7. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal. 8. The Ld. Counsel for the assessee relying on various decisions submitted that the capital introduced by the partners of the assessee cannot be added in the hands of the assessee firm and addition, if any can only be made in the hands of the partners. He submitted that the Assessing Officer in the instant case invoking the provisions of section 68 of the Act has made the addition of Rs.2,30,00,000/- on flimsy ground i.e. the absence of the partnership deed and capacity of partners to give such amount. He submitted that the Ld. CIT(A) / NFAC without giving adequate opportunity has dismissed the appeal filed by the assessee. He submitted that the assessee has filed all the requisite details substantiating the creditworthiness of the partners. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC should be deleted. In his alternate contention, he submitted that the matter may be restored to 4 ITA No.2659/PUN/2024 the file of the Assessing Officer for verification of all these details and decide the issue as per fact and law. 9. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that despite number of opportunities granted by the Ld. CIT(A) / NFAC, the assessee did not make any submission for which the Ld. CIT(A) / NFAC has passed the ex-parte order dismissing the appeal of the assessee for want of prosecution. Further, the assessee failed to substantiate the creditworthiness of the partners before the Assessing Officer. Under these circumstances, the appeal filed by the assessee should be dismissed. 10. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that due to non-substantiation of the creditworthiness of the partners for introduction of the capital to the extent of Rs.2,30,00,000/-, the Assessing Officer, invoking the provisions of section 68 of the Act, made the addition. While doing so, he further noted that the assessee failed to submit the partnership deed. We find the Ld. CIT(A) / NFAC dismissed the appeal filed by the assessee for want of prosecution. It is the submission of the Ld. Counsel for the assessee that the capital introduced by the partners cannot be added in the hands of the firm u/s 68 of the Act and addition, if any can only be 5 ITA No.2659/PUN/2024 made in the hands of the partners. It is also his submission that sufficient opportunity was not granted by the Ld. CIT(A) / NFAC, who dismissed the appeal for want of prosecution. It is also his submission that in the interest of justice, the assessee should be given an opportunity to substantiate its case by filing the requisite details before the Assessing Officer. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make its submissions, if any, before the Assessing Officer on the appointed date without seeking any adjournment under any pretext, failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 11. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 21st March, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 21st March, 2025 GCVSR 6 ITA No.2659/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 20.03.2025 Sr. PS/PS 2 Draft placed before author 21.03.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "