Case Law Details
Satish Kumar Contractor Vs ACIT (ITAT Delhi)
Counsel for the assessee vehemently submitted that the AO was not justified in making the addition on substantive basis in the hands of the assessee. He submitted that the assessee had filed a Supplementary Partnership Deed which clarified about the liability of the assessee firm. It was further submitted that the AO failed to appreciate the fact that there was no escapement of income hence, the re-opening of the assessment in the case of the assessee, is not justified.
The AO made addition at the hands of the assessee on substantive basis. However, it is stated that the partner of the assessee firm in his individual capacity as owned up the contractual receipts as his own business receipt. The reasons for not accepting the Supplementary Partnership Deed as stated by the AO is that this Supplementary Deed was not produced during the assessment proceedings for AY 2008-09 in the case of Shri Satish Kuamr, partner of the firm. Though, the assessment in his case was completed on 28.12.2010 on protective basis. Considering the facts available on record, I am of the considered view that the authorities below ought to have given clear finding regarding the terms of Partnership Deed and Supplementary Deed as furnished by the assessee. Even, Ld.CIT(A) failed to advert the submissions of the assessee. Therefore, the impugned order is set aside and the issue is restored to the file of AO to decide it afresh after giving adequate opportunity of hearing to the assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal filed by the assessee for the assessment year 2009- 10 is directed against the order of Ld. CIT(A), Meerut dated 27.08.2014.
2. The assessee has raised following ground of appeal:-
1. “BECAUSE, income of the assessee firm is NIL due to neither obtain any contract nor received any payments during the year in name of firm (copy of 26AS In the name of firm enclosed here with for your kind perusal where gross receipts and TDS in the name of firm is NIL) and assessment order has been passed on protective basis with consideration of the gross receipts of rupees 2,01,39,388.00 in the individual name (Xerox copy of regular assessment order of individual PAN AMCPK8313J enclosed here with for your kind perusal) and books of accounts maintain by the assessee and audited the same in the individual name (Xerox copy of audit report along with trading and profit & loss account and balance sheet of individual enclosed here with for your kind perusal) now assessing officer passed one more regular assessment order on substantive basis in the name of firm (PAN ABAFS2676P) on same gross receipts. Assessee firm filed all necessary documents and papers before assessing officer at the time of hearing of case and Hon’ble CIT (appeal) Meerut but they are not considered the said papers and documents.
2. BECAUSE, assessing officer not consider the supplementary deed where clause no. five has amended “that the contracts will be taken over in future by party no. second to twentieth parts above, either in his own name or in joint names or in the name of firm constitute as above shall be deemed and treated as if such works have been taken for and on behalf of the firm referred above” means party of the first part namely SATISH KUMAR has been detached himself from the clause number five of reconstitute deed of partnership in the supplementary deed of partnership which execute on 04.2007 now condition of clause number five of reconstitute deed not apply upon the assessee (Xerox copies of deed of partnership execute on 01.04.2003, reconstitute deed of partnership execute on 01.04.2007 and supplementary deed of partnership execute on 01.04.2007 enclosed here with for your kind perusal).
3. BECAUSE, income on gross receipts rupees 2,01,39,388.00 not escaped because said gross receipts has been declare in the individual income tax return assessee has been audited the books of accounts in the individual name of Mr. SATISH KUMAR (individual) PAN No (AMCPK8313J) and declare the income of rupees 10,25,116/- in audited trading and profit & loss account by the assessee (computation of income along with trading and profit & loss account, balance sheet and audit report of individual return and a copy of 26AS in the name of individual enclosed herewith for your kind consideration where all payments and TDS posted in the name of SATISH KUMAR).
4. BECAUSE, base of the assessing officer is 26AS of the firm where by mistake of employer/department some entry was posted in the PAN of firm instead of individual PAN 26AS of firm’s PAN (ABAFS2676P) was reflected the some entries after make a complaint to employer/department they had been deleted the entries from firm’s PAN (ABAFS2676P) and transferred the same entry to individual PAN (AMCPK8313J) and assessee informed to assessing officer at the time hearing of case of firm but assessing officer deemed after thought now deleted entries showing in the PAN of individual (AMCPK8313J) therefore showing the gross receipts in the name of firm on 26AS is NIL (copies of both 26AS enclosed here with for your kind perusal).
5. BECAUSE, assessed income on work contract of rupees 10,07,071.00 and interest income of rupees 18,045.00 on substantive basis is baseless because one income cannot be assessed in two time when payments and TDS posted on the 26AS of SATISFI KUMAR (individual) it’s the income tax department
6. BECAUSE, it is therefore, requested that your honor may pleased accredited the protective assessment order that pass in the name of SATISH KUMAR (individual) and quashed the order of firm (ABAFS2676P).”
FACTS OF THE CASE
3. Facts giving rise to the present appeal are that in this case, the assessment was re-opened u/s 147 of the Income Tax Act, 1961 [“the Act”]. A notice u/s 148 of the Act was issued on 18.02.2011 and served upon the assessee on 22.02.2011. In response to the statutory notices, Ld. Counsel for the assessee attended the proceedings. The basis of re-opening of the assessment as stated in the reasons for re-opening the assessment is stated that during the course of assessment proceedings in the case of M/s Satish Kumar Contractor for Ay 2008-09, PAN-AMCPK8313J it was noticed by the AO that he had filed return of income for AY 2008-09, declaring income of Rs.5,27,035/- on gross receipt of Rs.1,23,97,850/- from civil contract. However, it was found that as per Form 26AS, TDS was reflected in the case of Firm M/s Satish Kumar Contractor. The assessee has filed explanation stating that there was Supplementary Partnership Deed dated 01.04.2007 made by Clause 5 of the Deed was mandate. For this explanation, it was further stated that the assessee has not carried out any work for the year under consideration. Therefore, the assessee cannot be fastened the liability of taxes. This explanation of the assessee was not accepted by the AO. He therefore, computed the business income of Rs.16,1 1,151/- and further interest income of Rs.18,045/-. Thus, the AO assessed income at Rs.16,29,200/- of the assessee.
4. Aggrieved against this, the assessee preferred appeal before Ld. CIT(A) who after considering the submissions, sustained the addition and dismissed the appeal of the assessee.
5. Aggrieved against the order of Ld. CIT(A), the assessee is in appeal before this Tribunal.
6. Apropos to Grounds of appeal Nos. 1 to 6, Ld. Counsel for the assessee vehemently submitted that the AO was not justified in making the addition on substantive basis in the hands of the assessee. He submitted that the assessee had filed a Supplementary Partnership Deed which clarified about the liability of the assessee firm. It was further submitted that the AO failed to appreciate the fact that there was no escapement of income hence, the re-opening of the assessment in the case of the assessee, is not justified.
7. Sr. DR appearing on behalf of the Revenue, opposed these submissions and supported the orders of the authorities below.
8. I have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. The AO made addition at the hands of the assessee on substantive basis. However, it is stated that the partner of the assessee firm in his individual capacity as owned up the contractual receipts as his own business receipt. The reasons for not accepting the Supplementary Partnership Deed as stated by the AO is that this Supplementary Deed was not produced during the assessment proceedings for AY 2008-09 in the case of Shri Satish Kuamr, partner of the firm. Though, the assessment in his case was completed on 28.12.2010 on protective basis. Considering the facts available on record, I am of the considered view that the authorities below ought to have given clear finding regarding the terms of Partnership Deed and Supplementary Deed as furnished by the assessee. Even, Ld.CIT(A) failed to advert the submissions of the assessee. Therefore, the impugned order is set aside and the issue is restored to the file of AO to decide it afresh after giving adequate opportunity of hearing to the assessee. Thus, grounds raised by the assessee are allowed for statistical purposes.
10. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 20th September, 2022.
