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2017 (4) TMI 285 - AT - Income TaxLiability to pay tax - Taxable in the hands of partner or Partnership Firm - Interest Income and income from contract business as technical entrepreneur license holder - Arrangement of pooling turnover and business between the firm and its partner Karta - double taxation - Held that - The assessee is a partner in the firm M/s. Jagannath Choudhury is false and misleading as has been found by the Assessing Officer in the remand report. The assessee is not under contractual obligation to transfer any business to the firm M/s. Jagannath Choudhury. Hence, the contract receipts in the name of the assessee have to be considered in the hands of the assessee. It is not the case that the firm M/s. Jagannath Choudhury has executed the contract taken in the name of the assessee. The assessee has received interest from banks in respect of various deposits in his name and he is not under contractual obligation to transfer such income to the firm M/s. Jagannath Choudhury. It is also found that TDS has been made in respect of interest paid in the name of the assessee as per 26AS statement. The agreement between the firm and the partner Arun Kumar Choudhury (HuF) cannot be binding on the assessee. The record shows that the assessee has received interest and executed contracts in his name and TDS made on the interest is credited in the name of the assessee. In view of the same, there is no reason that interest of ₹ 12,93,062/- should not be assessed in the hands of the assessee. Since the contract receipts of ₹ 12,93,062/- has been received by the assessee for the contract works executed by him and no accounts have been submitted for the same, the Assessing Officer is justified in estimating income of ₹ 38,365/- @ 8% which is reasonable. - Decided against assessee
Issues:
1. Double taxation due to inclusion of interest income and contract receipts in the hands of the assessee. 2. Disallowance of interest income and contract receipts by the Assessing Officer. 3. Assessment of income and addition of &8377; 12,93,062/- and &8377; 38,365/- to the assessee's income. 4. Dismissal of the appeal by the CIT(A) and subsequent confirmation of the additions. Analysis: 1. Double Taxation Issue: The Assessing Officer added interest income and contract receipts to the assessee's income, alleging non-disclosure. The assessee argued that these amounts were already included in the firm's income, leading to double taxation. The CIT(A) called for a remand report, which revealed discrepancies in the partnership deed, indicating the assessee was not bound to transfer business to the firm. Consequently, the CIT(A) held that the interest and contract receipts should be considered in the hands of the assessee, leading to the confirmation of additions. 2. Disallowance by Assessing Officer: The Assessing Officer disallowed the interest income and contract receipts as the assessee failed to provide evidence supporting the claims made. Despite the assessee's submissions that these amounts were part of the firm's income, no conclusive evidence was furnished, resulting in the disallowance. 3. Assessment and Addition of Income: The Assessing Officer estimated and added &8377; 12,93,062/- and &8377; 38,365/- to the assessee's income based on the interest income and contract receipts not disclosed in the return. The CIT(A) upheld these additions after considering the remand report, which clarified the contractual obligations regarding business transfer and the actual recipient of the income. 4. Dismissal of Appeal and Confirmation of Additions: The appeal filed by the assessee was dismissed by the CIT(A) and subsequently upheld by the ITAT. The ITAT concurred with the CIT(A)'s findings, noting that the assessee conceded to the factual discrepancies revealed in the remand report. No errors in the CIT(A)'s decision were identified, leading to the dismissal of the appeal and confirmation of the additions to the assessee's income. Overall, the judgment highlights the importance of providing substantiated evidence to support income claims and the implications of contractual obligations in determining the tax liability of the assessee.
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