M/s Modern Decorators, Firozabad V. I.T.O.-5(2), Firozabad

ITA 135/AGR/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7031 (ITAT-AGRA)
• Duration Of Justice: 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-05-2011
• Assessment Year: 1988-1989
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: PRAKASH NARAIN; S N BANSAL
• Keywords: Search and seizure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA(SMC) BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 135 & 136/AGRA/2011 ASSTT. YEAR : 1988-89 & 1990-91 M/S. MODERN DECORATORS, VS. INCOME-TAX OFFICER, C/O IMPERIAL GLASS EMPORIUM, 5(2), FIROZABAD. JAIN NAGAR, FIROZABAD. (PAN ACDPG 5613 O) (APPELLANT) (RESPONDENT) FOR APPELLANT : S/SRI PRAKASH NARAIN & S.N. BANSAL, ADVOCATES FOR RESPONDENT : SHRI A.K. SHARMA, JR. D.R. ORDER THE ASSESSEE HAS FILED THESE APPEALS AGAINST THE CO MMON ORDER DATED 22.02.2011 OF THE CIT(A), AGRA. THE ASSESSEE HAS RA ISED ALMOST IDENTICAL GROUNDS OF APPEAL IN BOTH THE APPEALS. FOR THE SAKE OF CONV ENIENCE, GROUNDS IN APPEAL NO. 135/AGRA/2011 ARE REPRODUCED AS UNDER : 1. BECAUSE IN THE CIRCUMSTANCES OF THE CASE AND LA W ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE REJECTION OF REGISTRATION OF THE FIRM AND TO ASSESS THE FIRM IN STATUS OF UNREGISTERED FIRM. 2. BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS FURTHER ERRED IN HOLDING THAT SMT. KI RAN DEVI WAS A BENAMIDAR AND NOT A PARTNER IN REAL SENSE AND FOR T HAT REASON THE FIRM CANNOT BE HELD TO BE A GENUINE FIRM. 2 2. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 07.12.2007 IN COMPLIANC E TO THE DIRECTIONS BY THIS BENCH DATED 09.06.2006. THE ASSESSING OFFICER REJEC TED THE REGISTRATION OF THE FIRM BY PASSING THE ORDER U/S. 185(1)(B) OF THE INCOME-T AX ACT (HEREINAFTER CALLED THE ACT). A SEARCH WAS CONDUCTED BY THE DEPARTMENT ON 0 2.03.1989 AT THE RESIDENCE OF SMT. KIRAN DEVI, WHO WAS ONE OF THE PARTNERS IN THE FIRM. DURING THE COURSE OF SEARCH, SMT. KIRAN DEVI MADE A STATEMENT BY STATING THAT SHE DID NOT KNOW AS TO WHETHER SHE WAS ASSESSED TO TAX AND THAT HER ONLY S OURCE OF INCOME WAS AGRICULTURAL INCOME. SHE ALSO STATED AT THE TIME OF SEARCH ON 02.03.1989 THAT SHE WAS NOT AWARE AS TO WHETHER SHE WAS PARTNER IN ANY FIRM OR WAS HAVING SHARE HOLDING IN SOME COMPANY. BUT IN THE SET ASIDE PROCE EDINGS, SHE RETRACTED THE STATEMENTS MADE DATED 02.03.1989 AND FILED HER AFFI DAVIT DATED 04.10.2006 STATING THEREIN THAT SHE WAS DISTURBED ON 02.03.1989 DUE TO INCOME-TAX RAID AND AS SUCH, COULD NOT KEEP MENTAL BALANCE AND COULD NOT UNDERST AND THE QUESTION PUT BY THE RAIDING PARTY. SHE FURTHER STATED IN THE AFFIDAVIT DATED 04.10.2006 THAT SHE WAS A PARTNER SINCE 01.01.1997 AND REMAINED AS PARTNER AS SUCH AS PER PARTNERSHIP DEED DATED 25.03.1988 DURING THE PREVIOUS YEARS RELEVANT TO THE ASSESSMENT YEAR 1988- 89 II PART, 1989-90, 1990-91, 1991-92 AND SO ON. TH E ASSESSEE PLEADED BEFORE THE ASSESSING OFFICER THAT SHE WAS 95 YEARS OF AGE AT T HE TIME OF ASSESSMENT AND COULD NOT APPEAR BEFORE HIM AND REQUESTED TO ACCEPT THE S WORN STATEMENT ATTESTED BY THE NOTARY ON 07.02.2007. BUT THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF 3 THE ASSESSEE AND COMPLETED THE ASSESSMENT ON 07.12. 2007 U/S. 185(1)(B) OF THE ACT DECLARING THE ASSESSEE FIRM AS AN UNREGISTERED FIRM . AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE LEARNED FIRST APPE LLATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 02.02.2011 UPHELD THE ORDER OF THE ASSESSING OFFICER BY DISMISSING THE APPEALS OF THE ASSESSEE. NOW, THE AS SESSEE HAS FILED THE PRESENT APPEALS AGAINST THE IMPUGNED ORDERS. 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT SMT. KIRAN DEVI HAS DIED ON 07.05.2009, BUT AT THE TIME OF ASSESSMENT PROCEEDINGS, SHE WAS 95 YEAS OF AGE AND FILED HERE AFFIDAVIT DATED 0 4.10.2006 RETRACTING THE STATEMENT DATED 02.03.1989. HE FURTHER STATED THAT SHE COULD NOT APPEAR BEFORE THE ASSESSING OFFICER BECAUSE OF HER OLD AGE OF 95 YEAR S. SHE FILED AN APPLICATION DATED 07.02.2007 STATING HER INABILITY TO APPEAR BEFORE H IM AND REQUESTED THE ASSESSING OFFICER TO MAKE DESIRED ENQUIRY FROM HER AT HER RES IDENCE, BUT NOTHING HAS BEEN DONE BY THE ASSESSING OFFICER WHICH IS CONTRARY TO THE SETTLED LAW AS DELIVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F NATHU RAM PREM CHAND VS. CIT, 49 ITR 561 AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MEHTRA PARIKH AND CO. VS. CIT, 30 ITR 181 (SC). FINALLY HE STATED THAT THE FIRM IS CLOSED AND SHE IS NO MORE AND REQUESTED THAT THE IMPUGNED ORDER PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY MAY BE CANCELLED. 4 4. ON THE CONTRARY, THE LEARNED DR RELIED ON THE OR DER PASSED BY THE FIRST APPELLATE AUTHORITY. 5. I HAVE HEARD THE BOTH PARTIES AND HAVE PERUSED T HE RECORD AVAILABLE WITH ME. IT IS A MATTER OF RECORD THAT THE ASSESSEE FIRM CAM E INTO EXISTENCE ON 1 ST DAY OF JANUARY, 1977 BY CONSTITUTING SIX PARTNERS, WHICH I NCLUDE SMT. KIRAN DEVI GUPTA W/O LATE LALA SURAJ BHAN GUPTA.. IT REMAINS IN EXIS TENCE UPTO 11 TH DECEMBER, 1987 AND AGAIN RE-CONSTITUTED ON THE DEATH OF ONE PARTNE R SHRI JAGDISH PRASAD GUPTA WHO EXPIRED ON 11.12.1987. IN HIS PLACE SHRI DINESH CHA ND GUPTA JOINED THE PARTNERSHIP FIRM AND HIS SHARE WAS THE SAME AS THAT OF THE DECEASED PARTNER SHRI JAGDISH PRASAD GUPTA. A FRESH PARTNERSHIP DEED DATE D 25 TH MARCH, 1988 WAS EXECUTED BETWEEN THE NEW PARTNERS SHRI DINESH CHAND GUPTA AND ALL THE REMAINING PARTNERS. THE PARTNERSHIP DEED DATED 25.03.1988 ALO NGWITH FORM NO. 11 DATED 25.03.1988 DULY SIGNED BY ALL THE PARTNERS AND DULY FILED ALONGWITH THE PARTNERSHIP DEED IS A MATTER OF RECORD. IT IS ALSO ADMITTED FAC T THAT SMT. KIRAN DEVI GUPTA MADE A STATEMENT DURING THE COURSE OF SEARCH ON 02.03.19 89 BY STATING THAT SHE DID NOT KNOW AS TO WHETHER SHE WAS ASSESSED TO TAX AND THAT HER ONLY SOURCE OF INCOME WAS AGRICULTURAL INCOME. SHE ALSO STATED THAT SHE WAS N OT AWARE AS TO WHETHER SHE WAS PARTNER IN ANY FIRM OR WAS HAVING SHARE HOLDING IN SOME COMPANY. IT IS ALSO THE MATTER OF RECORD THAT AS PER PAPER BOOK PAGE NO. 9 & 10, SMT. KIRAN DEVI GUPTA AGED ABOUT 96 YEARS HAS ALSO FILED A NOTORISED AFFI DAVIT STATING THEREIN THAT SHE WAS 5 REALLY DISTURBED ON 02.03.1989 DUE TO THE INCOME-TA X RAID, AS SUCH COULD NOT KEEP MENTAL BALANCE AND COULD NOT UNDERSTAND THE QUESTIO N PUT BY THE RAIDING PARTY AND THEREFORE, IN SUCH CIRCUMSTANCES, NO ADVERSE VIEW C AN BE TAKEN. THE FACT REMAINS THAT SHE WAS A PARTNER SINCE 01.01.1977 AND REMAINE D AS PARTNER AS SUCH AS PER PARTNERSHIP DEED DATED 25.03.1988. DURING THE PREVI OUS YEARS RELEVANT TO ASSESSMENT YEARS 1988-89 II PART TO 1991-92 AND SO ON. IT IS ALSO A MATTER OF RECORD, THE ASSESSEE HAD FILED ONE APPLICATION DATED 07.02. 2007 WHICH IS ON ASSESSEES PAPER BOOK PAGE 7 & 8, REQUESTING THE ASSESSING OFF ICER THAT SMT. KIRAN DEVI GUPTA IS NOW AGED ABOUT 95 YEARS AND SHE IS UNABLE TO ATTEND THE OFFICE. HOWEVER, HER AFFIDAVIT DATED 04.10.2006 IS BEING FILED AND R EQUESTED THE ASSESSING OFFICER TO MAKE DESIRED ENQUIRY FROM HER AT HER RESIDENCE. IT IS THE DUTY OF THE ASSESSING OFFICER IF HE IS NOT SATISFIED WITH THE AFFIDAVIT F ILED BY SMT. KIRAN DEVI GUPTA WHO WAS 95 YEARS OLD LADY TO EXAMINE HER AT HER RESIDEN CE, BUT THE SAME HAS NOT BEEN DONE BY THE ASSESSING OFFICER AND HE BELIEVED THE S TATEMENT DATED 02.03.1989 AND DECLARED THE ASSESSEE AS A UNREGISTERED FIRM. THIS VIEW HAS ALSO BEEN UPHELD BY THE LEARNED FIRST APPELLATE AUTHORITY WITHOUT GOING THR OUGH ALL THE EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THEM. IN THE CASE OF NATHU RAM PREM CHAND VS. CIT, 49 ITR 561, THE HONBLE JURISDICTIONAL HIGH COURT SUPP ORTED THE VERSION OF THE ASSESSEE BY HOLDING THAT IT IS THE DUTY OF THE INCO ME-TAX OFFICER TO ENFORCE THE ATTENDANCE OF THE WITNESS IF HIS EVIDENCE IS MATERI AL, IN EXERCISE OF HIS POWERS UNDER SECTION 37(1) OF THE INCOME-TAX ACT, READ WIT H ORDER XVI, RULE 10 OF THE 6 CIVIL PROCEDURE CODE. NO INFERENCE CAN BE DRAWN AGA INST THE ASSESSEE MERELY BECAUSE THE ASSESSEE HAS NOT PRODUCED SMT. KIRAN DE VI WHO WAS AGED ABOUT 95 YEARS AT THE TIME OF ASSESSMENT, NOW DIED ON 17.05. 2009. IT IS ALSO A MATTER OF RECORD THAT SMT. KIRAN DEVI GUPTA VIDE A NOTORISED AFFIDAVIT DATED 04.10.2006 RETRACTED THE STATEMENT DATED 02.03.1989 WHICH HAS WRONGLY BEEN IGNORED BY THE ASSESSING OFFICER IN ABSENCE OF THE CROSS EXAMINATI ON OF SMT. KIRAN DEVI GUPTA. THE REVENUE AUTHORITIES COULD NOT OVERLOOK THE STAT EMENT DATED 04.10.2006 AND THE APPLICATION DATED 07.02.2007 REQUESTING THE ASS ESSING OFFICER TO EXAMINE SMT. KIRAN DEVI GUPTA AS REQUESTED BY THE ASSESSEE. IN A BSENCE OF THE SAME, TREATING THE ASSESSEE FIRM AS UNREGISTERED FIRM IS ILLEGAL AGAIN ST THE LAW AND FACTS. THEREFORE, THE IMPUGNED ORDER DESERVES TO BE CANCELLED. I, THE REFORE, CANCEL THE SAME BY RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURI SDICTIONAL HIGH COURT (SUPRA) AS WELL AS THE HONBLE SUPREME COURT OF INDIA (SUPRA). KEEPING IN VIEW OF THE FACTS AND DISCUSSION ABOVE, I CANCEL THE IMPUGNED ORDER B Y DIRECTING THE ASSESSING OFFICER TO TREAT THE ASSESSEE FIRM AS REGISTERED FI RM AS CLAIMED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.05.2011. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 20 TH MAY, 2011 7 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY