ASIAN SPORTS,PATIALA vs. ITO, PATIALA
आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “एस.एम.सी” , च᭛डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH
HEARING THROUGH: PHYSICAL MODE
᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य
BEFORE: SHRI. VIKRAM SINGH YADAV, AM
आयकर अपील सं./ ITA No. 514/Chd/2025
िनधाᭅरण वषᭅ / Assessment Year : 2016-17
Asian Sports
# 4307/2, Near Ram Ashram,
Glori Gate, Patiala-147001
बनाम
The ITO
Patiala
˕ायी लेखा सं./PAN NO: AAFFA6117R
अपीलाथᱮ/Appellant
ᮧ᭜यथᱮ/Respondent
िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Deepinder Singh, Advocate
राज᭭व कᳱ ओर से/ Revenue by :
Shri Vivek Vardhan, Addl. CIT, Sr. DR
सुनवाई कᳱ तारीख/Date of Hearing :
21/08/2025
उदघोषणा कᳱ तारीख/Date of Pronouncement : 22/08/2025
आदेश/Order
PER VIKRAM SINGH YADAV, AM
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC,
Delhi dt. 31/03/2025 pertaining to Assessment Year 2016-17. 2. Briefly, the facts of the case are that the assessment in this case was completed under section 147 r.w.s 144 r.w.s 144B of the Act vide order dt. 08/02/2024 wherein the AO made an addition of Rs. 7,89,260/- by estimating the net profit @ 10% of business transaction / sale proceeds amounting to Rs. 78,9,564/- and same was brought to tax in the hands of the assessee firm.
3. Against the order of the AO, the assessee carried the matter in appeal before the Ld. CIT(A), who has since sustained the order of the AO.
Against the order of the Ld. CIT(A), the assessee has preferred the present appeal before this Tribunal. 5. During the course of hearing, the Ld. AR submitted that in response to the initial show cause under section 148A(b) of the Act, the assessee has filed its submission wherein it was submitted that the assessee firm had got dissolved on 05/04/2014 and after the dissolution of the firm, one of the partners namely Shri Narinder Sharma continued the business of the firm in the capacity of sole proprietor. It was further submitted that the assessee firm also requested the bank to substitute the PAN number of the assessee firm with sole proprietorship PAN number. However, there was no change in the PAN number linked with the two bank accounts mentioned originally in the name of the assessee firm, and the sole proprietor continue to carry out the business transaction through said bank accounts. 6. It was submitted that since the assessee firm got dissolved on 05/04/2014, there was no business as such which was carried out in its name and it is the sole proprietor Shri Narinder Sharma who carried out the business and all the business transactions were reported as part of his financial statements and reference was drawn to the financial statements which are placed as part of assessee’s paper book at pages 46 to 48 wherein Shri Narinder Sharma has disclosed the sale turnover of Rs. 2,24,78,604/- and has reported net profit of Rs. 8,86,542/-. It was further submitted that both bank accounts were also reflected as part of the sole proprietorship balance sheet which is available at page 46 of the assessee’s paper book. It was accordingly submitted that thought the PAN number of the erstwhile assessee firm were linked with two bank accounts, all the business transaction- both deposits as well as withdrawals relates to 3
and were reported as part of the sole proprietorship business and accordingly, the accounts of the sole proprietorship was prepared and audited and basis the same, return of income was filed by the sole proprietor. In other words it was submitted that the transaction effectively pertains to the sole proprietorship which has since reported these transactions in his return of income and reference was drawn to the sole proprietor’s return of income which is available as part of the assessee’s paper book. It was accordingly submitted that no addition should be made in the hands of the assessee firm and necessary relief be granted to the assessee firm.
7. Per contra, the Ld. DR has been heard who has relied on the order of the Faceless Assessment Unit as well as of that of the Ld CIT(A).
8. I have heard the rival contentions and perused the material available on the record. The issue under consideration relates to the transaction undertaken through two bank accounts maintained in the name of the assessee firm. From the perusal of the record, it is an admitted fact that the assessee firm stood dissolved on 05/04/2014 and the dissolution deed is available as part of the assessee’s paper book placed on the record. Therefore, from a legal stand point, post dissolution, the assessee firm cannot be assessed and brought to tax in its own name. As far as the transactions in the two bank accounts are concerned, the assessee firm as response to the show cause under section 148 has stated as part of its submission filed on 04/03/2023 and thereafter on 16/03/2023 that all these transactions relates to the sole proprietor, Shri Narinder Sharma who has taken over the assessee firm business and which was carried on in the capacity of individual/sole proprietor. Further during the course of hearing with the assistance of the Ld. AR, I have gone through the financial statements of the sole proprietorship wherein the transaction effected through these two bank accounts have been duly reflected and the sales turnover have been reported to the tune of Rs.
2,24,78,604/- and the resultant profit thereof has been reported as part of sole proprietorship return of income which has been duly filed on 15/10/2016. In light of the same, I do not find any legal and justifiable basis for bringing the said transactions to tax again in the hands of the assessee firm. Therefore the addition so made and confirmed by the Ld. CIT(A) is hereby deleted.
9. In the result, appeal of the assessee is allowed.
(Order pronounced in the open Court on 22/08/2025 ) िवᮓम ᳲसह यादव
(VIKRAM SINGH YADAV)
लेखा सद᭭य / ACCOUNTANT MEMBER
AG
Date: 22/08/2025
आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to :
1. अपीलाथᱮ/ The Appellant
2. ᮧ᭜यथᱮ/ The Respondent
3. आयकर आयुᲦ/ CIT
4. आयकर आयुᲦ (अपील)/ The CIT(A)
5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH
6. गाडᭅ फाईल/ Guard File
आदेशानुसार/ By order,
सहायक पंजीकार/