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2017 (6) TMI 13 - AT - Income TaxAssessment in the hands of the assessee in the status of the firm - unaccounted contract receipts - Held that - CIT(A) has granted relief to the assessee on the basis of the pleadings of the assessee that the amount of ₹ 74,10,868/- declared by the assessee firm includes ₹ 24,20,688/-, which was shown in 26AS in old PAN number allotted in company status. Now the assessee challenges the order of the ld. CIT(A) that he should not have issued direction to the Assessing Officer that to consider the receipts of ₹ 24,20,688/- in the hands of the assessee in the status of the firm and to make fresh assessment thereon. When the assessee himself has stated in his pleadings that the total receipts of ₹ 74,10,868/- includes receipt of ₹ 24,20,688/- also then what grievance remains. The assessment order passed by the Assessing Officer in the status of the company was quashed by the ld. CIT(A) then in my considered view, there is no grievance remains and the plea of the assessee is unfair and unjustified.
Issues:
1. Validity of direction given by CIT(A) under section 150(1) of the IT Act for fresh assessment. 2. Assessment made in the name of a non-existing entity. 3. Change in PAN status and its impact on assessment proceedings. Issue 1: Validity of CIT(A) direction under section 150(1) of the IT Act: The appeal arose from the order of the CIT(A) directing the consideration of receipts of ?24,20,688 in the hands of the assessee as a firm for fresh assessment. The assessee contested this direction, arguing that the said receipt was already considered in the firm's regular return. The ITAT Jaipur analyzed the contentions and submissions made during the proceedings. The CIT(A) had granted relief to the assessee based on the claim that the total declared receipts included the disputed amount. The ITAT upheld the CIT(A)'s decision, stating that since the firm itself acknowledged the inclusion of the disputed amount in its total receipts, there was no valid grievance left against the direction given by the CIT(A). Issue 2: Assessment made in the name of a non-existing entity: The assessment was initially made in the name of the appellant as a company, despite the appellant being a firm with a new PAN. The ITAT considered the argument that the assessment on a non-existing entity is illegal and bad in law. However, it noted that the firm continued its business activities with the new PAN, and the change in PAN did not invalidate the assessment proceedings. The ITAT emphasized that the firm remained the same entity, only with a new PAN, and thus, the assessment in the name of the company was incorrect. Consequently, the assessment order passed in the name of the company was quashed, and the AO was directed to consider the receipts in the hands of the appellant as a firm for fresh assessment. Issue 3: Change in PAN status and its impact on assessment proceedings: The ITAT delved into the implications of the change in PAN status from a company to a firm. It highlighted that the firm maintained continuity in its business operations despite the PAN change. The ITAT clarified that the assessment should be made in the correct hands and status of the assessee. While acknowledging the need for correct assessment, the ITAT emphasized that the assessment order in the name of the company was incorrect. Therefore, the ITAT directed the AO to reassess the receipts in the hands of the appellant as a firm, considering only direct expenses related to the disputed amount. The ITAT concluded that the direction given by the CIT(A) for fresh assessment was justified, and thus, dismissed all grounds raised in the appeal. In conclusion, the ITAT upheld the CIT(A)'s direction for fresh assessment, quashed the assessment made in the name of a non-existing entity, and emphasized the importance of accurate assessment in the correct status of the assessee.
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