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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 28/08/2012 of the Ld. first Appellate Authority, Mumbai. Grounds no.1 & 3 raised by the Department is that the ld. Commissioner of Income Tax (Appeals) erred in law and on facts by concluding that the said firm has not filed any valid
2 Shri Purshottam Mavji Bhatia return of income and also not disclosed the sale of property and further the assessee has not sought any share income from the firm in his return of income and consequent deleting the addition of short term capital gain on sale of capital asset. The ld. DR advanced arguments which is identical to the ground raised, whereas, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order by contending that the firm paid the taxes for which our attention was invited to page 195 of the paper book. Our attention was further invited to page 196 of the paper book and copy of the agreement (pages 169 to 190) of the paper book by explaining that the premises was in the name of the firm and the assessee is merely a partner in the said firm.
We have considered the rival submissions and perused the material available on record. The facts in brief, are that the assessee is an individual declared income of Rs.75,110/- in his return which was processed u/s 143(1) of the Act. The case of the assessee was selected for scrutiny and the assessment was completed u/s 143(3) of the Act determining the income of the assessee at Rs.1,20,50,350/-.
2.1. The aggrieved assessee carried the matter in appeal before the ld. Commissioner of Income Tax (Appeals), wherein the submission dated 10/05/2012 (reproduced at page 3 onwards of the impugned order) were considered and found that the assessee was a partner in a partnership firm namely M/s Laxmi Iron & Steel Manufacturing Company. The firm sold one of its asset (Office Premises) which was held as 3 Shri Purshottam Mavji Bhatia investment. Out of the sale proceeds, the assessee firm paid Rs.22 lakh to the assessee who is the one of the partners of the firm. Out of Rs.22 lakh, Rs.13,37,600/- was used towards payment for purchase of new flat and other charges, such as stamp duty and registration. In the consolidated balance sheet, the total cost of flat was shown at Rs.33,27,040/-. The ld. Assessing Officer made addition of Rs.15,68,040/- on account of purchase of flat (Rs.31 lakh + Stamp duty of Rs.1,37,600/- + Registration Charges of Rs.30,400/- and housing loan of Rs.17 lakh). The Sarswat Bank made payment of Rs.19 lakh directly to the vendor (i.e. Rs.17 lakh out of housing loan and Rs.2 lakh taken from assessee which was paid from the business account). The balance amount of Rs.12 lakh was paid on 30/05/2008 to the vendor from the personal account with Sarswat Bank Account. The totality of facts clearly indicates, as is oozing out from the impugned order that the assessee purchased a flat for consideration of Rs.33,37,040/- after taking loan from Sarswat Bank and the details of payment which form part of purchase agreement along with cheque no. 197258 dated 30/05/2008 were furnished before the Assessing Officer. The factum of obtaining housing loan was also accepted by the Assessing Officer. The ld. Commissioner of Income Tax (Appeals) sought remand report from the Assessing Officer, who submitted the report on 18/07/2012. The remand report was provided to the assessee to whom the assessee filed written submissions. The stand of the assessee is that Sarswat Bank made payment of Rs.19 lakh directly to the 4 Shri Purshottam Mavji Bhatia vendor, meaning thereby, the payments are through banking channel. It can be concluded that partnership firm is a separate entity that of its partners under the Act. Since, the firm paid the capital gain tax arose from the sale of such land and already suffered tax, it cannot be added again, thus, we find no infirmity in the conclusion arrived at in the impugned order, more specifically when the assessee furnished the payment receipt, therefore, the partners are not liable for the tax liability of the firm.
3 The next ground raised in this appeal pertains to deleting the addition made u/s 68 of the Income Tax Act, 1961 (hereinafter the Act) as the assessee failed to prove the identity of the creditors, and the genuineness and creditworthiness of the transactions as the assessee could not produce the creditors for verification.
3.1 During hearing of this appeal, the ld. DR, Shri O. P. Meena, advanced his arguments which are identical to the ground raised. On the other hand, the ld. counsel for the assessee, Shri Vimal Punmiya, defended the conclusion arrived at in the impugned order.
3.2. We have considered the rival submissions and perused the material available on record. The ld. Assessing Officer made addition of Rs.6,30,000/- on account of cash loans on the ground that the assessee did not disclose such cash loan to the Department. However, the assessee furnished the loan confirmation in respect of loans and 5 Shri Purshottam Mavji Bhatia Rs.6,30,000/-. It was not disputed by the Revenue that details of parties, their addresses, accounts confirmation, PAN numbers, source of loan and proof of payment of the same were furnished, thus, we find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals).
Finally, the appeal of the Revenue is dismissed.
This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 17/11/2015.