Jugal Kishore And Sons Vs ITO (ITAT Chandigarh)
The appeal before the Income Tax Appellate Tribunal (ITAT), Chandigarh, arose from an order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, relating to Assessment Year 2015-16. The assessee challenged the addition of ₹3,85,46,094 made by the Assessing Officer (AO), contending that the partnership firm had ceased to exist after its dissolution on 30 September 2011 and, therefore, could not be subjected to assessment for the year under consideration.
The assessee explained that the partnership firm, originally constituted in July 2010 by Mohit Manchanda and Sanjeev Kumar, had been dissolved in 2011-12 and converted into a proprietorship concern operated by Mohit Manchanda under the same name. The same bank account continued to be used after completion of KYC formalities. During the relevant year, deposits amounting to ₹3,85,46,094 were made in this bank account. On the basis of these deposits and the alleged non-filing of a return of income, proceedings under Sections 148A and 148 were initiated, culminating in the addition of the entire amount to the income of the dissolved partnership firm.
Before the AO, CIT(A), and subsequently the Tribunal, the assessee furnished the dissolution deed, a bank certificate evidencing the conversion of the entity, audited financial statements of the proprietorship concern, income tax returns of the proprietor, and bank statements. It was also pointed out that summons issued under Section 131 to Mohit Manchanda had been duly complied with and that all relevant records had been produced, demonstrating that the deposits formed part of the regular business transactions of the proprietorship concern.
