SHRI. KARAN ARUN MAHAJAN , MUMBAI V. ITO 19 (2)(2), MUMBAI

ITA 2309/MUM/2022

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The case involves Karan Arun Mahajan, the appellant, who contested the decision of the CIT(A)/NFAC regarding the assessment year 2020-21. The primary issue was the denial of exemption under section 10(2A) of the Income Tax Act, 1961, concerning the share of profit from a partnership firm, which the assessee claimed was already taxed at the firm level. The CPC Bangalore, while processing the return, erroneously increased the assessee's declared income, leading to the appeal. The CIT(A) dismissed the appeal, citing lack of substantiation from the assessee regarding the partnership firm's details and the profit share. The Tribunal, after considering additional evidence submitted by the assessee, decided to remand the case back to the CIT(A) for a fresh evaluation.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 300089 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-11-2022
• Assessment Year: 2020-2021
• Appeal Filed On: 12-09-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No.2309/Mum/2022 (निर्धारण वर्ा / Assessment Years: 2020-21) Karan Arun Mahajan 12, Jeevan Asha, 60-A, Peddar Road, Mumbai- 400026. बिधम/ Vs. ITO-19(2)(2) Matru Mandir, Mumbai- 400007. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AJLPM1002C (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 24/11/2022 घोषणा की तारीख /Date of Pronouncement: 29/12/2022 आदेश / O R D E R PER ABY T. VARKEY, JM: This appeal preferred by the assessee against order of the CIT(A)/NFAC dated 04-08-2022 for A.Y. 2020-21. 2. The main grievance of the assessee is against the action of the CPC Bangalore passed u/s 143(1) of the Income Tax Act, 1961 (herein after “the Act”) wherein according to him the CPC while processing the return of income filed by the assessee on 18.12.2020 declaring total income of Rs.6,64,080/- erroneously had determined total income at Rs.14,35,510/- whereby exemption of Rs. 7,71,436/- on account of share of profit of the Firm u/s 10(2A) of the Act has been denied even though he (the assessee) brought to the notice of the Ld.CIT(A) that the Firm’s income has already been brought/offered to tax; and therefore (assessee’s) share of profit is not taxable again as per section Assessee by: Shri Surinder Mehra Revenue by: Shri Mahender Ahuja ITA No.2309/Mum/2022 A.Y. 2020-21 Shri Karan Arun Mahajan 2 10(2A) of the Act. But the Ld.CIT(A) has dismissed the same by observing as under: - 4. Decision: I have carefully considered the facts on record, the intimation order and other documents submitted during the appellate proceedings. The sole issue of contention relates to denial of exemption claimed u/s 10(2A) of the Act on account of receipt of share of profit from a partnership firm. It has been observed that first of all while filing the return of income for the period under consideration, the appellant failed to substantiate the contentious issue of receipt of share of profit from partnership firm by filing the details as contained in ‘Schedule IF’ of the return of income viz Name of the Firm, PAN of the firm, firm is auditable or not, Percentage share in the profit of the firm, amount of share of profit and Capital Balance as on 31%! March in the Firm. Thus, in view of the above, the appellant during the stage of filing of return of income was unable to substantiate the receipt of share of profit from partnership firm to the tune of Rs. 7,71,436/-, resulting into denial of the said exemption claimed by the CPC, Bengaluru. Secondly, during the instant appellate stage also, the appellant again failed to substantiate the matter under consideration as he did not submitted any cogent documentary evidences of receipt of share of profit from partnership firm viz Partnership Deed of concerned partnership firm depicting details relating to share of the appellant in partnership firm, audited financial statement of the partnership firm, etc. Thus, it is suffice to conclude that in the instant appellate proceedings also, the appellant failed to show that any share profit from any partnership firm has been received/accrued to him and accordingly the claim of exemption ITA No.2309/Mum/2022 A.Y. 2020-21 Shri Karan Arun Mahajan 3 of share of profit from partnership firm under the provisions of section 10(2A) of the Act remains unjustified. In view of the foregoing findings, it is clear that the appellant is claiming exempt income u/s 10(2A) of the Act, without any substantive documentary evidences in support of share profit or by filling the details of such transaction in the “Schedule-IF” of the ITR. Hence, the denial of exemption u/s 10(2A) of the Act by the CPC, Bengaluru on a/c of receipt of share of profit from partnership firm is aptly made and the same is upheld. Thus, all the grounds of appeal, which are interlinked to each other are hereby dismissed. 5 . In the result, the appeal of the appellant is dismissed.” 3. Countering the aforesaid observations of the Ld. CIT(A), the Ld. AR brought to my notice that even though the Ld. CIT(A) alleges that before him, the assessee failed to substantiate the issue (shares of profit from the Firm) by adducing relevant evidences as stated therein, the fact of the matter was that the Ld. CIT(A) did not ask for any such documents during the First Appellate Proceedings and merely dismissed the appeal, which show that assessee did not get proper opportunity to adduce the evidence/document before the Ld.CIT(A) and according to him, if the Ld.CIT(A) had asked for such documents, he could have definitely produced the same; and in order to support this contention, the assessee has filed the relevant documents before this Tribunal to substantiate about his share of profit from the Firm which according to him is Rs. 7,71,436/- which therefore was exempt u/s 10(2A) of the Act. It is noted that the assessee’s claim of ITA No.2309/Mum/2022 A.Y. 2020-21 Shri Karan Arun Mahajan 4 exemption of Rs. 7,71,436/- u/s 10(2A) of the Act was disallowed by the CPC u/s 143(1) of the Act since, there was inadvertent omission on the part of the CA who filed the return of income of the assessee. According to the Ld.CIT(A), the assessee did not file certain relevant documents to substantiate his claim that Rs. 7,71,436/- was the share of income from Partnership Firm which was already subjected to tax and therefore he dismissed the appeal of assessee. Aggrieved the assessee is before this Tribunal. 4. Before this Tribunal, the Ld. AR has submitted the relevant documents to substantiate his claim by filing additional evidences as noted supra. After hearing both the parties, I am inclined to admit the additional evidences filed by the assessee to substantiate that Rs. 7,71,436/- is share of profit of assessee from the Partnership Firm. From the facts and circumstances discussed supra, I am of the opinion that the assessee did not get proper opportunity before the First Appellate Authority to file the relevant documents to substantiate its claim. So I am inclined to set aside the impugned order of the Ld.CIT(A) and restore the appeal back to the file of Ld. CIT(A) with a direction to adjudicate the grounds raised by the assessee by considering the additional evidences which has been filed before this Tribunal [which has been admitted (supra)] and Ld.CIT(A) to adjudicate the issue in accordance to law; and assessee is given liberty to file the written submission/documents before this Tribunal as well ITA No.2309/Mum/2022 A.Y. 2020-21 Shri Karan Arun Mahajan 5 as the partnership deed or any other documents as called for by the Ld. CIT(A) in the course of the appellate proceedings. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 29/12/2022. Sd/- (ABY T. VARKEY) JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 29/12/2022. Vijay Pal Singh, (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai