ITO Vs Kanji Ambabhai Cotton Industries (ITAT Rajkot)
ITAT Rajkot held that there is no escapement of income or loss of revenue since tax paid on the basis of consolidated profit of both the partnership firm and hence reassessment proceedings are not sustainable. Accordingly, appeal of revenue is dismissed.
Facts- The case was reopened by issue of notice u/s 148 dated 30.03.2021. During the course of hearing of the case it was submitted that M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) and M/s Kanji Ambabhai & Co (PAN: AACFK2391J) are two separate firms with the same set of partners; M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) has been projected as a separate entity only to obtain textile modernization subsidy from the Ministry of Textiles as the said subsidy was not admissible to the already existing M/s Kanji Ambabhai & Co (PAN: AACFK2391J). AO observed that with two distinct PANs, M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) and M/s Kanji Ambabhai & Co (PAN: AACFK2391J) are two separate firms in the eyes of law. The Ministry of Textiles, in awarding the subsidy, recognized in M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) as the recipient. The assessment order u/s 143(3)/147 dated 30.03.2022 in the case of M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) was finally framed based on the details uploaded against the firm from the bank regarding cash deposits, cash withdrawals and time deposits made with the bank during Financial Year (FY) 2016-17. The following additions were made by AO, viz: (a) Unexplained money u/s 69A of Rs. 41,10,751/-, (b) Unexplained money u/s 69A of Rs. 4,24,66,232/-, (c) Unexplained u/s 69A of Rs. 8,45,00,000/-, (d) Interest income of Rs. 7,879/-, (e) Unexplained investment u/s 69B of Rs. 2,53,58,000/-, and (f) Unexplained money u/s 69A of Rs. 1,42,03,419/-.
