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TMI Blog2012 (11) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of Section 170(1) to lay claim to the adjustment of the loss of the erstwhile firm. Such being the case, lack of clarity by the income tax authorities right upto the ITAT itself, in the opinion of the Court. It is a justifiable ground for the assessee to say that the point was debatable. Such being the case, the upholding of the quantum proceedings by the Court could not have been the only basis for the imposing of the penalty - in favor of the assessee. - ITA 67/2012 - - - Dated:- 11-10-2012 - MR. S. RAVINDRA BHAT AND MR. R.V. EASWAR JJ. Appellant Through: Sh. S. Krishnan, Advocate. Respondent Through: Ms. Suruchi Aggarwal, Sr. Standing Counsel. MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT) 1. The following question of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assessed in respect of the income of the previous year after the date of succession. 6. Section 170(1) is very lucid and clear. The partnership firm has to be assessed in respect of profit and gains from the business for the period up to 18th September, 2004. After the said date and after the partnership firm was dissolved, the sole proprietor has to be assessed in respect of profits and losses. The income earned by the appellant, as an individual, would include his share of loss as an individual but not the losses suffered by the partnership firm. The losses suffered by the partnership firm cannot be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the income authorities initiated penalty proceedings on the footing that the assessee had made a false claim. This penalty imposed was confirmed by CIT(A) an order which was upheld by the ITAT. 4. Learned counsel argues that the discussion by the lower authorities would reveal that even according to their understanding this was not a case where Section 170 of the Income Tax Act applied, which was one of the principal reasons which impelled the Court to reject his claim. It was urged that the CIT(A) as indeed the AO seemed to have fallen into error in holding that the assessee was not a successor whereas in fact he was because he took over the assets, finance, liabilities and other affairs of the erstwhile firm which was in turn an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ownership of the same was not proved by the assessee. It is not a case where the party is not cooperating with the assessee. She is in the employment of the assessee and, therefore, there could not have been any difficulty in furnishing the documents relating to the ownership of the road rollers. From these facts, it is evident that the assessee had not proved the genuineness of the transactions. Therefore, assessee had claimed expenditure which was not allowable as deduction. As regards setting off of loss of the firm against the individual income, the provisions of Section 78(2) are clear and unambiguous. The loss incurred by an assessee cannot be set off against the profit earned by another assessee. A firm and an individual are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars have been concealed. XXXXXX XXXXXX XXXXXX 29. The decision relied upon by the ld. AR of the assessee in the case of CIT v. Reliance Petro Products (supra) is not applicable to the facts of the assessee s case as the information given in the return of income has been found to be incorrect. It is not a case merely of making incorrect claim for deduction, but it is a case of bogus claim for set off of loss of firm against income of individual. It is also a case of bogus claim in respect of road roller hire charges. Therefore, the issue is squarely covered by the decision of Hon ble Delhi High Court in the case of Har Parshad Co. Ltd. (supra). Respectfully following the decision of Hon ble Delhi High Court, it is held that pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was not a successor. This Court has conclusively ruled that the assessee was in fact a successor but not entitled by virtue of Section 170(1) to lay claim to the adjustment of the loss of the erstwhile firm. Such being the case, lack of clarity by the income tax authorities right upto the ITAT itself, in the opinion of the Court, is a justifiable ground for the assessee to say that the point was debatable. This is underscored by the final judgment of the Court reported as Pramod Mittal v. Commissioner of Income Tax (2012) 205 Taxman 444 (Delhi) in the assessee s own case. In these circumstances, the imposition of penalty was not warranted. The impugned order requires to be and is set-aside. The question of law is, therefore, answered i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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