9911796707
TMI Blog2015 (10) TMI 2024X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has passed the order u/s 144 of Income Tax Act, 1961 for non compliance of legal notice u/s 142(1)(ii), the assessee was not entitled for deduction by way of any payment of interest, salary, bonus, commission and remuneration by whatever name called, made by the assessee to any partners of such firm in accordance with the specific legal provisions mentioned in section 184(5) of Income Tax Act, 1961 while computing the income under the head 'Profit and gains of business and profession". 3. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the addition made by the Assessing Officer at Rs. 42,08,000/- as undisclosed income under section 68 of the I.T. Act, 1961. The learned Commissioner of Income Tax (Appeals) has not appreciated the Assessing Officer who made the addition after making enquiries, as the above deposits were the Cash Credits in the bank account of the assessee in Oriental Bank of Commerce and the assessee failed to explain the source of these cash credits during the assessment proceedings. 4. That the order of the learned Commissioner of Income Tax (Appeals) may be cancelled and the order of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et profit at Rs. 9,19,280/- which was 8% of the total contract payments of Rs. 1,14,91,101/- While doing so, he has placed reliance upon the order of the Lucknow Bench of the Tribunal in the case of M/s Modern Traders, Lucknow vs. ACIT, Lucknow in I.T.A. No. 1786/Alld/1994. 5. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) and the ld. CIT(A) being convinced with the explanations of the assessee, has directed the Assessing Officer to allow interest and salary from the net profit estimated by the Assessing Officer. 6. Aggrieved, the Revenue is in appeal before the Tribunal with the submission that where the Assessing Officer has invoked the provisions of section 144 of the Act for making best judgment assessment in the case of a firm, no deduction by way of any payment of interest, salary, bonus, commission and remuneration, by whatever name called, made by the firm to any partner of a firm shall be allowed in computing the income chargeable under the heads profit & gains of business or profession, and such interest, bonus, commission or remuneration shall not be chargeable to Income-tax Act, under clause (v) of section 28 of the Act. The ld. D.R. further contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section, the copy of the instrument of partnership shall be certified in writing by all the partners (not being minors) or, where the return is made after the dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased. (3) Where a firm is assessed as such for any assessment year, it shall be assessed in the same capacity for every subsequent year if there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the assessment as a firm was first sought. (4) Where any such change had taken place in the previous year, the firm shall furnish a certified copy of the revised instrument of partnership along with the return of income for the assessment year relevant to such previous year and all the provisions of this section shall apply accordingly. (5) Notwithstanding anything contained in any other provision of this Act, where, in respect of any assessment year, there is on the part of a firm any such failure as is mentioned in section 144, the firm shall be so assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the persons and genuineness of the transaction and their creditworthiness by way of issuing notice under section 131 of the Act. The notices were received back unserved. Thereafter these facts were confronted to the assessee, but neither the assessee could produce a single creditor in whose name credit has been shown nor anybody responded to the notice issued from the office of the Assessing Officer on or before the scheduled date fixed for hearing. The Assessing Officer finally concluded that the unexplained credit of Rs. 29.05 lakhs was also not explained, but while making addition under section 68 of the Act, he has given credit of the same and made addition of Rs. 42.08 lakhs cash deposit in bank account. 11. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) and the ld. CIT(A) in his entire order has recorded the finding of the Assessing Officer in this regard. Thereafter, he recorded assessee's contentions and finally in few lines he deleted the addition and for the sake of reference, we extract the relevant findings of the ld. CIT(A) as under:- "I have considered the Assessing Officer's order and the A.R's submissions. The A.R. has brought enough evidence on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has filed the copy of ledger account and bank statement with Bank of India and Bank of Baroda, Oriental Bank of Commerce, Hardoi. He has also placed reliance upon the order of the Tribunal in the case of DCIT vs. Shri. Pawan Agarwal, Lucknow in I.T.A. No. 374/LKW/2013; Moogipa Investment Ltd. vs. Income Tax Officer, 30 taxmann.com 113 (Delhi -Trib.) and ACIT vs. Baldev Raj Charla, 121 TTJ 366 (Delhi) in support of his contention that when the books of account are produced, the same should be verified. Reliance was also placed upon the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Vijay Constructions, 213 CTR 105 and Hon'ble Patna High Court in the case of Shyam Bihari vs. CIT and Another, 345 ITR 283 in support of his contention that once the books of account are rejected and income was estimated, no further disallowance can be made. 14. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that during the course of assessment proceedings, the Assessing Officer has afforded a number of opportunities to produce the complete books of account for verification, but the assessee did not produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 144 of the Act, separate addition under section 68 of the Act are possible. The relevant observations of the Hon'ble High Court are extracted hereunder:- "In the instant case, the consistent plea of the assessee was that the sundry creditors are genuine but at any point of time the assessee take the stand that the sundry creditors are referable to the income of the business which has been determined on estimate basis. Hence, the assessee must be held to have failed to establish that the unexplained sundry creditors were referable to the business income. The addition of the unexplained sundry creditors as income from other sources by the AO, therefore, was held valid. Further, the Hon'ble Apex Court in the case of CIT vs. Devi Prasad Vishwanath Prasad; 72 ITR 194 observed that where there is an unexplained credit, it is open to the AO to hold that it is income of the assessee, and no further burden lies on the AO to show that the income is from any particular source. It is for the assessee to prove that, even if the sundry creditors represents income, it is income from a source which has already been taxed. There is nothing in law which prevents the AO in an appropr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank be re-examined in the light of the cash book duly maintained by the assessee. Therefore, it requires a proper verification by the Assessing Officer. During the course of hearing, our attention was also invited to the fact that while making addition on account of cash deposit in bank, the Assessing Officer has also examined the sundry creditors of Rs. 29.05 lakhs, but he has not made any addition of Rs. 29.05 lakhs, as he has made an addition of Rs. 42.08 lakhs on account of cash deposit in the bank. Therefore, once the matter is restored back for verification of cash deposits, sundry creditors of Rs. 29.05 lakhs be also verified. Accordingly we set aside the order of the ld. CIT(A) and restore the matter to the Assessing Officer with a direction to re-adjudicate the issue by making necessary verification with regard to the cash deposit of Rs. 42.08 lakhs and sundry creditors of Rs. 29.05 lakhs. If need be, sundry creditors may also be summoned for verification. The assessee is also directed to produce all the relevant books of account to justify the cash deposits in the bank and sundry creditors. Accordingly, the order of the ld. CIT(A) is set aside and the matter is restor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
