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TMI Blog2023 (1) TMI 1303X X X X Extracts X X X X X X X X Extracts X X X X ..... rm, there was no transfer of any asset to the partners of the firm. Present petition is allowed and notice issued are set aside. - Hon ble Ms. Justice Ritu Bahri And Hon ble Mrs. Justice Manish Batra For the Petitioner : Mr. Akshay Bhan, Senior Advocate with Mr. Alok Mittal, Advocate For the Respondents-Department : Ms. Pridhi Jaswinder Sandhu, Jr. Standing counsel ORDER RITU BAHRI, J. The present petition has been filed under Article 226/227 of the Constitution of India, seeking writ in the nature of certiorari for quashing of notice dated 11.03.2014 (Annexure P-11), notice dated 17.11.2014 (Annexure P-12), order dated 08.01.2015 (Annexure P-14) whereby explanation of the petitioner has been rejected. The facts in brief is that on 13.11.1956 (Annexure P-1), Raja Ram HUF entered into a lease for 99 years in respect of the land on which the theatre run by the petitioner is operating. Vide letter dated 10.10.1956 (Annexure P-2), the petitioner sought licence under Rule 5 of the Punjab Cinema Act for construction of permanent Cinema Hall on the above leased land. Vide letter dated 14.12.1995, the permission for construction of the said Cinema Hall w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of business by the partnership, Raja Ram HUF is filing returns as a sole proprietor. However, the said explanation was rejected and an ex-parte assessment order dated 30.12.2010 (Annexure P-9) under Section 144 of Act 1961 was passed. An appeal was then filed against order dated 30.12.2010 before the Commissioner of Income Tax (Appeal), Bathinda and vide order dated 12.03.2013 (Annexure P-10), the impugned order dated 30.12.2010 was set aside:- While adjudicating the various grounds of appeal, it has been held above that the AO was not justified in completing the assessment in the status of Firm' because the firm had discontinued its business w.e.f. 31.03.2006 in as much as no renovation was carried out by the firm' during the period relevant for the assessment year 2007-08. During appellate proceedings before me, the A/R of the appellant stated that the same AO completed the assessment in the case of Shri Raja Ram Nagpal, HUF for the assessment year 2009-10 vide order w/s 147/143(3) dated 21.09.2012 (i.e. the person who had infact carried out renovation of the theatre building) but accepted the expenditure incurred by him on the renovation of the theatre buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenging the impugned orders. On notice of this petition, a reply dated 27.05.2015 has been filed by respondent No. 2 admitting the fact that the firm ceased to exist on 31.03.2006. However, since the assets of the firm on dissolution of the firm stand transferred to the partners, they are liable for the Capital Gain in the hands of the firm as per the provisions of Section 45 (4) of Act 1961. While giving reply to para 2 (xi), the submissions made by the appellant were accepted, as the proceedings under Section 147 were initiated by the then Income Tax Officer, Ward-II (3), Abohar and notice under Section 148 was duly issued on 15.03.2010 and thereafter, assessment under Section 144 was completed on 30.12.2010. The petitioner filed replication dated 10.09.2015 to reply filed by respondent No. 2 reiterating his stand taken in the writ petition that as per sale deed, the transfer was made in favour of Raja Ram as the vendee who was already in possession of the property and has constructed a building on the said property is in the name and style of Sandeep Theatre. No sale has been made in favour of the firm. The property has never been debited to the capital account of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd HUF had separate identity. Hence the HUF being separate identity, the land was purchased by Raja Ram independently being HUF. The partnership firm M/s Sandeep Theatre regularly maintained its account as per Annexure P-6 collly, which were not in dispute. Hence, two separate returns to be filed one by HUF and one by partnership deed. Since partnership firm had come to an end and vide order dated 12.03.2013, the explanation given by the petitioner has been accepted, therefore, for all intents and purposes, the firm ceased to exist on 31.03.2006. In this background, the penalty of Rs. 1,50,220/- imposing penalty upon the petitioner was set aside, vide order dated 12.03.2013 (Annexure P-8). Once this order had attained finality, there was no occasion with the respondents to issue a fresh notice under Section 147 of the Act 1961 with respect to assessment year 2007-2008 on the ground that after dissolution of the firm on 31.03.2006, the assets were distributed among partners and as per provisions of Section 45 (4) of the Act 1961, all capital assets of the firm transferred to individuals was liable for capital gain at fair market value on the date of transfer in the hands of the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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