M/S DESTINY CONSULTANTS, JAIPUR V. INCOME TAX OFFICER, WARD-2-2, JAIPUR

ITA 241/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4812 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 19-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Section: 143(3); 142(1); 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 241/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2008-09 M/S DESTINY CONSULTANTS, G-8, SANGAM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD- 2(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFFD 0649 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16/10/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/10/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 29/12/2017 OF LD. CIT(A)-I, JAIPUR FOR THE A.Y. 200 8-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, TH E NOTICE ISSUED U/S 148 AND CONSEQUENT ORDER PASSED U/S 147 IS ILLEGAL AND BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE FINDING OF A.O. THAT AMOUNT RECEIVED FROM VARIOUS PARTIES P ERTAIN TO THE ASSESSEE FIRM AND NOT THE PROPRIETORSHIP CONCERN OF SH. SANJEEV SONI, THEREBY, CONFIRMING THE ADDITION OF RS. 14,38,265/- . HE HAS FURTHER ERRED IN NOT DIRECTING TO ALLOW THE TDS CREDIT OF R S. 1,44,265/-. ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 2 3. THE LD. CIT(A) HAS FURTHER ERRED ON FACTS AND IN LAW IN NOT ACCEPTING THE CONTENTION OF ASSESSEE THAT THE ENTIRE RECEIPT OF RS. 14,38,265/- SHOULD NOT BE ADDED BUT ONLY THE PROFIT EARNED THER EON SHOULD BE TAXED. 4. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 5. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. GROUND NO. 1 OF THE APPEAL IS REGARDING VALIDITY OF REOPENING OF THE ASSESSMENT. AT THE TIME OF HEARING, THE LD AR OF TH E ASSESSEE HAS SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 1 AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD DR HAS RAISED NO OBJECTION IF GROUND NO. 1 OF THE APPEAL IS DISMISSED AS NOT P RESSED. ACCORDINGLY, GROUND NO. 1 OF THE APPEAL IS DISMISSED BEING NOT P RESSED. 3. GROUNDS NO. 2 AND 3 OF THE APPEAL ARE REGARDING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 14,38,265/- BASES O N THE TRANSACTIONS SHOWN IN 26AS. THE ASSESSEE WAS A PARTNERSHIP FIRM AN D DID NOT FILE ANY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. AS PER THE AIR INFORMATION GENERATED FROM THE SYSTEM, THE ASSESSIN G OFFICER NOTICED THAT THE ASSESSEE FIRM HAS RECEIVED RS. 14,38,625/- FROM VARIOUS PARTIES DURING THE YEAR UNDER CONSIDERATION, ACCORDINGLY TH E ASSESSING OFFICER ISSUED A NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE PARTNERSH IP FIRM CONSISTING OF SH. RAJIV SONI AND SH. SANJEEV SONI HAVING EQUAL SH ARE WAS DISSOLVED ON ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 3 31/3/2007 AND THE ENTIRE BUSINESS WAS TAKEN OVER BY ONE OF THE PARTNER SHRI SANJEEV SONI. SINCE THE PARTNERSHIP FIRM WAS D ISSOLVED ON 31/3/2007, THEREFORE, NO RETURN OF INCOME WAS FILED BY THE PAR TNERSHIP FIRM FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE ALSO EXPLAIN ED THAT THE AMOUNT SHOWN AS PER 26AS IS PART OF THE TOTAL RECEIPTS OF T HE PROPRIETORSHIP CONCERN OF SHRI SANJEEV SONI IN THE SAME NAME OF M/ S DESTINY CONSULTANTS. HOWEVER, THE PAYERS HAVE MISTAKENLY DE DUCTED THE TDS UNDER THE PAN OF PARTNERSHIP FIRM AND THEREFORE, IT WAS WRONGLY CREDITED IN THE ACCOUNT OF THE PARTNERSHIP FIRM INSTEAD OF P ROPRIETORSHIP CONCERN. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N OF THE ASSESSEE AND MADE THE ADDITION OF THE SAID AMOUNT OF RS. 14,38,2 65/- IN THE HAND OF PARTNERSHIP FIRM. 4. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESS ING OFFICER BEFORE THE LD. CIT(A) AND REITERATED THE EXPLANATION THAT THE TDS WAS DEDUCTED BY THE PAYERS UNDER THE PAN OF THE DISSOLVED PARTNE RSHIP FIRM AND THEREFORE IT WAS A NON-EXISTING ENTITY WHEREAS THE ENTIRE RECEIPT OF RS. 14,38,625/- HAS BEEN SHOWN BY THE ASSESSEE PROPRIET ORSHIP CONCERN IN ITS INCOME AND WAS ALSO OFFERED TO TAX. THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT TH E PARTNERSHIP FIRM HAS NOT SURRENDERED THE PAN EVEN AFTER DISSOLUTION AND FURTHER THE ASSESSING OFFICER WAS NOT INFORMED ABOUT DISSOLUTIO N OF PARTNERSHIP FIRM. ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 4 5. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT IT IS A CASE OF DEDUCTION OF TDS UNDER WRONG PAN BY THE PAYERS A ND THEREFORE, THE ASSESSING OFFICER HAS MADE THE ASSESSMENT IN THE HA ND OF NON-EXISTING ENTITY. THE LD AR HAS POINTED OUT THAT THE PARTNERS HIP FIRM WAS DISSOLVED W.E.F. 31/3/2007 VIDE DISSOLUTION DEED DATED 28/3/2 007 AND AS PER THE TERMS OF THE DISSOLUTION ONE OF THE PARTNER SHRI SA NJEEV SONI HAS TAKEN OVER THE BUSINESS OF THE PARTNERSHIP FIRM AND CONTI NUED WITH THE BUSINESS UNDER THE SAME NAME M/S DESTINY CONSULTANTS BUT AS A PROPRIETORSHIP CONCERN. THE INCOME AS PER 26AS HAS BEEN DECLARED B Y THE ASSESSEE IN THE RETURN OF INCOME FILED AS PROPRIETORSHIP CONCER N AND THEREFORE, THE SAID AMOUNT WAS TAXED BY THE ASSESSING OFFICER AGAIN IN THE HAND OF DISSOLVED PARTNERSHIP FIRM WOULD AMOUNT TO DOUBLE T AXATION OF THE SAME INCOME. HE HAS POINTED OUT THAT THE PAYERS HAVE INA DVERTENTLY DEDUCTED TDS AND DEPOSITED UNDER THE PAN OF THE DISSOLVED PA RTNERSHIP FIRM, THOUGH, THE BILLS WERE RAISED BY THE PROPRIETORSHIP CONCERN. HE HAS REFERRED TO THE DETAILS OF THE RECEIPTS SHOWN IN 26 AS AND SUBMITTED THAT ALL THESE RECEIPTS FROM THE SAME PARTIES ARE MATCHI NG WITH THE RECEIPTS SHOWN BY THE PROPRIETORSHIP CONCERN IN THE P&L ACCOU NT. THE PROPRIETORSHIP CONCERN HAS ALSO CLAIMED THE TDS OF THE ENTIRE AMOUNT INCLUDING THE AMOUNT IN QUESTION. THE LD AR HAS ALSO REFERRED TO THE LEDGER ACCOUNT OF ALL THESE PARTIES AND SUBMITTED T HAT THE AMOUNT SHOWN ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 5 IN 26AS ARE MATCHING WITH THE AMOUNTS WHICH ARE SHO WN IN THE LEDGER ACCOUNT OF PROPRIETORSHIP CONCERN AND THEREFORE, TH E ENTIRE RECEIPT IS PART OF THE RECEIPTS SHOWN BY THE PROPRIETORSHIP CONCERN IN THE P&L ACCOUNT AT PAGE 35 OF THE PAPER BOOK. THUS, THE LD AR HAS SUBM ITTED THAT WHEN THE ASSESSEE HAS PRODUCED ALL THE DETAILS BEFORE THE AS SESSING OFFICER AS WELL AS THE LD. CIT(A) TO ESTABLISH THE FACT THAT THE RE CEIPT SHOWN IN THE 26AS ARE ACTUALLY RECEIPT OF PROPRIETORSHIP CONCERN AND ARE OFFERED TO TAX IN THE HAND OF PROPRIETORSHIP CONCERN. THE LD AR HAS ALSO R EFERRED TO THE ASSESSMENT ORDER FOR THE A.Y. 2009-10 AND SUBMITTED THAT FOR THE SUBSEQUENT ASSESSMENT YEAR, THE ASSESSING OFFICER H AS ACCEPTED THIS EXPLANATION THAT THESE RECEIPTS PERTAINS TO THE PRO PRIETORSHIP CONCERN AND NOT TO THE DISSOLVED PARTNERSHIP FIRM. A COPY OF TH E ASSESSMENT ORDER FOR THE A.Y. 2009-10 HAS BEEN FILED. 6. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ASSESSEE FAILED BEFORE THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A) TO FILE THE RELEVANT DETAILS AND RECONCILIATION TO ESTABLISH THAT THESE RECEIPTS SHOWN IN 26AS IN THE PARTNERSHIP FIRM ARE ALREADY CONSIDERED BY THE PROPRIETORSHIP CONCERN IN ITS P&L ACCOUNT. HE HAS FURTHER CONTENDED THAT T HE LD. CIT(A) HAS RIGHTLY POINTED OUT THAT THE DISSOLVED PARTNERSHIP FIRM HAS NOT SURRENDERED THE PAN AND ALSO NOT INFORMED THE ASSESSING OFFICER AS WELL AS TO THE ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 6 REGISTRAR OF PARTNERSHIP FIRM ABOUT THE DISSOLUTION OF THE PARTNERSHIP FIRM. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE PA RTNERSHIP FIRM WAS DISSOLVED VIDE DISSOLUTION DEED DATED 28/3/2007 W.E .F. 31/3/2007 AND THEREFORE, THE PARTNERSHIP FIRM WAS NOT IN EXISTENC E FOR THE F.Y. 2007-08 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . HOWEVER, AS PER THE DETAILS OF 26AS, RECEIPTS ARE SHOWN AS THE VARIOUS COMPANIES HAVE DEDUCTED TAX AND DEPOSITED UNDER THE PAN OF THE DIS SOLVED PARTNERSHIP FIRM. THE ASSESSEE EXPLAINED BEFORE THE AUTHORITIES BELOW THAT IT WAS A MISTAKE ON THE PART OF THE PAYERS TO DEPOSIT THE TD S IN THE PAN OF DISSOLVED PARTNERSHIP FIRM INSTEAD OF PROPRIETORSHI P CONCERN. WE NOTE THAT AT THE TIME OF DISSOLUTION, ONE OF THE PARTNER SHRI SANJEEV SONI HAS TAKEN OVER THE BUSINESS OF THE PARTNERSHIP FIRM AND CONTI NUED WITH THE SAME NAME M/S DESTINY CONSULTANTS, WHICH WAS ALSO THE NA ME OF THE PARTNERSHIP FIRM. THEREFORE, THE CONFUSION IN DEDUC TING THE TAX UNDER WRONG PAN ARISES DUE TO THE SIMILARITY OF THE NAME OF BUSINESS ENTITY UNDER THE PARTNERSHIP FIRM AS WELL AS THE SUBSEQUEN T PROPRIETORSHIP CONCERN. WE HAVE GONE THROUGH THE DETAILS OF THE 26 AS AND NOTED THAT AGAINST THE CONSULTANCY SERVICES VARIOUS COMPANIES NAMELY ICICI PRUDENTIAL, KOTAK SECURITIES LTD., CHOLAMANDALAM DI ST. SERVICES LTD. ETC. ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 7 HAVE MADE PAYMENT TO THE ASSESSEE AFTER DEDUCTING T DS, HOWEVER, THE TDS WAS DEDUCTED AND DEPOSITED UNDER THE PAN OF THE PARTNERSHIP FIRM. THUS, AMOUNT OF RS. 14,38,625/- IS PART OF THE TOTA L RECEIPTS OF THE ASSESSEE WHICH ARE SUBJECTED TO TDS. THEREFORE, THE SAID AMOUNT OF RS. 14,38,625/- ON WHICH THE TDS OF RS. 1,44,265/- WAS DEDUCTED IS PART OF THE TOTAL RECEIPT OF THE ASSESSEE, WHICH IS SHOWN I N THE P&L ACCOUNT AMOUNTING TO RS. 31,76,148/-. WE ALSO GONE THROUGH THE LEDGER ACCOUNTS OF ALL THESE PARTIES AND FOUND THAT THE AMOUNT SHOWN IN THE 26AS ARE MATCHING WITH THE LEDGER ACCOUNT OF THESE PARTIES I N THE BOOKS OF THE PROPRIETORSHIP CONCERN. THE LEDGER ACCOUNT COPY OF P LACED AT PAGE NOS. 42 TO 51 OF THE PAPER BOOK WHEREAS THE DETAILS OF 26 AS ARE PLACED AT PAGE NOS. 39 TO 41 OF THE PAPER BOOK. THUS, ALL THE SE PAYERS AND THEIR RESPECTIVE AMOUNTS ARE ALSO RECORDED IN THE LEDGER ACCOUNT OF PROPRIETORSHIP CONCERN. IT IS CLEAR THAT THESE RECE IPTS SHOWN IN THE 26AS OF THE PARTNERSHIP FIRM ARE AGAINST THE BILLS RAISE D BY THE PROPRIETORSHIP CONCERN BUT SINCE FOR THE LAST SO MANY YEARS, THE P AYERS WERE DEDUCTING TDS UNDER THE PAN OF PARTNERSHIP FIRM AND THE NAME OF THE PROPRIETORSHIP CONCERN IS SAME, THEREFORE, THEY MIS TAKENLY DEDUCTED THE TDS UNDER THE OLD PAN IN THEIR SYSTEM INSTEAD OF PA N OF PROPRIETORSHIP CONCERN. THE ASSESSING OFFICER FOR THE A.Y. 2009-10 VIDE ORDER DATED ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 8 30/8/2016 PASSED U/S 147 READ WITH SECTION 143(3) O F THE ACT HAS ACCEPTED THIS EXPLANATION OF THE ASSESSEE AS UNDER: NOTICE U/S 148 WAS ISSUED ON 29.03.2016 AFTER RECOR DING REASONS AND TAKING PRIOR APPROVAL FROM THE PR. CIT-1, JAIPUR. NO RETUR N HAS BEEN FILED IN RESPONSE TO NOTICE U/S 148. THEREFORE, NOTICE U/S 142(1) ALO NGWITH QUERY LETTER WAS ISSUED ON 03.06.2016. NO RESPONSE HAS RECEIVED. FUR THER LETTER IS ISSUED ON 16.08.2016. IN RESPONSE TO THIS LETTER SH. JAGDISH SOMANI, CA AND ID. A/R OF THE ASSESSEE ATTENDED AND FILED THE WRITTEN SUBMISS ION. THE ID. A/R SUBMITTED THAT THE RECEIPTS OF RS. 12,58,744/- RECEIVED FROM DIFFERENT PARTIES WERE INCLUDED IN THE RETURN FILED BY SH. SANJEEV SONI. A N AFFIDAVIT IS ALSO FILED IN SUPPORT OF REPLY. CONSIDERING THE FACTS OF THE CASE AND REPLY FILED, THE PROCEEDINGS INITIATED U/S 148 VIDE NOTICE DATED 29. 03.2016 ARE HEREBY DROPPED. THUS, THE ASSESSING OFFICER HAS ACCEPTED THE FACT T HAT THE PARTNERSHIP FIRM WAS ALREADY DISSOLVED AND ALL THESE RECEIPTS B ELONG TO PROPRIETORSHIP CONCERN AND ALSO PART OF THE TOTAL RECEIPTS AND INC OME SHOWN BY THE PROPRIETORSHIP CONCERN. THE REVENUE HAS NOT DISPUTED THE FACT THAT THE PROPRIETORSHIP CONCERN HAS FILED THE RETURN OF INCO ME, THE COPY OF THE SAME IS PLACED AT PAGE NO. 30 OF THE PAPER BOOK ALO NGWITH COMPUTATION OF TOTAL INCOME WHEREIN THE ENTIRE RECEIPT ON ACCOUN T OF CONSULTANCY CHARGES IS CONSIDERED AND THE TDS CREDIT OF RS. 2,8 6,660/- WAS CLAIMED, WHICH INCLUDES THE AMOUNT OF RS. 1,44,265/- IN RESP ECT OF THE RECEIPT OF RS. 14,38,625/- SHOWN IN THE 26AS OF THE PARTNERSHI P FIRM. ACCORDINGLY, IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE HOLD THAT ONCE THE ASSESSEE HAS PRODUCED ALL THE DETAILS TO ESTABLISH THAT THES E RECEIPTS PERTAIN TO THE PROPRIETORSHIP CONCERN AND MISTAKENLY THE TDS WAS D EDUCTED AND ITA 241/JP/2018_ M/S DESTINY CONSULTANTS VS ITO 9 DEPOSITED BY THE PAYERS UNDER THE PAN OF THE DISSOL VED PARTNERSHIP FIRM THEN THE ASSESSMENT OF THE INCOME IN THE HAND OF TH E NON-EXISTING PARTNERSHIP FIRM IS NOT JUSTIFIED. FURTHER THE SAID AMOUNT IS CONSIDERED WHILE FILING THE RETURN OF INCOME OF THE PROPRIETOR SHIP CONCERN AND CONSEQUENTLY THE ASSESSMENT IN THE HAND OF THE DISS OLVED PARTNERSHIP FIRM WOULD AMOUNT TO DOUBLE TAXATION OF THE SAME INCOME. THE ASSESSING OFFICER HAS ALREADY ACCEPTED THIS FACT FOR THE A.Y. 2009-10, ACCORDINGLY WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/10/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23 RD OCTOBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S DESTINY CONSULTANTS, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD- 2(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 241/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR