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TMI Blog2016 (4) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... oroughly, which has not been controverted by the ld DR, thus the Assessing Officer have doubted the cash payment made to the sellers of the house property, which is not prohibited under the IT laws. The source in the hands of AOP had been explained by the assessee, therefore, we uphold the order of the ld CIT(A). - Decided in favour of assessee. - ITA No. 416/JP/2012, ITA No. 826/JP/2012, C.O. No. 26/JP/2015 - - - Dated:- 14-3-2016 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For The Revenue : Shri Kailash Mangal (JCIT) For The Assessee : Shri P.C. Parwal (CA) ORDER PER: T.R. MEENA, A.M.: These are cross appeals one by the revenue and another by the assessee and cross objection by assessee arise from the order dated 29/02/2012 of Ld. CIT(A), Kota, for A.Y. 2008-09. Effective grounds of appeals as well as C.O. are as under:- Grounds in Revenue Appeal ITA No. 416/JP/2012 On the facts and in the circumstances of the case, the ld CIT(A) has erred in: (i) Reducing the NP rate from 12% to 20% of the turnover without any valid basis when the assessee has not maintained any books of accounts; (ii) deleting addition of ₹ 67,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from AOP of Royal Wines in hands of assessee and also estimating income of liquor license of assessee. 2. The grounds of the cross objection of the assessee and cross appeal of the assessee are identical and the appeal of the assessee has to be decided by this Bench, therefore, C.O. is become infructuous and hence dismissed. 3. The assessee is in hardware and liquor business. He filed his return on 31/3/2009 declaring total income of ₹ 1,00,600/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The first ground of revenue s appeal, assessee s cross appeal and cross objection filed by the assessee is against reducing the net profit rate applied by the Assessing Officer 20% to 12% by the ld CIT(A). The ld Assessing Officer observed that during the course of assessment proceedings, the assessee has not produced the books of account, bills vouchers etc. on the pretext that the return had been filed in terms of Section 44AF of the Act being turnover less than ₹ 40 lacs. The Assessing Officer further observed that despite specific requirement made under the excise law regarding maintaining the books of account in liquor busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer in the ease of M/s Royal Wines, AOP. It is seen that assessee has not obtained any permission from State Excise Department 'to do business in the name of AOP. All the purchases (in respect to liquor shops licensed to the assessee) during the year were made in the name of assessee. All the payments (in respect to liquor shops licensed to the assessee) for purchase, license fee, excise duty etc. were made by the assessee. Tax Collected at Source (in respect to liquor shops licensed to the assessee) was collected from assessee. All the purchases and sales .were made in cash. During the operation of shops, the display's at the shops (in respect to liquor shops licensed to the assessee) were in the name of assessee. It is also seen that the A.O. who assessed the income of royal wines did not examine this issue. From the above, it can be concluded that assessee has not transferred the license to the AOP, and that all the transactions (in respect to liquor shops licensed to the assessee) were carried out by assessee himself. It is therefore held that profits from the shops licensed to the assessee has to be assessed in the hands of assessee itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is required to be taken. In present case, such prior permission is not taken. For this reason alone, the income of the two shops for which license is given to the assessee cannot be taxed in the hands of the assessee when the purchase, sale and other expenses in relation to these shops is already considered by the AOP and income of the AOP is assessed by the department in order passed u/s 143(3). In this connection, reliance is placed in case of Durga Madira Sangh Vs. CIT 153 ITR 226 (Raj.) (HC) where it was held that where the Excise Act does not prohibit entering into partnership by license holders with non-licensees, such a partnership is valid and eligible for registration. Further, the Supreme Court in case of Biharilal Jaiswal Others Vs. CIT 217 ITR 746 at Page 758 held that where law prohibits entering into a partnership agreement, there can be in law no partnership agreement of that nature. However, where the statutory provisions or the condition of the license do not prohibit entering into partnership, such a partnership cannot be held to be illegal, unlawful or void. However, it further held that it would not mean that such an illegal partnership cannot be taxed. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the addition of ₹ 5,62,633/- confirmed by CIT(A) is unjustified and the same be deleted. He relied on the decision of Hon ble Jodhpur ITAT Bench in the case of ACIT Vs. M/s Krishan Lal Meel Party alongwith other cases in ITA No. 370/Jodh/2015 and other ITAs, which was decided on 04/09/2015 wherein identical issue has been decided by the Hon ble Bench in favour of the assessee, as the issue available in the present case may also please be decided in favour of the assessee. Therefore, he prayed that the ground of the department be dismissed and the cross objection of the assessee be directed to be allowed. 6. We have heard the rival contentions of both the parties and perused the materials available on record. It is undisputed fact that the license was granted in the name of the assessee by the excise department for two shops. The sale of the liquor has been disclosed by the assessee in the business of AOP. The assessee has not taken any permission from the excise department for transferring his business to the AOP but as per excise rule, only permission is required to run the business in the name of AOP by the licensee. The AOP already had been considered this bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Wines in which the assessee is a partner on 05/3/2008. The ld further observed that the AOP is not legal in view of the excise laws and it is not possible that huge amount of ₹ 67 lacs in cash had been made by the assessee. He recorded his statement, which has been reproduced by the Assessing Officer on page 12 and 13 of the assessment order. For sake of convenience, which is reproduced as under:- The ld Assessing Officer further held that since the genuineness of the transaction was not proved beyond doubt as the assessee has capital in AOP at ₹ 11,99,860/- whereas amount withdrew at ₹ 67 lacs. The amount over and above should be loan of AOP to member i.e. assessee. The AOP and assessee are having bank accounts and sale proceeds of AOP of liquor business were deposited in the bank accounts. Even then the assessee had taken alleged loan in cash. The assessee has also taken loan from the ICICI bank at ₹ 62,25,000/- on 17/3/2008. All these facts showed that the assessee had introduced his own income from undisclosed source in the garb of loan from the AOP. Therefore, he made addition of ₹ 67 lacs under the head unexplained investment in h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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