REKHA MANOJ JAJODIA,AKOLA vs. INCOME TAX OFFICER, WARD-2, AKOLA

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ITA 169/NAG/2023Status: DisposedITAT Nagpur20 December 2024AY 2015-16Bench: SHRI V. DURGA RAO (Judicial Member)3 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A), finding no infirmity in the assessment. The assessee's argument that the firm was dissolved and therefore could not be taxed in its name was not accepted, especially since Service Tax returns were filed in the firm's name.

What were the facts?

The assessee failed to file a return of income for AY 2015-16. The Assessing Officer reopened the case under Section 148 and made an ex-parte assessment, adding an estimated gross profit of 8% on total receipts based on Service Tax returns. The CIT(A) upheld this addition.

What were the issues?

Whether the ex-parte assessment made by the AO and sustained by the CIT(A) is valid when the assessee failed to file returns and provide compliance. Whether income can be estimated based on Service Tax returns when the assessee claims the firm was dissolved.

Which sections of the Income-tax Act were involved?

Section 148,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR

Before: SHRI V. DURGA RAO

For Respondent: Shri Abhay Y. Marathe

The present appeal has been filed by the assessee challenging the impugned order dated 03/05/2023, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2015–16.

2.

In its appeal, the assessee has raised following grounds:–

“1] Learned CIT(A), NFC, Delhi erred in dismissing Assessee's Appeal without applying his mind and dismissing Appeal is bad in law. 2] Learned CIT(A), NFAC, Delhi erred in not properly consider Assessee's various submissions and supporting documents. 3] Learned CIT(A), NFAC, Delhi erred in not properly applying his mind and merely relying in A.O.'s order and his finding.

2 Rekha Manoj Jajodia 4] Learned A.O. erred in computing the income amounting to Rs.3,50,845/- i.e. 8% of the total receipts is bad in law. 5] Appellant craves to urge additional grounds at the time of hearing, if necessary.”

3.

In this case, the assessee did not file its return of income for the year under consideration. The case was re–opened under section 148 of the Act and statutory notices were issued to the assessee, but the assessee failed to comply. The Assessing Officer completed assessment ex–parte by making addition on account of estimated gross profit @8% of ` 43,85,572, which comes to ` 3,50,845.

4.

On appeal, the learned CIT(A) elaborately discussed the issue while dismissing the appeal of the assessee. The relevant findings of the learned CIT(A) are reproduced below:–

“6. I have carefully considered the facts of the case, e–response made by the appellant, remand report furnished by the A.O. and rejoinder of the appellant and find that the appellant did not respond to the notices issued by the A.O. during the assessment proceedings. Assessment was framed at an income of ` 3,50,845 under section 144 of the Act. 6.1 The following facts emerge from the records:- In this case, the information was available with the department that the assessee firm has filed its Service Tax Return for F.Y. 2014-15 in which the assessee firm has shown it's receipts at 43,85,572/-. The assessee firm has not filed its return of income for A.Y. 2015-16 (relevant to A.Y. 2014-15). Therefore, a letter for filing of return of income was issued on 07.03.2017. It is also to mention here that the assessee has not filed her return of income in individual capacity also and the receipts can't be verified therefrom. Further, if the partnership firm was dissolved, then assessee should not have filed the service tax return of the partnership firm. The assesse has been unable to rebut the above facts which remain uncontroverted. 6.2 In view of the above position, the A.O. has rightly computed the income in the capacity of the firm based on service tax return at Rs.3,50,845/- i.e. 8% of the total receipts of Rs.43,85,572/-. Thus, I am inclined to sustain the order of the A.O, hence the ground of appeal is dismissed.”

3 Rekha Manoj Jajodia

5.

I have heard the learned Departmental Representative, perused the material available on record and order of the authorities below. The firm is dissolved, hence it has to be taxed in the hands of the individual. The case of the assessee is that the firm is dissolved and, therefore, it cannot be taxed in the hands of the firm. The learned CIT(A) has noted that the assessee firm has filed a copy of payment of service tax for the F.Y. 2014–15, in which the assessee firm’s receipts have been shown at ` 43,85,572. The assessee firm has not filed its return of income for the A.Y. 2015–16 and, therefore, a letter for filing of return of income was issued on 07/03/2017. In this letter, it is also mentioned that the assessee has not filed return of income in the capacity of “Individual”. Thus, we find no infirmity in the order passed by the learned CIT(A) which is hereby upheld by dismissing the grounds raised by the assessee.

6.

In the result, appeal filed by the assessee is dismissed. Order pronounced in the open Court on 20/12/2024

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