ITO, KOTA vs. PATEL AGARWAL & COMPANY, KOTA

PER SHRI KUL BHARAT, J.M.

This appeal by the revenue is directed against the order of ld. CIT (A), Kota,

dated 28.08.2013 pertaining to assessment year 2009-10. The revenue has raised

the following grounds of appeal :-

“ On the facts and in the circumstances of the case, the ld. CIT (A) has erred in :

(i) Cancelling the AO’s order u/s 147 for assessing the long term capital gains in the status of the firm, ignoring altogether the facts of the relevant registered deed, which explicitly reflected that the plot in question was in possession of the firm upto 26.09.2008 i.e. date of sale ;

(ii) Accepting the additional evidence without calling for any remand report from the Assessing Officer ;

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(iii) The appellant craves liberty of raise additional ground and to modify/amend the ground of appeal at the time of hearing.” 2. Briefly stated the facts of the case are that the case of the assessee was

picked up for scrutiny assessment and the assessment under section 144 read with

section 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was passed vide order dated 6th March, 2013. While framing the assessment, the AO

computed the income by invoking the provisions of section 50C of the Act at Rs.

1,17,57,820/-. On further appeal to the ld. CIT (A), the appeal of the assessee was

allowed and the assessment order was quashed on the ground that the said notice

under section 148 was issued against the non-existing person.

section 147 of the Act.

4.1. The ld. D/R submitted that the ld. CIT (A) was not justified in cancelling the

order.

4.2. On the contrary, the ld. Counsel for the assessee submitted that all the

evidences were placed before the AO and it was contended that the firm had already

been dissolved.

4.3. We have heard rival contentions, perused the material available on record

and gone through the orders of the authorities below. We find that the ld. CIT (A)

has given the finding of fact by observing as under :-

“ From the perusal of copy of order sheet in the case of Shri Subhash Agarwal, it was seen that the AO asked for details of property sold and purchased with supporting document. The AO recorded on the order

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sheet that the property was purchased on 27.07.1996 in co-ownership with Shri Mani Bhai Patel. It was also noted by the AO that copy of allotment letter of RIICO allotting plot in joint name of Shri Mani Bhai Patel and Shri Subhash Agarwal was furnished by A/R of Shri Subhash Agarwal. From the above, it is clear that the issue of taxing the capital gain in the hands of partner was before AO and he had made detailed enquiries before concluding the assessment in the case of Shri Subhash Agarwal. Without going into the other aspects of the case, the issue is decided on legal grounds only. As mentioned by me earlier, the firm ceased to exists on death of one of the partners and, therefore, notice u/s 148 cannot be issued to a none existing person. Once this fact came to knowledge of AO, he should have withdrawn the notice and served it on the legal representative of the deceased partner and the sole surviving partner as representative of dissolved firm. It is also held that the capital gain arising from above transaction was disclosed in the hands of partner and was enquired into by the AO, therefore, reopening of assessment in the case of firm is merely change of opinion (it is worth mentioning that the AO of assessee and its partner, Shri Subhash Agarwal is same (ITO, Ward 1(1), Kota). Therefore, the reopening of assessment is also held to be invalid. The very basis, on which the assessment order was passed, did not survive. Therefore, order u/s 147 is cancelled.”

The finding of facts as mentioned above, is not controverted by the revenue.

Therefore, we do not see any reason to interfere in the order of ld. CIT (A), same is

hereby affirmed. The ground of the revenue is rejected.

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Order pronounced in the open court on 10 /03/2017.

Sd/- Sd/- ( HkkxpUn] ½ ( dqy Hkkjr) (BHAG CHAND ) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 10/03/2017. d/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

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