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Income Tax Appellate Tribunal, DELHI BENCH “I-2”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER BENCH 1. These are the two appeals filed for Assessment Year 2011-12 on same issue against the same order of the ld CIT (A) -27, New Delhi dated 23/12/2016 in case of M/s PICO Deepali Overlays Consortium ( In Short “AOP” or “ Assessee” ) by two different parties.
Brief facts shows that Assessee, in whose case assessment order as well as appellate orders are passed are M/s PICO Deepali Overlays Consortium which is undisputedly an Association of Persons (in short AOP) constituted having PAN No AABAP1880F.
PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) According to the revenue authorities M/s Deepali Designs and Exhibits Private Limited ( In short “Deepali”) is a member of This AOP. Their version is based on the agreement of consortium where the assessee is mentioned as one of the members holding 20 % share. M/s Deepali design Exhibits Private Limited is denying that it is a member of assessee AOP. As the additions made by the ld AO has been confirmed by the ld CIT (A) therefore the recovery proceedings were initiated against the assessee u/s 177 (3) of the act vide order dated 29/9/2017. Hence , as alleged by revenue being the member of assessee AOP, M/s. Deepali Design and Exhibits Pvt. Ltd preferred this appeal vide ITA No. 1561/Del/2017 against the order of the d CIT (A) .
3. Case history shows that assessee consortium was assessed by the Assistant commissioner of Income Tax , Central Circle -8, New Delhi vide order dated 30.05.2014 passed u/s 153A rws 144 and 144C of the Act, wherein, the income of the consortium is assessed on Rs. 4,05,19,46,960/-. The ld AO in passing the order in consortium has held that appellant M/s. Deepali Design and Exhibits Pvt. Ltd is having 20% in the above joint venture. The ld AO has held that the consortium consists of three partners (i) M/s. PICO Hong Kong with 60% share, (ii) M/s. PICO Event Marketing India Pvt. Ltd; (iii) M/s. Deepali Design and Exhibits Pvt Ltd, both of them having 20% share in the joint venture. Further, the order of the ld AO was challenged before the ld CIT (A) who vide order dated 23.12.2016 dismissed the appeal of the assessee. As the demand crystallized against the AOP, by order u/s 177 (3) of the act it was held to be recoverable from the Deepali design and Exhibit Private Limited. Therefore, this appeal has been filed by Deepali Design and Exhibits Pvt. Ltd stating that it is alleged member of the consortium.
4. Initially it is the contention of the assessee that assessee has been treated as member of the association of persons and the tax recovery has been fastened in term of section 177(3) of the Act. The main contention of the assessee is that the assessee is aggrieved with the order of the ld CIT (A) and the ld AO in confirming the additions in the hands of the AOP where the assessee is alleged to be a member, and tax demand of AOP is held to be recoverable from Deepali and this appeal is filed.
According to provisions of Income Tax Act as per section 253 of the Act an „assessee‟ who is aggrieved by the specified order may file the appeal before the tribunal.
6. The word „assessee‟ is defined u/s 2(7) of the Act, as under “(7) "assessee" means a person by whom [any tax] or any other sum of money is payable under this Act, and includes— PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) (a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income [or assessment of fringe benefits] or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person ; (b) every person who is deemed to be an assessee under any provision of this Act ; (c) every person who is deemed to be an assessee in default under any provision of this Act ;
No doubt the assessee has been served an order u/ 177 (3) of the act dated 29/9/2017 according to which assessee was directed to pay Rs 1871882268/- which were demand pertaining to AY 2011-12 to 2013-14 in case of the assessee AOP. According to section 177 (3) of the act , every person who was at the time of discontinuance or dissolution a member of the association of persons shall be jointly and severally liable for the amount of tax, penalty or other sum payable, and all the provisions of this Act, so far as may be, shall apply to any such assessment or imposition of penalty or other sum. Further as per sub section (4) Where such discontinuance or dissolution takes place after any proceedings in respect of an assessment year have commenced, the proceedings may be continued against the persons referred to in sub-section (3) from the stage at which the proceedings stood at the time of such discontinuance or dissolution, and all the provisions of this Act shall, so far as may be, apply accordingly. We have not been appraised that what are the actions taken by the Deepali against the order passed u/s 177 (3) of the act. It was also not addressed before us whether such order is required to be passed and whether such order is appealable, if yes, before which appellate authority. However the moot question involved in the present case which requires our consideration is whether Deepali is a member of the AOP or not as both the parties have taken a different stand on this aspect.
8. Therefore, an interim order was passed on 03.01.2018, wherein, the ld AO was directed to verify and submit the remand report categorically giving his finding as to whether assessee is member of AOP or not . If it is member, then what is determinate share of the assessee in the AOP. 9. Meanwhile, M/s. PICO Deepali Overlays Consortium filed an appeal on 11.07.2018 against the same order of the ld CIT(A)-27 which is signed by the Deepali listed as . An application for condonation of delay was also filed. The main reasons stated are that appeal No. 1561/Del/2017 was filed by alleged member of the AOP. During the course of hearing of that appeal, the bench expressed its apprehension on validity of Page | 3 PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) form No. 36 stating that appeal can be filed by the Member of the AOP in the name of the AOP, however, ITA NO. 1561/Del/2017 was filed by the member as alleged member of the AOP. Therefore, on such apprehension the assessee has now filed the appeal in . It was stated that the documents and paper book and remand report etc filed in that appeal may be considered as filed in this appeal. Simultaneously, in ITA No. 1561/Del/2017 assessee has stated that as the AOP, itself has now filed the appeal in ITA NO. 4921/Del/2018 on 12.07.2008, the appeal in ITA No. 1561/Del/2017 has become infructous . Therefore, vide letter dated 14.07.2018, Deepali requested for withdrawal of appeal in ITA No. 1561/Del/2017.
10. Accordingly, ITA No. 1561/Del/2017 filed by Deepali Design and Exhibits Private Limited as alleged member of M/s PICO Deepali Overlays Consortium for Assessment Year 2011-12 is dismissed.
11. Now we come to ITA No. 4929/Del/2018. The appeal has been filed late. In fact, same should have been filed on or before 14.04.2017 but it was filed on 11.07.2018, the application for condonation of delay was also filed on 11.07.2018 stating above facts and explaining the delay in filing of the appeal.
12. The ld DR vehemently objected with respect to the delay in filing of the appeal.
We have carefully considered the rival contentions and find that though the order of the ld CIT(A) has been passed on AOP i.e. M/s. PICO Deepali Overlays Consortium but By order dated 177 (3) of the act , recovery of the demand etc was made on one of the alleged member of the AOP M/s. Deepali Design and Exhibits Pvt. Ltd, treating it as a member. So Deepali filed an appeal in ITA No. 1561/Del/2017. There was a specific query during the course of hearing of ITA no 1561/Del/2017 that how M/s. Deepali Design and Exhibits Pvt Limited is an “ assessee” which is „aggrieved‟ by the any of the specified order u/s 253 of the Income tax Act, who can file an appeal before ITAT, AOP immediately filed an appeal in its own name signed by Deepali to avoid any confusion. Assessee AOP contends that apprehension of the AOP was valid and there was sufficient cause in delay in filing of the appeal. Looking at the facts and circumstances of the issue involved, it is apparent that assessee does not get any benefit in filing the belated appeal. Furthermore, on technical issues if the delays are explained, in the larger interest of the merits of the case, delay should be condoned, if sufficient cause is shown. In the present case, assessee has shown sufficient cause therefore, for rendering substantial justice and adopting a pragmatic and liberal approach we condone the delay in filing of the appeal. Page | 4 PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) 14. On the merits of the issue, we note that the appeal has been filed in the name of M/s. PICO Deepali Overlays Consortium, signed by the authorized signatory of M/s. Deepali Design and Exhibits Pvt. Ltd. In the present case in the AOP M/s. PICO Deepali Overlays and Consortium, M/s. Deepali Design and Exhibits Pvt. Ltd is considered as a member by the ld AO which is denied by the assessee. vide direction dated 03.01.2008, the ld AO has submitted the remand report dated 27.03.2018 as under:- “On the directions dated 03.01.2018 of Hon'ble ITAT The Remand Report is submitted as under:
1. 1. The assessee M/s Pico Deepali Overlays consortium filed its return & income for the assessment year 2011-12 on 22.06.2012 in the state of AOP during the cause of assessment proceedings. The assessee furnished following replies which clearly showed that the assessee AOP was a consortium between Pico Hongkong Limited, Pico event marketing (India) Pvt. Ltd. & M/s Deepali Design & Exhibits Pvt. Ltd.
1. Letter dated 09.10.2012 Annexure'A' 2. Letter dated 19.12.2012 Annexure 'B' 3. Letter dated 03.12.2012 Annexure C In state of account of the assessee were duly audited by M/s Nangia & Co Chartered Accountants and the amount proceedings were also attended by Chartered Accountant and the assessment proceedings were also attended by Chartered Accountant of the firm. From the perusal of the documents furnished by the assessee it emerges that the auditors had only audited the books of account of the assessee maintained in the state of AOP commits of their members namely M/s Pico Hongkong Ltd, Pico Events Marketing (India) Pvt Ltd and M/s Deepali Design & Exhibits Pvt Ltd.
2. The assessee also produced copy of Audit Report before the Deputy Direct of Income Tax transfer pricing Officer-11(7), New Delhi. Copy of order u/s 92CA(3) dated 27.01.2014 is enclosed as Annexure 'D'.
3. The status of AOP was not challenged during the course of assessment proceeding or during the cause of appellate proceedings before the Ld. CIT(A). The Ld. CIT(A) has confirmed the entire addition made in the states of AOP. In furtherance of order dated 03.01.2018 passed by the Hon'ble ITAT M/s Deepali Designs & Exhibits P Ltd. has filed documents in order to substantiate case that it was not a member of the AOP documents filed by M/s. Deepali Designs & Exhibits P Ltd have been examined and the reports submitted as under:- i. The assessee M/s PICO Deepali Overlays Consortium had itself had claimed status of AOP in its return of income. ii. It is a matter of record that the assessee had duly filed copies of agreements dated 19.12.2009 and 01.06.2010 entered into by M/s PICO Hongkong Ltd., M/s Pico Event Marketing India Pvt. Ltd. & M/s Deepali Designs & Exhibits Page | 5 PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) Pvt. Ltd. and formed a consortium for participating in the bid for Commonwealth Games 2010 , Delhi. As per terms of agreement dated 01.06.2010, M/s Deepali Designs and Exhibits P Ltd. was to receive from the consortium entire money related to their scope of activities carried out after a deduction of 23% in records of statutory and non statutory levies. iii. M/s Deepali Designs and Exhibits P Ltd. has referred to CBDT's Circular No. 07/2016 dated 07.03.2016 on the subject of clarification regarding taxability of Consortium members and certain judicial pronouncements on the issue of taxability of consortium. In this regard it is submitted that Board's Circular not applicable in view of the fact that in the instance case. The members of the consortium had themselves formed an AOP and filed that return of income of AOP for this purpose of changeability of tax. No contrary view has been taken by the department while adopting the status of the assessee. Case laws cited by the M/s Deepali Designs and Exhibits (P) Ltd are also of no help to it. In the case of Konkani Bharat Dairy Farm (AOP) vs. Assistant Commissioner of Income Tax, Circle-2, Nashik (2008) 113 ITD 72 (Pune), the Hon'ble ITAT while deciding the issue has referred to decision of the Hon'ble Supreme Court in the case of G. Murgesan & Brothers vs. CIT(1933) ITR 432 (SC). In this case the Apex Court held that for forming an AOP, the members of the Association must join together for the purpose of producing an income. An AOP can be formed only when two or more individuals voluntarily combine together for a certain purpose. Hence volition on the part of the members of the association is an essential ingredient. In this case, 4 Brothers driving income from life interest in a house property and dividend from companies in respect of shares jointly held by them had filed their return for the A.Y. 1957- 58 & 1958-59 in the status of AOP and for the A.Y.s 1959-60 & 1962-63, they submitted their returns as individual specifically stating that they were no more functioning as AOP. The department had assessed them in the status of AOP for all the 6 years. The Hon'ble SC held that the members had specifically stated themselves that they were no more functioning as AOP for Assessment Year 1959-60 & 1962-63 and in case of AOP it is always open to its members to withdrawn from the same. In case of the M/s Deepali Overlays Consotium, the books of accounts were maintained by the assessee in the status of AOP which were duly audited by the Chartered Accountants. The appellant had filed its return of income in the status of AOP which was accepted by the AO. M/s Deepali Overlays Consortium had not filed any evidence during the course of assessment proceedings that it was not a member of AOP. In the lights of above discussion it is submitted that the AO had rightly assessed M/s Pico Deepali Overlays Consortium in the status of AOP where M/s Deepali Designs & Exhibits Pvt. Ltd. was a member of the AOP.”
The assessee is also submitted its rejoinder to the remand report as under:- “1. The Hon'ble Tribunal vide order dated 03.01.2018 in the captioned matter had directed that "Now in order to determine, whether the assessee is a member of AOP Page | 6 PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) or not, the AO is directed to submit a remand report categorically giving the finding as to whether the assessee is a member of AOP or not and if he is a member, then what is the determinate share of the assessee in the AOP. The assessee may file all the requisite documents and evidences before the Id AO in order to substantiate its case that it is not a member of the AOP."
2. Deepali Designs & Exhibits Pvt. Ltd. (DDEPL) filed the documents and evidence before the Id. AO and these may be considered as part of this reply, for the sake of brevity. Copy of the introductory notes filed before the assessment officer as per the direction of this Hon'ble tribunal and the index of the annexures filed along is enclosed herewith as Annexure-1 and 2.
The AO vide his remand report dated 27.03.2018 has concluded that "the AO had rightly assessed M/s Pico Deepali Overlays Consortium in the status of AOP where M/s Deepali Designs & Exhibits Pvt. Ltd. was a member of the AOP."
The above conclusion is premised on, in sum and substance, the following as per the remand report: (i) M/ s Pico Deepali Overlays Consortium filed its return of income in the status of AOP. (Reply - Undisputedly the return of income was filed by Mr. Tham Kok Fai who is a director of Pico Event Marketing (India) Pvt. Ltd.; he is not the manager or AR of M/s Pico Deepali Overlays Consortium nor of M/s Deepali Designs & Exhibits Pvt. Ltd. or in any way related to it. No evidence to suggest any role, involvement, consent etc. of M/s Deepali Designs & Exhibits Pvt. Ltd. in the filing of the return.) (ii) The replies furnished during assessment proceedings showed that M/s Pico Deepali Overlays Consortium is an AOP. (Reply - No evidence to suggest that the status of the assessee was ever made an issue during the assessment proceedings despite overwhelming material to suggest that Deepali Designs & Exhibits Pvt. Ltd. could not have been a member of the AOP. No notice was ever issued to Deepali Designs & Exhibits Pvt. Ltd. and no authorised representative of Deepali Designs & Exhibits Pvt. Ltd. ever participated in the assessment proceedings. The status of Pico Deepali Overlays Consortium as an AOP was simply presumed by ignoring materials to the contrary.) (iii) Assessment proceedings were attended by M/s Nangia & Co, chartered accountant. (Reply - Undisputedly M/s Nangia & Co are not the authorised representative of Deepali Designs & Exhibits Pvt. Ltd. There are two authorizations in favor of M/s Nangia & Co; one purportedly by the consortium, but signed by a director of Pico Event Marketing (India) Pvt. Ltd., and the other by Pico Event Marketing (India) Pvt. Ltd. for itself.) (iv) The status of AOP was never challenged during the assessment proceedings and the first appellate proceedings. (Reply - The assessment proceedings and the first appellate proceedings took place behind the back of Deepali Designs & Exhibits Pvt. Ltd. Deepali Designs & Exhibits Pvt. Ltd. had no knowledge about the fact that a third party had made it a member of an AOP and had no role, involvement etc. in the assessment proceedings and the first appellate proceedings.) 5. In addition to the above, the remand report has relied on the judgment of the Supreme Court of India in G. Murugesan & Brothers v CIT, 88 ITR 432 (SC). However, the Page | 7 PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) AO has failed to realize that this judgment supports the case of assessee. The ratio decidendi of this judgment is that "An "association of persons" can be formed only when two or more individuals voluntarily combine together for a certain purpose. Hence volition on the part of the members of the association is an essential ingredient." (page 437 of the judgment, last paragraph) The remand report does not disclose or the AO has not come across (because there is none) any material to show volition on the part of Deepali Designs & Exhibits Pvt. Ltd. to be a member of the purported AOP.
The presumption that PICO Deepali is a member AOP under the provisions of Income Tax Act, 1961 is illegal, bad in law and based on presumption contrary to fact/material available on record. It is also contrary to Circular No. 07/2016 dated 7th March, 2016 (Clarification regarding taxability of consortium members [Page 47-48 of CLC], Judgment of Delhi High Court in the case of Linde AG, Linde engineering division v. DCIT, [2014] 44 taxmann.com 244 (Delhi) [Page 01-44 of CLC] - upheld by Hon'ble Supreme Court in Director of Income Tax v. Linde AG, Linde engineering division, [2016] 73 taxmann.com 212 (SC) [Page 47-48 of CLC], CTCI Overseas Corporation Ltd. v. Director of Income Tax-1, International Taxation, [2014] 366 ITR 33 (Delhi) [Page 49-51 of CLC], 7. It is further submitted that the remand report admits that during the assessment proceedings the AO had knowledge of and on record both the agreements viz. agreement dated 19.12.2009 and 01.06.2010. However despite this, the AO and the assessment order has relied only on the agreement dated 19.12.2009 and has ignored the agreement dated 01.06.2010 that wholly, substantially and materially amended the legal relationship of the parties and was entered into several months before the income generating activity commenced. Further, it was never the case of the revenue either during the assessment proceedings or the remand proceeding that the agreement dated 01.06.2011 is a sham or a non-genuine document.
Without prejudice to above submission it may also be submitted that income in respect of scope of work of DDEPL is already included and taxed in the hand of DDEPL, whereas the same is also included by AO in the case of AOP. This amounts to double taxation of the same income.
As per direction of the Bench, all the relevant documents and written submission were submitted before Assessing Officer on 24.01.2018. The copy of remand report was supplied to DDEPL on 28 March 2018. DDEPL filed Paper Book (Page 1 to Page 1279) and written submission before Assessing Officer in support of its contention that DDEPL is not a member of AOP as it had defined scope of work which was executed independently and material has been filed to show the same.
It is submitted that the finding of the remand report is also contrary to the direction of the Hon'ble tribunal. The remand report has concluded that Deepali Designs & Exhibits Pvt. Ltd. is a member of the purported AOP. However, the remand report is silent on the determinate share of Deepali Designs & Exhibits Pvt. Ltd. in the said AOP. It is submitted that the failure of the AO to give a finding in this regard is not accidental. Undisputedly (even if the return of income of the AOP is held to be true and correct since the AO has placed entire reliance on the return of income) the share of Deepali Designs & Exhibits Pvt. Ltd. in the said AOP is zero percent. The AO did realize that this fact in itself would be a sufficient reason to hold that Deepali PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) Designs & Exhibits Pvt. Ltd. could not be the member of the AOP. Hence the AO has remained silent on this issue.
It is further submitted that the remand report, by ignoring the specific direction of the Hon'ble tribunal to specify the determinate share of the members of the AOP, has failed bring forth a vital fact. This fact is that undisputedly (even if the return of income of the AOP is held to be true and correct since the AO has placed entire reliance on the return of income) Pico Hong Kong Limited had 100% share in the AOP. Despite a company having 100% share in a purported AOP (and of the other two members having zero percent each) and that company using a sister concern to file the return, attend assessment proceedings etc.. As per our Knowledge, the AO has till date never issued any notice either during the assessment proceedings or during recovery proceedings or during remand proceedings to Pico Hong Kong Limited. Even a cursory examination of the materials on record would have shown that Pico Deepali Overlays Consortium is nothing but a trade name used by Pico Hong Kong Limited to do business in India but remain unaccountable under revenue laws. It is submitted that, to the best of our knowledge, Pico Hong Kong Limited did not obtain a PAN and has never filed a return of income; instead, it has been using the facade of Pico Deepali Overlays Consortium to generate income in India, repatriate it to Hong Kong and remain unaccountable for income tax.
It is reiterated that this reply is limited to the findings and observations in the remand report. Deepali Designs & Exhibits Pvt. Ltd. would rely on the materials submitted during the remand proceedings and written submissions submitted before the Hon'ble Tribunal to further substantiate its case that Deepali Designs & Exhibits Pvt. Ltd. is not member of the AOP and that receipt towards its scope of work is wholly and solely the income of Deepali Designs & Exhibits Pvt. Ltd.”
On the basis of above, the first issue that is required to be adjudicated as to whether the M/s. Deepali Design and Exhibits Pvt. Ltd is the member of AOP or not. This issue has arisen because this appeal is signed by M/s. Deepali Design and Exhibits Pvt. Ltd which itself says that it is not a member of AOP but the ld AO has treated it as AOP. According to Rule 47(1) of the Income Tax Rules, 1962, the appeal shall be signed by the persons specified in Rule 45(2) of the Income tax Rules 1962. The Rule 45(2) provides that such form is to be signed by the person who is authorized to sign return of income u/s 140 of the Act. As the assessee is AOP according to section 140(e) of the Act, it can be signed by any member of the association or principal officer of the association. Therefore, it is apparent that form No. 36 filed before us is required to be signed by member of the association. Further, it is also the claim of the assessee that if the assessee is ultimately held to be member of AOP, then it should have been given an opportunity of hearing before holding it to be member of that AOP and ultimately responsible for recovery of tax. On reading of the assessment order it is apparent that the ld AO has treated the assessee as one of the member of the AOP. Now the same facts are disputed by the assessee. At page No. 4 of the assessment order, this fact has Page | 9 PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) been noted by the ld AO. In the remand report also the ld AO has pointed out letter dated 09.10.2012, 19.12.2012, 03.12.2012 wherein, it has been stated that assessee is a member of AOP. As per the account of the assessee M/s. Deepali Design and Exhibits is also mentioned as a member. As per para No. 3 of remand report also notes that status of AOP was not at all challenged during the course of assessment proceedings or the appellate proceedings. Against this, the assessee also submitted a paper book filed by 25.01.2018 before the ld AO containing 1 to 1279 documents and several judicial precedents. The assessee contested that Deepali Design and Exhibits Pvt. Ltd is not at all related with PICO Hongkong and PICO India. The assessee further referred an agreement dated 19.12.2009 entered into by M/s. PICO Hongkong Ltd , M/s. PICO Event marketing India Pvt. Ltd and M/s. Deepali Desings and Exhibits pvt. Ltd. It is stated that at the end of the March 2010 because of dispute between the parties the relationship changed. Therefore, it was stated that from May 2010 onwards the assessee was not a member of the AOP. The ld AR further referred the addendum to the agreement dated 01.06.2011, wherein, the original agreement dated 19.12.2009 were amended. The salient features of the agreement were also explained. On that basis, it was stated that Deepali Design and Exhibits Pvt. Ltd is not member of AOP. However, it was submitted that Deepali Design and Exhibits Pvt. Ltd performed its scope of work in accordance with original contract but it is not a member of the AOP. Though the ld AR has submitted that while filing the return of income in case of APO, same was undeniable filed in the status of AOP but the grievance of the Deepali is that no consent etc was taken of Deepali while filing return as such. We do not find any such provision in the act that at the time of filing of the return of AOP each of the member must consent. It is entrusted to one party only. Therefore this arguments of the ld AR does not deserve any consideration. Further the AOp has been assessed as such where the AOP members participated in the assessment proceedings. The submission as well as the annual audited accounts of the AOP also confirms the status of the assessee a AOP, For subsequent assessment years also the assessee has been assessed as AOP. There is no objection to this during the assessment as well as appellate proceedings. Subsequently also asseessee is assessed as AOP which is evident from order u/s 177 (3) of the act. Therefore now this arguments also deserves rejection. Further argument raised that the authorized represesntative appearing before the ld AO were not the authorized repersestative of Deepali but of other members of AOP. This argument also deserves to be rejected in view of decision of Honourable supreme court An order of assessment made subsequent to the Page | 10 PICO Deepali Overlays consortium Vs. ACIT &4929/Del/2018 (Assessment Year: 2011-12) dissolution of an association of persons assessing its income, after serving a notice upon one of its members, can be enforced against the other members who were not served, and proceedings for recovery of arrears of tax so assessed can be initiated against such other members [ CIT v. Raja Reddy Mallaram, (1964) 51 ITR 285(SC). It I also not in dispute that the authorized representatives were duly authorized by AOP. No provision of law was shown to us that in case of assessment of AOP , all the members must authorize the person who is the respesent the AOP. Therefore now it is beyond doubt the assessee is correctly assessed as an AOP. Therefore now the only grievance of the assessee that is to be addressed is that whether Deepali is a member of the AOP or not. On this facts it is imperative that the ld AO must first decide that whether M/s. Deepali Design and Exhibits Pvt. Ltd is a member of PICO Deepali Overlays and Consortium as a member of PICO Deepali Overlays Consortium or not. Further, it is claimed that by subsequent agreements Deepali has exited the AOP. It could not be ascertained from the assessment orders that those agreements were before the lower authorities or not. Even if they are placed before lower authorities whether they have been examined from the angle of the controversy raised before us. Further it is stated that Deepali was not the members of the AOP after 1/6/2010. Further it is also not prohibited that member originally member of AOP cannot exit the AOP. Therefore this aspect needs greater examination by the ld AO. Further Deepali apparently did not have any opportunity to show to the assessing officer that it The LD AO opportunity of hearing to the Deepali. Thereafter, If it is held to be a member of the AOP , then it should be given a proper opportunity of hearing and then the ld AO should pass a fresh assessment order in accordance with law. If Deepali Design and Exhibits Pvt. Ltd is held to be not a member of AOP, then it does not have any locus standi in the present appeal against those orders passed by the lower authorities and further the tax demand raised on the AOP is not recoverable from the Deepali Design and Consortium Pvt. Ltd but by other means . In view of this, we set aside Assessment Year 2011-12 filed in the name of PICO Deepali Overlays Consortium and signed by Deepali Design and Exhibits Pvt. Ltd back to the file of the ld AO, with a direction to first decide whether Deepali Design and Exhibits Pvt. Ltd is a member of AOP or not. If it is held to be a member, then Deepali be given a proper opportunity of hearing on the merits of the various additions made in the assessment order u/s 69A and other disallowances u/s 37 of the Act in the hands of assessee AOP. After that ld AO may pass an order on assessee AOP