Assam Logistics Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal Delhi allowed the appeal filed against the order of the Commissioner of Income Tax (Appeals), NFAC, concerning additions made in the hands of a dissolved partnership firm for Assessment Year 2017-18. The dispute arose after the Assessing Officer reopened the assessment under Sections 147 and 144 of the Income Tax Act on the basis that contractual receipts of ₹18.37 crore from Maruti Suzuki Ltd., along with interest income of ₹75,723, were reflected in the PAN of the erstwhile partnership firm and no return of income had been filed.
The assessee contended that the partnership firm had already been dissolved with effect from 28.04.2015 through a dissolution deed. Under the deed, three partners retired, while the surviving partner, Shri Raja Singh, continued the transportation business under the same trade name, “Assam Logistic,” as a proprietorship concern. According to the assessee, the receipts from Maruti Suzuki India Ltd. were actually received and accounted for in the books of the proprietorship concern operated by Shri Raja Singh. It was further submitted that the receipts were credited into the proprietorship firm’s HDFC Bank account and duly reflected in its financial statements.
The Assessing Officer observed that the proprietorship concern had disclosed turnover of ₹4.28 crore in its Profit and Loss Account and therefore concluded that the contractual receipts of ₹18.37 crore remained taxable in the hands of the erstwhile partnership firm. Applying a profit rate of 8%, the Assessing Officer made an addition of ₹1.47 crore and also added the interest income. On appeal, the Commissioner (Appeals) upheld the additions substantially, though the profit rate was reduced from 8% to 5.76%, resulting in confirmation of an addition of ₹1.05 crore.
