M/S TUSHAR JEMS,,AMRELI vs. INCOME TAX OFFICER, WARD-3(1) (5),, AMRELI

The solitary ground of appeal

The relevant facts of the case is that the case of the assessee was reopened by issuing of notice u/s. 148 of the act on 27th March, 2015. The Assessing Officer was of the view that assessee firm had received labour income of Rs. 5,21,00,81/- from H. Vinod Kumar & Company and the same was not disclosed in the return of income pertaining to the year under consideration. In response, the assessee submitted during the course of assessment proceedings that assessee partnership firm i.e. Tuhsar Jems had been dissolved on 15th October, 2016 and also furnished the dissolvement deed of the firm. The assessee has further submitted that now said firm has been converted to proprietary concern under the proprietorship of Shri Batukbhai Ramjibhai Surani. The assessee has also submitted that transaction of Rs. 52,10,081/- made with H. Vinod Kumar & Company had already been shown in the proprietary concern and the return of income along with audit report has already been submitted vide acknowledgement no. 012266 along with detail of bank transaction of Rs. 52,10,081/- in the hands of the proprietary concern. However, the Assessing Officer has not agreed with the submission of the assessee only on the basis that the transaction of Rs. 52,10,081/- made with the PAN No. of the dissolved firm. Therefore, the Assessing Officer has estimated 8% of the labour receipt of Rs. 52,10,081/- to the amount of Rs. 4,16,810/- as income of the assessee firm and added to its total income.

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee reiterating the facts stated by the Assessing Officer.

During the course of appellate proceedings before us, the ld. counsel has submitted written submission pointing out that Assessing Officer has not considered the factual position that income was already shown by the proprietary concern and the same cannot be taxed twice. On the other hand, the ld. Departmental Representative has supported the order of lower authorities.

Heard both the sides and perused the material on record. Without reiterating the facts as reported above, the assessee has brought to the knowledge of the Assessing Officer and CIT(A) that during the course of assessment and appellate proceedings along with supporting document that the assessee firm has already been dissolved on 15-10-2006 and the business of the erstwhile firm has been taken over by the proprietary concern of Shri Batuk Ramjibhai Surani. However without disproving the facts reported by the assessee the Assessing Officer has estimated the income @ 8% in the hands of the dissolved firm only on the basis of PAN No. of the firm reflected in the transaction. After perusal of the facts, we consider that Assessing Officer is not justified in taxing the impugned receipt in the hand of the dissolved assessee firm merely on the basis of PAN No. without disproving the material fact contested by the assessee that the said firm has already been dissolved and the income has already been taxed in the hands of the proprietary concern. In the light of the above facts and Page No 4 M/s. Tushar Jems vs. ITO circumstances, we consider that it would be appropriate to restore this case to the file of the Assessing Officer to decide the issue de-novo that in case the firm has been dissolved before the date of transaction and the assessee has duly shown the receipt in the hands of the proprietary concern then the same should have been taxed in the hands of the proprietary concern. Accordingly, the case of the assessee is set aside to the file of the Assessing Officer for deciding afresh as directed above.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 18-11-2021