9911796707
TMI Blog1995 (11) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... d on a survey operation under s. 133A of the IT Act at the office premises at Khadia, Ahmedabad, on 2nd Feb., 1989. During the survey operation he found that assessee's husband Shri Ghanshyambhai R. Thakkar (G.R. Thakkar) was carrying out his proprietary business in the name of Bharat Industrial Corporation for supply of measuring instruments, thermometers, etc. to textile mills. He also found that said G.R. Thakkar was doing another business in the name of Rupa though business was in the name of his wife Smt. Bhartiben G. Thakkar (B.G. Thakkar). He further found that books of accounts of both concerns were in the same premises of Khadia office, Ahmedabad, and was written by same accountant. The AO further found that purchase and sales for both the concerns were made by Shri G.R. Thakkar. The AO also found two blank cheques duly signed by Smt. B.G. Thakkar and kept in the same premises. At the time of survey Smt. B.G. Thakkar was not available in the office at Khadia as well as in the factory premises situated at Ambawadi, Ahmedabad. During the course of said survey operation G.R. Thakkar gave a letter dt. 2nd Feb., 1989, to the AO accepting therein the fact that he was attending a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had received as gift from her brother as well as insurance income. Explaining the business being run at joint office at Khadia as well as finding of books of accounts, etc. it was said that business premises belonged to Shri Ranchodlal Bhurabhai Thakkar, the father-in-law. There was a separate cabin. The factory was situated at Ambawadi wherein manufacturing was done and the stock was stored at factory. The business of M/s Rupa was carried on by the own staff of the said firm. The accountant Shri Himmatbhai Shah was doing part time job. He was writing the books of accounts not only of M/s Rupa and M/s Bharat Industrial Corporation but other concerns also. The said accountant was given separate remuneration for his work. It was further said that blank cheques were given to assessee's husband because some immediate payments were to be made. However, it was explained that at times her husband used to extend his help in the business he being one of the family members. However, those explanations of the assessee did not find favour with the AO. The AO noted that the firm which was started in S. Y. 2037 was mainly consisted of the family members. Ranchhodlal was father-in-law and Smt. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions were reiterated and also various documents including the earlier assessments of the assessee were submitted. The learned Dy. CIT(A) considering those contention and documents reversed the order of the AO and directed him to complete the assessment of the assessee on substantive basis. Against said order of Dy. CIT(A) now the Revenue are in appeal. 5. Shri M.P. Lohia, the learned Departmental Representative, vehemently objected to the order of the learned Dy. CIT(A). He said that the learned Dy. CIT(A) did not examine the matter in controversy in right perspective. Instead of giving due consideration to the facts found during the survey operation under s. 133(1A) of the IT Act and the facts gathered in the statement of Smt. B.G. Thakkar recorded under s. 131 of the IT Act, the Dy. CIT(A) considered various extraneous matters, added the learned Departmental Representative. Recapitulating the facts of the case, the learned Departmental Representative said that M/s Rupa was not a simple trading concern but it was engaged in business of manufacturing and sale of textile machinery for which considerable standard of professional or technical capabilities were required. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .: This business is only on paper, but completely handling by my husband." The learned Departmental Representative emphasised that assessee herself admitted that business of M/s Rupa was in her name only on paper but in reality it was her husband who was the real owner of M/s Rupa. The Departmental Representative having referred to answer to question No. 9 also submitted that she used to go to factory rarely and on Sunday with her children by way of having entertainment and amusement. The learned Departmental Representative reiterated that the learned Dy. CIT(A) did not consider all those aspects in correct perspective. He further said that AO rightly came to the conclusion that even at the starting of the firm in 1981 the assessee was having no capital to contribute because the AO had specifically asked to produce evidence to that regard but she failed to produce any evidence to show that she was having capital to invest. According to the learned Departmental Representative, the order of the learned Dy. CIT(A) should be reversed. 6. On the other hand, Shri L.G. Thakkar, the learned counsel of the assessee, strongly supported the order of the learned Dy. CIT(A) and opposed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claiming herself to be the proprietor of said M/s Rupa and accordingly taxes were paid on total income of Rs. 20,764 and Rs. 20,760, respectively. The learned counsel referred to assessment orders for the two assessment years compiled at pages 29 to 33 of the paper book. He emphasised that at the beginning of the accounting year relevant to the assessment year under consideration the assessee was having capital in her account at Rs. 81,520. The learned counsel emphasised that this was not a case of starting of a new business by her husband in the name of the assessee or with the help of the assessee. Actually, the business was going on since long as a genuine firm with genuine partners. The learned counsel said that after the assessee became the sole proprietor of M/s Rupa all necessary corrections were carried out in various Government Departments. The learned counsel added that the assessee was declared as a proprietor in the Sales-tax Department, Industries Department, bank, etc. The learned counsel of the assessee referred to pages 26/34, 26/35 and 26/36 which were respectively certificate issued by Industries Department, sales-tax registration certificate under the ST Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in her statement and various other documents as referred to above the things were very straight. The learned counsel said that the Revenue would not to be allowed to make out its case taking into consideration one or two answers only. For coming to a discreet conclusion the entire statement of Smt. B.G. Thakkar was to be considered. The learned counsel referred to question Nos. 2, 3, 10 and 13 and their respective answers which are as follows: "Q. 2.: Inform the source of your income. Ans.: I am a proprietor of Rupa Textiles Engineering Works. Q.3. When you passed S.S.C. Which subjects? Ans.: I passed my S.S.C. in 1975-76 with Maths, English and Science. Q. 10. What you are doing on Sunday? Ans. On Sunday I am going to my factory and inquire to my staff. Q. 13. Then what time you spare for visiting your factory? Ans.: Mostly I am giving instruction to my husband for factory work. And he is handling works as per my instruction." Referring to these answers the learned counsel of the assessee submitted that Smt. B.G. Thakkar was not an illiterate lady but she passed SSC in 1975-76 with Maths, English and Science. The learned counsel said that the business was not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85-86 the business has been run by partnership firm. All along those years, the firm has been held to be genuine and so are the partners. The partner's shares have been duly allocated during those years including the assessee as we have seen from the paper compiled at page 26/29-31 of the paper book. It is to be further seen that in asst. yrs. 1986-87 and 1987-88 M/s Rupa has become the proprietary business of assessee and she has been accordingly assessed. Nothing has been brought in the appeal record by the Revenue to show that if the partnership firm right from asst. yrs. 1982-83 to 1985-86 has been benami of Shri G.R. Thakkar. There is nothing to show that if Smt. B.G. Thakkar has been a partner as benami of her husband or that she contributed towards her share capital in partnership firm for and on behalf of her husband. Even in the accounting year relevant to asst. yrs. 1986-87 and 1987-88 there is no such material when actually the assessee became the sole proprietor of M/s Rupa. Various documents have been placed before us such as certificate from Industries Department, Sales-tax Department, etc., which prove that the assessee was the proprietor of M/s Rupa. No doubt, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a proprietor and the AO was not justified in clubbing the income from the business of M/s Rupa in the hands of Shri G.R. Thakkar, the assessee. Consistent with that decision we hold that the learned Dy. CIT(A) was justified in cancelling the clubbing of income from M/s Rupa in the hands of the assessee as done by the AO. 11. The next disputed point relates to deletion of Rs. 60,000 being bad debt. We may point out here that this ground of appeal was not taken at the time of filing of the appeal. But during the course of hearing the learned Departmental Representative having drawn our attention towards the appellate order submitted that by mistake no ground was taken against the deletion of bad debt of Rs. 60,000. The learned Departmental Representative made a request that permission was to be given to raise this additional ground which would be regularised after taking formal approval of the CIT and which was finally regularised. 12. After hearing both the sides and since the matter in controversy was already a matter of consideration before the authorities below we admitted the additional ground and heard both the sides. 13. During the course of assessment proceedings the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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