2012 (11) TMI 667 - HC - Income Tax

Whether an amount can be taxed in hands of firm as well as in the hands of the partners - held that - Appeals succeed on this point and the matter is required to be remanded to the Assessing Officer for finding out about the fact of the assessment of partners as the appellant has placed on the record only assessment order made by the Assessing Officer and whether that order attained the finality or not is not known - allowing the appeal of the revenue for taxing the amount in question in the hands of the firm is set aside and the matter is remanded to the Assessing Officer. Deletion of Addition of Rs.23,74,842/by the C.I.T. (A) - held that - Revenue was right in seeking remand in view of the fact that during the course of assessment proceeding, the assessee submitted revised return and the statement of the account audited by the Chartered Accountant and the Tribunal though observed that earlier also audited accounts were submitted and both the accounts are running altogether in contrast then in that situation, it was a fit case for remanding the matter to the Assessing Officer for recording its finding of fact with respect to the pleas of the parties.

Summary

Issues Involved:
1. Taxation of the same amount in the hands of a firm and its partners.
2. Deletion of an addition of Rs. 23,74,842 by the C.I.T. (Appeal).

Analysis:

Issue 1: Taxation of the same amount in the hands of a firm and its partners
The main contention in this appeal was whether the Revenue could tax the same amount in the hands of both the firm and its partners. The appellant argued that the income had already been assessed in the hands of the individual partners, namely Shri Jawahar Lal Vig, Shri Harish Kumar Vig, and Shri Om Prakash Jaggi. The appellant provided copies of the orders passed in the assessment cases of the partners to support this claim. The court found that taxing the same amount in two different hands raised a legal question. Consequently, the court decided in favor of the appellant, setting aside the order to tax the amount in question in the hands of the firm and remanding the matter to the Assessing Officer to determine the finality of the partners' assessment orders.

Issue 2: Deletion of an addition of Rs. 23,74,842 by the C.I.T. (Appeal)
Regarding the deletion of the addition of Rs. 23,74,842 by the C.I.T. (Appeal), the Revenue contended that the Assessing Officer did not comply with the direction of the C.I.T. (Appeals) to submit a report of the enquiry. The court agreed with the Revenue's argument, stating that the matter should have been remanded to the Assessing Officer to complete the necessary enquiry. The court emphasized the importance of recording findings of fact during assessment proceedings, especially when revised returns and audited accounts were submitted. Therefore, the court ruled in favor of the assessee-appellant on this issue as well, directing a remand to the Assessing Officer for a fresh order considering all relevant factors.

In conclusion, the High Court set aside the Tribunal's order and remanded the matter back to the Assessing Officer for both issues discussed in the appeal. The court emphasized the need for a thorough assessment process and compliance with directions from higher authorities to ensure accurate taxation and proper resolution of legal issues.