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Facts
The appeals concerned the assessment of income from the business "Sheth Bhagwan Das Vittal Das and Sons." A compromise decree initially allotted the business to Amal Sheth, but Nirmala Sheth later alleged fraud by her sons and challenged the decree. The Assessing Officer had assessed the income substantively in Amal Sheth's hands and protectively in Nirmala Sheth's.
Held
The Tribunal noted that the business license was in Nirmala Sheth's name and she had alleged fraud. Therefore, the income should be assessed substantively in Nirmala Sheth's hands. Consequently, her appeals were restored to the AO for readjudication, while Amal Sheth's appeals were allowed.
Key Issues
Whether the business income should be assessed in the hands of Nirmala Sheth or Amal Sheth, considering the civil dispute and allegations of fraud.
Sections Cited
Income Tax Act
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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
आयकर अपील"य अ"धकरण, कटक "यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK (THROUGH VIRTUAL HEARING) "ी जाज" माथन, "या"यक सद"य एवं "ी राजेश कुमार, लेखा सद"य के सम" । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER आयकर अपील सं/ITA Nos.523 & 525/CTK/2025 ("नधा"रण वष" / Assessment Years : 2009-10 & 2010--11) Nirmala Sheth, Prop. Sheth Vs ACIT, Circle-2(1), Bhagwan Das Vittal Das and Sons, Cuttack near Bank of India, Nayasarak, Cuttack-753002 PAN No. : AGLPS 2909 M .. (अपीलाथ" /Appellant) (""यथ" / Respondent) आयकर अपील सं/ITA Nos.490,491,492 & 506/CTK/2025 ("नधा"रण वष" / Assessment Years : 2008-09,2009-10, 2010—11 & 2012-13) Amal Sheth, C/O. Sheth Bhagwan Vs ACIT, Circle-2(1), Das Vittal Das and Sons, near Bank Cuttack of India, Nayasarak, Cuttack- 753002 PAN No. : AGCPS 2147 J (अपीलाथ" /Appellant) .. (""यथ" / Respondent) "नधा"रती क" ओर से /Assessee by : Shri Mohit Sheth, Adv राज"व क" ओर से /Revenue by : Shri Ashim Kr Chakraborthy, ld CIT DR and Shri Vijaya Singh, ld Sr DR सुनवाई क" तार"ख / Date of Hearing : 2 /12/2025 घोषणा क" तार"ख/Date of Pronouncement : 2 /12/2025 आदेश / O R D E R Per Bench :
2 आयकर अपील सं/ITA No.523 & 525/CTK/2025 ("नधा"रण वष" / Assessment Years : 2009-10 & 2010--11) & 525/CTK/2025 are the appeals filed by the assessee against the separate orders dated 30.6.2025 & 18.7.2025 passed by ld CIT(A), Bhubaneswar-2 in Appeal No.CIT(A),Cuttack/10420/2016-17 & CIT(A), Cuttack/10271/2017-18 for the assessment year 2009-10 & 2010-11, respectively. 2. to 492 & 506/CTK/2025 are the appeals filed by the assessee against the order dated 30.6.2025 passed by CIT(A), Bhubaneswar-2 in Appeal No.. CIT(A) Cuttack/10624/2016-17, CIT(A) Cuttack/10419/2016-17, CIT(A),Cuttack/10622/2016-17 for the assessment years 2008-09, 2009-10, and 2012-13, and order dated 18.7.2025 in Appeal No. CIT(A),Cuttack/10259/2017-18 for the assessment year 2010-11.
Shri Mohit Sheth, ld AR appeared for the assessee and Shri Ashim Kr Chakraborthy, ld CIT DR and Shri Vijaya Singh, ld Sr DR appeared for the revenue.
It was submitted by ld AR that the issue is in regard to business under the name and style of “Sheth Bhagwan Das Vittal Das and Sons”. It was the submission that Smt Nirmala Sheth was the owner of the above said business i.e. Sheth Bhagwan Das Vittal Das and Sons and Shri Sajal Sheth, the elder son of Smt. Nirmala Sheth had filed a civil suit against Shri Amal Sheth and his mother claiming the share of the property. It was the submission that the Court of Civil Judge in C.S.(I) 529/06 dated 4.12.2006 passed a compromise decree, wherein, the business of Sheth Bhagwan Das Vittal Das and Sons was allotted to Amal Sheth. Subsequently, the mother Smt. Nirmala Sheth filed a suit before the said Civil Judge in C.M.A.No.98/2017, wherein, she has alleged that she has 3 आयकर अपील सं/ITA No.523 & 525/CTK/2025 ("नधा"रण वष" / Assessment Years : 2009-10 & 2010--11) never participated in civil proceedings and her property has been taken away by two sons by committing fraud. This matter is now pending finalization. It was the submission that the Assessing Officer in the course of assessment took into consideration the compromise decree of the Court of Civil Judge in C.S.(I) 529/06 dated 4.12.2006 and held that the business of Sheth Bhagwan Das Vittal Das and Sons belonged to Shri Amal Sheth and assessed the income of the said firm in the hands of Shri Amal Sheth on substantive basis. It was the submission that the return of income of the Smt. Nirmala Sheth was filed on regular course disclosing the income from Sheth Bhagwan Das Vittal Das and Sons and the assessment was done by the Assessing Officer on protective basis in the hands of Smt. Nirmala Sheth. It was the submission that the returns having been filed by Smt. Nirmala Sheth and the business license in the name of Smt. Nirmala Sheth and Smt. Nirmala Sheth having challenging the decree of the Civil Judge as having been done fraud by two sons, the assessment of the business income in respect of Sheth Bhagwan Das Vittal Das and Sons is liable to be made substantively in the hands of Smt. Nirmala Sheth and not in the hands of Shri Amal Sheth.
In reply, ld CIT DR and Sr DR submitted that the revenue is interested in collection of revenue. If Smt. Nirmala Sheth is one who claim ownership, let her be taxed. It was the submission that the orders of the AO and ld CIT(A) are also exparte. It was the submission they have no objection if the issues are restored to the file of the AO for readjudication.
We have considered the rival submissions. Considering the above facts that the business license is in the name of Smt Nirmala Sheth and Smt. Nirmala 4 आयकर अपील सं/ITA No.523 & 525/CTK/2025 ("नधा"रण वष" / Assessment Years : 2009-10 & 2010--11)
Sheth has also challenged the decree of the Civil Judge claiming fraud of her two sons, we are of the view that the income of the assessee must be substantially assessed in the hands of Smt. Nirmala Sheth. Consequently, in the case of Smt. Nirmala Sheth, the issues in the appeals are restored to the file of the AO for readjudication after granting the assessee adequate opportunity of being heard. Should the assessee not cooperate in the assessment proceedings, liberty is granted to the AO to draw adverse inference.
As the income of the firm Sheth Bhagwan Das Vittal Das and Sons has already been held to be assessed in the hands of M/s. Nirmala Sheth substantively, no more addition remains in the hands of Shri Amal Sheth and consequently, the addition made in the case of Amal Sheth stands deleted.
At the time of hearing, ld AR also raised the issue of reopening of assessment. As the issue in the case of Smt. Nirmala Sheth is restored to the file of the AO for readjudication, we are not going into the issue of reopening of assessment and all legal aspects are left open to be adjudicated and agitated before the Assessing Authority. As the addition in the case of Shri Amal Sheth no more survive and the appeals filed by Shri Amal Sheth stand allowed.
In the result, two appeals of the Smt. Nirmala Sheth stand partly allowed for statistical purposes and four appeals filed by Amal Sheth stand allowed. Order dictated and pronounced in the open court on 2/12/2025. (राजेश कुमार) (जाज" माथन) (RAJESH KUMAR) (GEORGE MATHAN) लेखा सद"य/ ACCOUNTANT MEMBER "या"यक सद"य / JUDICIAL MEMBER "दनांक Dated 2/12/2025 B.K.Parida, Sr.P.S(OS)
5 आयकर अपील सं/ITA No.523 & 525/CTK/2025 ("नधा"रण वष" / Assessment Years : 2009-10 & 2010--11)