RAVI BANSILAL DARIRA,MUMBAI vs. CIRCLE 15(3)(1), MUMBAI, MUMBAI

Briefly, the facts of the case are that the assessment in this case was completed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 („the Act‟), vide order passed by the NFAC, Delhi dt. 24-02-2025, wherein the AO has made an addition of Rs. 4,61,83,532/- as undisclosed business income in the hands of the assessee. The assessee thereafter carried the matter in appeal before the Ld.CIT(A), who has since dismissed the assessee‟s appeal and against the said order, the assessee is in appeal before us.

During the course of hearing, the Ld.AR submitted that the assessee was carrying on business as sole proprietor under the name and style of Raviraj Process Controls upto 31-03-2022 and w.e.f. 01-04-2022, the entire business was transferred to a newly incorporated company, namely, Raviraj Process Controls Private Limited under a duly executed business transfer agreement and all assets, liabilities, contracts, customers and operations stood vested in the company. It was further submitted that the said company has filed its return of income for AY. 2023-24 declaring total income of Rs. 29.49 crores which includes transactions under dispute. It was further submitted that the AO treated the entire amount of Rs. 4,61,83,532/- appearing in Form-26AS of the assessee as undisclosed business income without appreciating that the business already stood transferred, the invoices were raised by the company and not by the assessee and the income already been offered to tax in the return of income filed by the assessee-company. It was submitted that Form-26AS is only an information statement and cannot determine the taxability by itself and real income theory mandates taxation in the hands of the person, who actually earned and retained the income, in the present case, the company. It was submitted that the entire disputed turnover is already offered to tax in the company‟s assessment and there is no escapement of income and in fact, claim of TDS credit by the assessee was a procedural necessity, since TDS was wrongly deducted under his PAN by the customers and submitted that the addition leads to impermissible double taxation, which as per settled legal position cannot be sustained. It was also submitted that the assessee has filed detailed submissions before the Ld.CIT(A), however, the submissions so filed have not been considered and which has resulted in grave injustice. It was accordingly submitted that necessary relief be provided to the assessee.