Ketan Tokershi Shah Vs DCIT (ITAT Mumbai)
Income belonging to the firm whether disclosed or undisclosed can be taxed only in the hands of the firm and not in the hands of the partner
Introduction: The recent case of Ketan Tokershi Shah vs. DCIT (ITAT Mumbai) addresses a critical issue in taxation concerning whether income belonging to a firm, whether disclosed or undisclosed, can be taxed only in the hands of the firm and not in the hands of the partner. The appeal, dated 26/07/2023, contested an addition made by the Assessing Officer to the tune of Rs. 6,16,89,505/- on account of an alleged cash credit under section 68 of the Income Tax Act for the Assessment Year 2016-17.
Factual Background:
1. Ketan Tokershi Shah, an individual, is a partner in various firms, including the partnership firm M/s Monarch and Qureshi Builders, engaged in real estate and construction.
2. The Assessing Officer noted that M/s Monarch and Qureshi Builders declared income of Rs. 12,33,67,010 under the Income Declaration Scheme, 2016 (IDS-2016) but did not pay taxes due.
3. The Assessing Officer contended that the share of profit claimed as exempt by Ketan Tokershi Shah should be taxed since the firm didn’t pay taxes on the disclosed income.
Grounds Raised by the Assessee:
1. Challenging the legality of the assessment, citing that jurisdiction lay with the ITO and not the DCIT for an income below Rs. 20 lakhs.
2. Merits: Contesting the addition of Rs. 6,16,89,505/-, claiming it as unexplained cash credit under section 68.
Arguments and Decision:
1. Additional Ground on Jurisdiction:
