Shree Salasar Builders & Developers, Cuttack V. ITO, Ward-2(3), Cuttack, Cuttack

ITA 513/CTK/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7573 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: D K SHETH
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.513/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 SHREE SALASAR BILDERS & DEVELOPERS, PARAS PLAZA, TINKONIA BAGICHA, BUXIBAZAR, CUTTACK VS. ITO, WARD 2(3), CUTTACK PAN/GIR NO. ABJFS 5146 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.K.SHETH REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 5 /10 / 2016 DATE OF PRONOUNCEMENT : 28 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - BERHAMPUR , DATED 7.10.2014 , FOR THE ASSESSMENT YEAR 2010 - 2011. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS; 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE WHOLE ASSESSMENT IS IMPROPER AND FAULTY. 2 ITA NO.513/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 2. FOR THAT THE LEARNED AO HAS ASSESSED THE INCOME WITHOUT SPECIFYING THE PROPER HEAD OF INCOME. THE INCOME AS COMPUTED APPEARS TO BE INCOME FROM HOUSE PROPERTY WHICH IS NOT ASSESSABLE IN THE HANDS OF THE APPELLANT (FIRM) UNDER THE PROVI SI ONS OF SEC.26 OF THE IT. ACT. 3. FOR THAT THE INCOME AS RETURNED AT NIL SHOULD HAVE BEEN ACCEPTED . 4. FOR THAT THE LEARNED COMMISSIONER IS ALSO NOT JUSTIFIED TO CONFIRM THE ASSESSMENT OF INCOME UNDER HEAD HOUSE PROPERTY AND HAS FAILED TO APPRECIATE THE CONTENTIONS OF THE APPELLANT. 5. FOR THAT IN ANY VIEW OF THE CASE THE ORDER OF ASSESSMENT AS WELL AS THE ORDER OF APPEAL AS MADE ARE OTHERWISE BAD - IN - LAW. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF TWO PARTNERS, NAMELY, SHRI SUSHIL KUMAR AGARWAL AND SUSHIL KUMAR SETHIA. DURING THE YEAR UNDER CONSIDERATION, THE ONLY INCOME DERIVED BY THE PARTNERSHIP FIRM WAS RENTAL INCOME FROM HOUSE PROPERTY. THE AFORESAID RENTAL INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY IS ALSO NOT IN DISPUTE. LD CIT(A) COMPUTED THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AT RS.10, 45,722/ - . THE CONTENTION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS LD CIT(A) WAS THAT IN VIEW OF PROVISIONS OF SECTION 26 OF THE ACT, SUCH INCOME FROM HOUSE PROPERTY IS NOT ASSESSABLE IN THE HANDS OF THE FIRM BUT IS TO BE ASSESSED IN THE HANDS OF THE PARTNERS. HOWEVER, THE ASSESSING OFFICER AS WELL AS LD CIT(A) REJECTED THE ABOVE CONTENTION OF THE ASSESSEE AND BROUGHT 3 ITA NO.513/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 TO TAX THE INCOME FROM THE HOUSE PROPERTY AT RS.10,45,722/ - IN THE HANDS OF THE ASSESSEE FIRM. 4. BEFORE ME, LD AR. RELIED UPON THE DE CISION OF HONBLE KARANATAKA HIGH COURT IN THE CASE OF SHAKTI FARM HOUSE VS. DCIT (2010) 323 ITR 661 (KARN). 5. I FIND THAT IN THE AFORESAID DECISION, HONBLE KARNATAKA HIGH COURT HAS HELD AS UNDER: WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT AND THE RESPONDENT. THE APPELLANT HEREIN FILED THE RETURN OF INCOME FOR THE' ASSESSMENT YEARS 1995 - 96, 1998 - 99 ON MARCH 31; 2000V DECLARING HIS TOTAL INCOME AS NIL. THE CASE WAS TAKEN UP FOR SCRUTINY. THE ASSESSING OFFICER PASSED AN ORDER REJECTING THE CONTEN TION OF THE ASSESSEE THAT THE ASSESSEE IS A FIRM, AGAINST WHICH THE ASSESSEE HAS FILED ART APPEAL. THE COMMISSIONER OF INCOME - TAX (APPEALS) BY HIS OR DER DATED JULY 20, 2000 ALLOWED THE APPEAL FILED BY THE ASSESSEE AND REMANDED THE MATTER TO THE ASSESSING O FFICER FOR F RESH CON SIDERATION. THE ASSESSING OFFICER PASSED AN ORDER OF REASSESSMENT PURSUANT TO AN ORDER OF REMAN D BY HOLDING THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE FIRM IS DISSOLVED, THE PARTNERS HAVE NO DEFINITE AND ASCER TAINABLE SHARE IN THE PROPERTY OF THE FIRM AND THAT T HERE IS NO SHARING RATIO IN THE PROPERTY. THEREFORE, HE HELD THAT THE APPELLANT HEREIN HAS TO BE ASSESSED AS PARTNERSHIP FIRM - AN ASSOCIATION OF PERSONS AND THAT THE RENTAL INCOME RECEIVED BY TH E ASSESSEE ON LETTING OUT OF GO DOWN IS ASSESSABLE UNDER THE INCOME FROM THE HO USE PROPERTY. THIS ORDER WAS CALLED IN QUES TION BY FILING AN APPEAL BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS) WHICH APPEAL CAME TO BE DISMISSED, AGAINST WHICH A SECOND APPEAL BEFORE THE INCOME - TAX APPELLATE TRIBUNAL WAS FILED WHICH APPEAL ALSO CAME TO BE DISMISSED. BEING ; AGGRIEVED BY THE CONCURRENT - FIN DINGS OF ALL THE AUTHORITIES, THE PRESENT APPEAL S IS FILED . LEARNED COUNSEL APPEARING ON BEHALF OF TH E ASSESSEE CONTENDS THAT THE ASSESSING OFFICER DID NOT CONSIDER THE EFFECT OF 4 ITA NO.513/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 SECTION 26 OF 'THE INCOME - TAX ACT, 1961. ACCORDING TO HIM, THE ASSESSING OFFICER HAS GIVEN A DEFINITE FIND ING THAT THE FIRM IS NOT DISSOLVED; WHI CH WOULD SHOW THAT THE FIRM IS IN EXIST ENCE. IF THE FIRM IS IN EXISTENCE IT HAS TO BE ASSESSED TO TAX AS A FIRM BY LOOK - ING INTO THE TERMS AND CONDITIONS OF THE PARTNERSHIP DEED. LEARNED COUNSEL CON TENDS THAT WITHOUT NOTICING THE PITH AND SUBSTANC E OF THE PARTNERSHIP DEED, THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER WITHOUT GIVING A DEFINITE FINDING EITHER C ONSIDERING THE ASSESSEE AS A PARTNERSHIP FIRM OR AS AN ASSOCIATION OF PERSONS. HE FURTHER CONTENDS THAT, EVEN IF THE ASSESSEE IS CONSIDERED, AS AN ASSOCIATION OF PERSONS WHEN EACH PERSON HAS GOT AN - ASCER TAINED SHARE, IT WAS FOR THE ASSESSING OFFICER TO ASSESS EACH OF THE PERSONS BY FOLLOWING THE PROVISION OF SECTION 26 OF THE INCOME - TAX ACT. HE THEREFORE CONTENDS THAT THIS ASPECT OF THE MATTER HAS NOT BEEN CONSIDERED BY THE COMMISSIONER OF INCOME - TAX SO ALSO BY THE INCOME - TAX APPELLATE TRIBUNAL. IN THE CIRCUMSTANCES, HE REQUESTS THE COURT TO ALLOW THE APPEAL. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF THE ASSESSMENT ORDER, WE ARE OF THE O PINION THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE DOCU MENTS PRODUCED BY T NE ASSESSEE AS TO WHETHER THE ASSESSEE IS A PART NERSHIP FIRM WHO ARE HAVING A DEFINITE AND ASCERTAINABLE SHARE IN THE PROP ERTY O F THE FIRM. SINCE THE SAME HAS NOT BEEN CONSI DERED BY BOTH THE AUTHORITIES , WE ALLOW THE APPEAL WITHOUT ANSWERING THE QUESTION OF LAW FRAMED HEREIN AND REMAND THE MATTER TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION. IN THE RESULT, WE ALLOW THIS APPEAL DIRECTING THE ASSESSING OFFICER TO CON SIDER THE CASE OF THE ASSE SSEE AFRESH IN ACCORDANCE WITH LAW. ACC ORDINGLY, ALL THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE HEREBY QUASHED. 6 . BEFORE ME, LD A.R. OF THE ASSESSEE SUBMITTED THAT IN THE INSTANT CASE ALSO, SHARES OF THE PARTNERS IN THE HOUSE PR OPERTY IS DEFINITE AND ASCERTAINABLE AND THE ASSESSEE FIRM BE ALLOWED AN OPPORTUNITY TO PRODUCE THE EVIDENCE FOR THE SAME. 5 ITA NO.513/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 7 . I FIND THAT THE EVIDENCE OF THE SAME WAS NOT FILED BEFORE THE LOWER AUTHORITIES. IN THE CIRCUMSTANCES AND IN THE INTEREST OF JUS TICE, IN MY CONSIDERED VIEW, NO HARM WILL BE CAUSED IF FURTHER OPPORTUNITY TO PRODUCE EVIDENCE TO SHOW THAT THE SHARES OF THE TWO PARTNERS WERE DEFINITE AND ASCERTAINABLE. I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSE FIRM TO PRODUCE THE EVIDENCE AS STATED ABOVE AND THEREAFTER, AFTER VERIFICATION OF THE SAME, ADJUDICATE THE ISSUE AFRESH AS PER LAW KEEPING IN VIEW THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SHAKTI FARM HOUSE (SUPRA) QUOTED ABOVE. THUS, THE GR OUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCE D IN THE OPEN COURT ON 28 /10 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 28 /10 /2016 B.K.PARIDA, SPS 6 ITA NO.513/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : SHREE SALASAR BILDERS & DEVELOPERS, PARAS PLAZA, TINKONIA BAGICHA, BUXIBAZAR, CUTTACK 2. THE RESPONDENT. ITO, WARD 2(3), CUTTACK 3. THE CIT(A) , BERHAMPUR 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY// 7 ITA NO.513/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 DATE INITIA L 1. DRAFT DICTATED ON 25 / 10/16 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 25 / 10/16 (DICTATION PAD HAS BEEN ENCLOSED ALONG WITH ORIGINAL FILE) SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER A M 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS /PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE H.C. 9. DATE ON WHICH FILE GOES TO THE SR. PS 10. DATE OF DISPATCH OF ORDER.