Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “DB” BENCH, JABALPUR
O R D E R
PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of the National Faceless Appeal Centre (NFAC)/CIT(A) passed u/s 143(3) and 250 of the Act.
At the time of hearing, the Ld.AR of the assessee submitted that the grounds of appeal No.2,3 & 4 are not pressed. Accordingly, they are withdrawn and are dismissed. And the effective grounds of appeal are No.1 and 5 to 9 of the appeal memo.
Satyendra Textile .Jabalpur.. - 2 -
The brief facts of the case are that, the assessee is an a partnership firm. The Income Tax Department has received information that there was cash deposits of Rs. 12,60,000/- during the demonetization period in the bank account with the SBI, Jwaharganj Branch, Jabalpur and the account was in the name of M/s Satyendra Textiles. The Assessing Officer (AO) found that the assessee firm has not filed the return of income u/sec 139 of the Act and notice u/sec 142(1) of the Act was issued. In compliance to notice, the return of income for the A.Y 2017-18 was filed on 23.03.2018 disclosing a total income of Rs.Nil and notice u/sec 142(1) of the Act was issued. In compliance, it was mentioned that the partnership named M/s Satyendra Textiles was converted into proprietorship concern w.e.f 01.04.2011 and no business activities were carried out by the partnership firm in the F.Y 2016-17.Further Sri Anand Kumar Jain is running the business in the name of Satyendra Textiles and has maintaining been maintaining the books of accounts and are Audited U/s 44AB of the Act and the Anand Kumar Jain has filed return of income for the A.Y 2017-18 disclosing a total income of Rs. 3,24,808/- and the entries /deposits in the bank account are treated as business receipts. Since the firm was Satyendra Textile .Jabalpur.. - 3 - already closed and the transactions of cash deposits were considered in the books of accounts of Anand Kumar Jain hence no addition is tenable. Whereas the AO was not satisfied with the submissions and made addition dealt at page 3 of the order as under:
“Contention of the assessee is not acceptable prima facie The assessee is engaged in business activities since long back. He is well aware of the concept of entities viz. partnership firm and proprietorship concerns. Even he continued the business in the name of M/s Satyendra Textile as proprietorship concern and continued the bank account, he must have changed the PAN in the Bank He didn't produce copy of any documentary evidence in respect of seeding of correct PAN i.e. PAN of the individual in the bank account. During the course of the assessment proceedings, it has simply been stated that the assessee firm M/s Satyendra Textile has been dissolved and during the F. Y. 2016- 17 relevant to the A. Y. 2017-18 it has not carried on any business activities. On perusal of the bank account no. 10526464199, it is clear that it is in the name of M/s Satyendra Textile and it is linked to PAN: ABJFS4792D ie the PAN of M/s Satyendra Textile (Firm). If the contention of the assessee is accepted primarily that the cash deposited in the said bank account belongs to Shri Anand Kumar Jain and his proprietorship concern M/s Satyendra Textile, genuineness of the claim is still to be verified. Accordingly, proceedings u/s 148 of the Income Tax Act, 1961 are being initiated separately in the case of Shri Anand Kumar Jain Prop. M/s Satyendra Textile to verify the source of the cash deposits in the bank account of the Firm M/s Satyendra Textile and whether it pertains to his proprietorship concern.
Satyendra Textile .Jabalpur.. - 4 -
However, to protect the interest of the revenue, income of the assessee firm is computed as under on protective basis” 4. The AO has finally assessed the total income of Rs. 3,24,611/-and passed the order u/s 143(3) dated 02.12.2019.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal, submissions of the assessee and findings of the AO but concord with the action of the AO and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal.
6. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in confirming the action of the AO in making addition of Rs.3,24,611/- on protective basis, irrespective of the fact that the said firm was converted into proprietary concern and the assessee has disclosed the cash deposits in the individual account of M/s Anand Kumar Jain therefore there cannot be any additions in the hands of the firm which is already closed. Further The Ld. AR emphasized on the facts that the Income Tax Department was informed about the closure of of the Satyendra Textile .Jabalpur.. - 5 - partnership firm. The Ld.AR substantiated the submissions with the factual paper book, synopsis and prayed for allowing the appeal. Per Contra, the Ld. DR supported the order of the CIT(A).
7. We heard the rival submissions and perused the material on record. The sole matrix of the disputed issue submitted that the CIT(A) has erred in confirming the addition of Rs. 3,24,611/- which is the business income offered by the assessee Shri Anand Kumar Jain in his individual capacity as a proprietary concern and the cash deposits in the SBI bank account have been considered as business receipts in the return of income. The partnership firm named M/s Satyendra Textiles was converted into proprietorship concern w.e.f 01.04.2011 and no business activities were carried out by the partnership firm in the F.Y 2016- 17.Further Anand Kumar Jain is running the business in the name of Satyendra Textiles and has maintaining been maintaining the books of accounts and are Audited U/s 44AB of the Act and the Sri Anand Kumar Jain has filed the return of income for the A.Y 2017-18 disclosing a total income of Rs. 3,24,808/- and the entries/deposits in the bank account are treated as business receipts. The assessee firm was closed and the assessee has filed a letter
Satyendra Textile .Jabalpur.. - 6 - with the income tax department on 14.08.2013 and the Ld.AR demonstrated the letter placed at page 67 of the paper book which is not disputed. The Ld. AR emphasized that the return of income for A.Y 2017-18 of Shri Anand Kumar Jain was processed u/s 143(1) of the Act dated 12.07.2017.
8.Further the Ld.AR submitted that the CIT(A) has confirmed the action of the AO without considering the fact that said firm was closed in the A.Y 2011-12 and subsequently the partner of the firm has been running the business and maintaining the bank account in the name of M/s Satyendra Textiles. The Ld. AR referred to the computation of income where the assessee has offered income of Rs. 3,24,611/- under income from business in the name and style of M/s. Satyendra Textiles and the CIT(A) has not made any enquiries in respect of the income tax return filed by Shri Anand Kumar Jain for the A.Y 2017-18 and any proceedings either under section 143(3) of the Act or U/sec147 of the Act are initiated by the income tax department. Hence the addition of Rs. 3,24,611/- in the hands of the assessee/Partnership firm on the protective basis is not tenable. Accordingly, the order of the CIT(A) is set aside and we direct the Assessing
Satyendra Textile .Jabalpur.. - 7 - officer to delete the addition and allow the grounds of appeal in favour of the assessee.
In the result, the appeal filed by the assessee is partly allowed.
Orders pronounced in the open court on 18.09.2023