9911796707
TMI Blog2013 (4) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... t to double taxation. However this aspect requires verification at the AO's level based on the materials on record with the Revenue in hand and therefore remit back the matter for such limited purpose. No income shall be taxed in the hands of the assessee twice without the operation of law and if such circumstance prevails it will lead to miscarriage of justice. Assessee's claim to allow credit of the taxes paid in whose income were clubbed in the assessee rejected - Held that:- Assessment in the hands of the AOP is a substituted assessment for all the group entities. In this circumstance, the assessment of all group entities will not survive and obviously taxes if any paid by those entities for the years under appeal has to be given credit while computing the tax liability of the assessee AOP. The learned AO is directed to pass such necessary orders for giving tax credit to the assessee subject to verification and in accordance with law. Inclusion of proportionate income assessed for the AYs 1987-88 and 1988-89 in spite of specific direction of the CIT(A) which was not reversed by the Tribunal - Held that:- As the additions made for the assessment year 1987-88 and 1988-89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective assessing officers. As the scrutiny of the seized materials was underway, it appears that the Patel group came up with a proposal with a view to avoid litigation and it was finally agreed upon by the assessee and the Department that the Group will be assessed in the status of AOP for the assessment years 1980-81 to 1986-87 on the basis of accretion of wealth for the purposes from 1-4-1979 to 31-3-1986 and the net wealth as on 31-3-1986 was to be divided in proportion to the value of the work done (receipts) during this period and the divided resulted figures shall be deemed as taxable income of the AOP etc., Accordingly, the Patel Group had prepared a balance sheet of all its assets and liabilities as on 31.3.1986 and to which the accretion of wealth was to the tune of Rs.4.5 crores. The assessee had filed returns of income for the assessment years 1980-81 to 1986-87 admitting its incomes, aggregating to Rs.4.5 crores. However, the AO issued notices u/s 143(2) and u/s 142(1) of the Act and, further, seeking explanation from the Patel group in relation to the income earned and declared by several entities and also in respect of various entries of cash credit and other receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the order passed u/s. 143(3) dated 31.03.1997, the assessee filed an appeal before the CIT(A)-XIV, Ahmedabad. The CIT(A)-XIV, Ahmedabad vide his order No. CIT(A)-XIV/Cir- 6(2)/114-120/97-98 dated 22.02.1999 directed to compute the net taxable profit @ 21.5% on a gross turnover of Rs.21.5 crores and bring it to tax on the basis of year-wise proportionate ratio. The CIT(A) further directed if a part of this income falls outside the years of account under consideration i.e. in subsequent period, to that extent it would be reduced from these years. 3. The effect to aforesaid order of the ld. CIT(A) was given in the case of the assessee for A. Ys. 1980-81 to 1986-87 vide respective appeal effect orders dated 26.2.99 which were subsequently rectified u/s. 154 on 30.03.2000. As such, the total income of the assessee stands proportionately apportioned in years 1980-81 to 1987-87 as under: - A. Y. Percentage Total income 1980-81 14.76% Rs.56,91,762 1981-82 09.60% Rs.37,01,959 1982-83 24.81 Rs.95,67,251 1983-84 07.87% Rs.30,34,835 1984-85 21.00% Rs.80,90,036 1985-86 07.98% Rs.30,77,254 1986-87 13.98% Rs.53,90,978 Total Rs.3,85,54,075 The aforesaid decision of CIT(A) was disputed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication dated 28-07-2010 (Refer P 95 - 98 PB) for (i) rectification of the aforesaid appeal effect order of the AO dated 04-08-2005 and (ii) settlement of outstanding demand release of attached properties. The assessee by referring to Para 11 and 12 of the order of the Tribunal dated 31-08-2004 stated that it could be concluded that:- (i) The assessment has to be framed in the hands of N. I. Patel Other (AOP) for entire group in stead of separate assessment for all the entity of the group i.e. individuals, firms, AOPs, Family trust, etc. Since the settlement was arrived at to tax the new entity in the status of AOP and not in the status of other persons of the group, the taxes paid on behalf of the group of AOP. (ii) The income for all these years, i.e. from 1980-81 to 1988- 89 will be Rs.450 lacs based on the original return filed by the assessee. Thus, the income of all the nine years will not exceed Rs.450 lacs for the entire group." 4.3. The AO, after due consideration of the submissions of the assessee, rejected the said rectification application vide his letter/order dated 20-08-2010 holding the same view as taken in the appeal effect order dated 04-08-2005 by ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt orders of various assessment years, findings of the CIT (A) as well as the findings of the earlier Benches of this Tribunal etc., 6.1. Prima facie, all these appeals are arising on the common appellate order of the learned CIT (A), dismissing the appeals of the assessee against the orders of the AO rejecting to rectify his earlier orders giving effect to the findings of the earlier Bench of the Tribunal dated 31.8.2004. 6.2. Ironically, the assessee had preferred I.T. appeals before the Tribunal for the AYs 1980-81 to 1988-89 and WT appeals for the AYS 1980-81 to 83-84, 85-86 86-87 whereas the Revenue had appealed I.T. appeals for the AYs 1980-81 to 87-88 [source: ITAT Order dt.31.8.2004 - P 82 of PB]. All these appeals were clubbed together as those appeals involved being common and inter-linked grounds and disposed off by a common order. 6.3. At this point of time, we would like to narrate the facts of the issues, briefly, as under:- This case has a long and unusual history. This assessee group was originally carrying on the business of constructions in the names of various partnership firms, trusts etc., and running into more than 1100 entities. This group's premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compute the net taxable profits @ 21.5% on a gross turnover of the entire construction activity under by the appellant group to the 'period search', computed above atRs.21.5 crores, irrespective of the year in which earned, and bring it to tax on the basis of year-wise proportionate turnover ratio. If part of this income falls outside the years of account under consideration, i.e., in subsequent periods, to that extent, it would be reduced from these years." [Courtesy: P 10 - 34 of PB I] 6.5. As already narrated, the assessee took up the issues for the AYs 1980-81 to 1988-89 as well as the Revenue for the AYs 1980-81 to 1987-88 before the Tribunal. The earlier Bench of this Tribunal while disposing off those appeals vide its order dated 31.8.2004 made certain observations and also recorded its findings, the relevant portions, for disposal of the present appeals, are extracted as under: PB-I(page 82-91) "2. The assessee is an AOP consisting of 4 persons - Shri Naranbhai I Patel, Shri Jivabhai A Patel, Shri Vithalbhai S Patel and Shri Ambalal P Pate,. They have originally created about 1100 entities for controlling their operations. There was a search action u/s 132 of the Act o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is arrived at by the assessee after going through the detailed and in-depth scrutiny of the accounts, documents and discussion with the Revenue authorities including the CIT and the Member of CBDT from time to time over a period of two years - the date of search being 16.5.1986 and the disclosure petitions given on 28.3.1987. Nothing wrong in the submission of disclosure was found. It is simply ignoring on the plea that this not the correct method of making assessment and which has to be made on the basis of material found in the course of search. An instance of the income determined of Rs.3,85,24,340/- is also given by the AO but ultimately the assessments were not exactly made on the basis of material found but on taking into consideration partly the individual assessments made earlier in various entities and partly by resorting to estimate. It may be true that the assessee might be entitled to revise the disclosure figures before the assessment is finally made on the basis of corroborating material and evidences on record for revision. However, in view of the fact that the earlier disclosures was made on detailed scrutiny of accounts and after discussion with various revenue aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.4.5 crores which is, as aforesaid, is based on accretion of wealth supported by the details of assets and liabilities of the assessee............". 7.3. This view of the earlier Bench, in our considered view, was in consonance with the observations of the CIT (A) that "19.............If part of this income falls outside the years of account under consideration i.e., in subsequent periods, to that extent, it would be reduced from these years [source: P 34 of PB]. 7.4. It is also an un-denying fact that the appeals of the assessee were before the Tribunal for the AYs 1980-81 to 1988- 89 which have been duly considered and, accordingly disposed off. Thus, it makes implicit that the assessments of the assessee-AOP be completed on the basis of disclosure of Rs.4.5 crores which was based on the accretion of wealth supported by the details of assets and liabilities of the assessee for the AYs under dispute, namely, AYs 1980-81 to 1988-89 and not only for the AYs 1980-81 to 1986-87 as attributed by the AO and the CIT (A). Thus, in our considered view, the AO as well as the CIT (A) ought not to have interpreted the same harshly but viewed the same judiciously after a reasonable anal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosure of Rs. 4.5 Crores for the period 1980-81 to 1986-87 based on the principle of accretions of wealth then unless there is a fresh accretion of wealth, during the assessment year 1987-88 the same amount cannot be once again added to the income of the assessee in the assessment year 1987-88, which will amount to double taxation. Therefore if from the facts on record if the Revenue is not able to establish that there is fresh accretion of wealth or it is the income generated from the construction activity or any other activity beyond the disclosure made for the period 1980-81 to 1986-87, addition cannot be made for the assessment year 1987- 88 or any subsequent year, since it will amount to double taxation because the amount of Rs.1,42,01,314/- forms part of the income disclosed of Rs. 4.5Crors for the period 1980-81 to 1986-87. However this aspect requires verification at the AO's level based on the materials on record with the Revenue in hand and therefore in the interest of justice we remit back the matter for such limited purpose. We further make it clear that at this stage no fresh investigation is warranted in order to avoid any undue harassment to the assessee as the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions stipulated in Para 7.5 (A) (1) hereinabove. (5) Addition on account of cash found and seized in various premises during the course of search of Rs.30,871/:- This addition is made for the reason that cash was found and seized in the various premises of the assessee during the course of search. It is therefore obvious that if this amount is included in the income disclosed for the period 1980-81 to 1986-87 on the methods of accretion of wealth once again the same amount cannot be included in any other assessment year. Therefore, this matter also requires verification at the AO's level as indicated in Para 7.5 (A) (1) hereinabove. (6) Addition on account of income of six entities taxed substantively in the hands of the assessee Rs.18,85,000/-:-.The learned AO has substantively taxed in the hands of the assessee the income of the following six entities aggregating to Rs.18,85,000/- Sr. Name of assessee Assessed income for No. AY 1987-88 1 M/s. Pravin Const. Co. 1,00,000 2 M/s. P. Pravin Co. 80,000 3 M/s. Pravin Corporation 6,50,000 4 Mahendra Family Trust 1,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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