Shyam Lata, New Delhi V. ITO WARD - 29(5), New Delhi

ITA 805/DEL/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1506 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-09-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 148; 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “SMC” : DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA.Nos.803, 804 & 805/Del./2020 Assessment Year 2010-11 Shri Manish Gupta, PAN AAPPG3405Q Shri Sanjay Gupta, PAN AAJPG8125B Smt. Shyam Lata, PAN AABPL9437H B-23/1, Phase-II, Okhla Industrial Area, Delhi. PIN 110 020 [vs. The Income Tax Officer, Ward-29(5), New Delhi. (Appellants) (Respondent) For Assessees : Shri Rajiv Saxena And Shri Shyam Sunder Advocates. For Revenue : Shri Anuj Garg, Sr. DR Date of Hearing : 29.09.2022 Date of Pronouncement : 07.10.2022 ORDER The above appeals by different Assessees have been directed against the separate orders of the Ld. CIT(A)- XXV, New Delhi, dated 12.12.2019 relating to A.Y. 2010-11. 2 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. 1.1. Since common issues/grounds have been raised in all these appeals, these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. Both the parties are agreed that the decision taken in ITA.No.803/Del./2020 for the A.Y. 2010-11 be applicable in other two appeals. I, therefore, culled out facts for the A.Y. 2010-11 in ITA.No.803/Del./2020 in the case of Manish Gupta. 2. Briefly stated facts of the case are that the assessee is a partner in the partnership firm viz., M/s. Delhi Plastic Industries. The assessee is having 1/3 rd equal share on par with other co-partners in the partnership firm on its profit and losses. The assessee filed his return of income on 01.05.2017 declaring total income at Rs.1,77,960/-. The A.O. received an information that the assessees’ partnership firm has sold immovable property for Rs.1,08,90,000/- on 06.07.2009. Since, no return of income was filed for the year under consideration, therefore, the A.O. noted that the income escaped assessment by the reason of failure on the part of assessee to disclose fully and truly all material facts 3 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. necessary for assessment. Accordingly, the case was reopened by the A.O. under section 147/148 of the I.T. Act, 1961 with the prior approval of competent authority and notice under section 148 dated 30.30.2017 was issued and duly served upon the assessee. In response to the said notice, the assessee furnished his ITR dated 01.05.2017 and requested the A.O. to provide reasons for reopening of his case. The reasons for reopening of the case of assessee along with notices under section 143(2) and 142(1) of the I.T. Act, 1961 were issued to the assessee on 07.07.2017 and served to the assessee. The Authorised Representative of the Assessee appeared before the A.O. from time to time and furnished the requisite details. During the course of assessment proceedings, the A.O. noted that the property in question was purchased by the assessee along with Smt. Shyam Lata and Shri Sanjay Gupta in December, 2006 for a consideration of Rs.41,39,000/- and the same was sold by them on 09.07.2009 for a consideration of Rs.60 lakhs. Since the assessee’s 1/3 rd share of Rs.6,20,333/- did not shown in his return of income, the A.O. after considering 4 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. the explanation of assessee, added the same back to the income of assessee besides adding credit card payment of Rs.4,19,440/- to the total income of assessee and thus, computed the total income of assessee at Rs.12,17,733/- under section 147/143(3) of the I.T. Act, 1961 dated 30.12.2017 as against the returned income of assessee at Rs.1,77,960/-. 3. Aggrieved by the order of the A.O, the assessee carried the matter in appeal before the Ld. CIT(A) and reiterated the submissions made before the A.O. It was the contention of the assessee before the Ld. CIT(A) that the property [plot] in question was purchased in the name of partners for the benefit of the Partnership Firm out of Partnership Firm funds through banking channel for a consideration of Rs.50,55,320/- [which includes brokerage charges to Tiwari Property] and the said property was sold in April/May, 2009 at a total consideration of Rs.60 lakhs through banking channel, duly executing the sale deed by the partners. However, since the purchase as well as sale of the property in question has been made out of the Firm 5 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. funds, the amount received by the individual partners in their accounts, have been immediately credited to the partnership Firm which has been shown in the balance- sheet of the Firm and paid taxes thereon. These facts have not been disputed by the Ld. CIT(A). Therefore, again taxing in the hands of individual partners would amount to double taxation. The Ld. CIT(A) called for remand report from the A.O. and also considered the submissions of the assessee. The Ld. CIT(A) noted that the residential Plot No.9, Block-E, Sector-30, Noida (U.P) was stated to have been purchased by the Partnership Firm while the registration was in the names of partners. The Ld. CIT(A) noted that the third partner Mrs. Shyam Lata W/o. Shri S.K. Gupta was not a partner of the Partnership Firm. Since the explanations offered by the assessees are not complete, therefore, the Ld. CIT(A) confirmed the addition made by the A.O. of Rs.6,30,330/- i.e., 1/3 rd share of each partner and deleted the addition of Rs.4,19,940/- made on account of credit card payments by the assessee. 6 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. 4. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal, contending, inter alia, that the property/plot in question was purchased out of the Partnership Firm funds and not out of the funds by the individual partners and no investment have been made by the individual partners for purchase of property in question and the funds are emanated out of the Partnership Firm only which have been shown in the audited financial accounts as well as in the balance sheet of the partnership Firm which fact has not been disputed by the lower authorities. Even when the property in question was sold, the amount received by the partners have been immediately transferred to Partnership Firm Account and shown in the balance-sheet and paid taxes thereon. Therefore, there is no role at all of the partners of investing any sum for purchase of the property in question and subsequently, when it was sold, the surplus amount has not been bifurcated amongst the partners and the surplus amount credited to the books of account of the Partnership Firm. Therefore, no profit accrued/earned by the co-owners on the reason that no 7 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. investment made by the partners. Since no investment made by the assessee for purchase and sale of the property, the impugned addition of Rs.6,20,333/- [being 1/3 rd equal share amongst partners] made in the hands of assessee be deleted. 5. The Ld. D.R. on the other hand strongly relied upon the orders of the lower authorities. He submitted that since the explanation furnished by the assessee was not complete as the property in question was executed by a non-partner of the partnership firm, the addition confirmed by the Ld. CIT(A) be upheld. 6. I have considered the rival submissions and perused the material available on record. From the careful perusal of the orders of the authorities below, it is noticed that in the instant case the Residential Plot No.9, Block-E, Sector-30, Noida, U.P. was purchased by the partnership firm at Rs.50,55,320/- in December 2006 and the fact that the said sum is totally, fully and wholly invested by the Partnership Firm from own funds of the Firm disclosed in 8 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. the balance-sheet as Assets of the Firm held in the name of its partner(s) viz., Shri Manish Gupta, Shri Sanjay Gupta, Shri Surender Gupta, has not been disputed by the authorities below. It is also not disputed by the lower authorities that Smt. Shyam Lata is wife of Shri Surender Gupta who is one of the partner in the Partnership Firm. Further for purchase or subsequent sale of the said property, the individual partners have not contributed anything out of their own funds and in fact, the surplus amount received in the name of individual partners, was also credited to partnership firm account immediately on execution of sale deed, through banking channel, which fact is also not denied by the lower authorities. It is a crystal clear fact that the funds are not utilized out of the individual partner’s and the entire sum has been paid by the partnership Firm through banking channel and duly shown in it’s audited accounts and balance-sheet which is also not disputed by the authorities below. In fact, after deducting the cost of acquisition and other expenses out of sale proceed received by the Partnership Firm on the total 9 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. surplus amount of Rs.2,53,180/- on sale of property Plot No.9, Block-E, Sector-30, Noida, the Partnership Firm viz., M/s. Delhi Plastic Industries has shown the said sum of Rs.2,53,180/- in the P & L A/c for the F.Y. 2009-10 as noted by the Ld. CIT(A) in his order which is also included in the returned income of assessee and had paid taxes thereon. This factual matrix has not been disputed or controverted by the Ld. D.R. In this situation, if addition is sustained, then it would amount to double taxation. The Ld. D.R. could not point out any defect in the short term capital gain calculation shown by the Partnership Firm in it’s P & L A/c. Since, no profit accrued/earned by the assessee/co- owners on the reason that no investment made by the partners, the impugned addition of Rs.6,20,333/- [being 1/3 rd equal share amongst partners] made in the hands of assessee without considering the other expenses like brokerage, stamp duty etc., is hereby deleted. Accordingly, appeal of the assessee is allowed. 7. In the result, ITA.No.803/Del./2020 of the assessee is allowed. 10 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. ITA.Nos.804 & 805/Del./2020 : 8. Since the grounds raised by the assessees are identical and the facts are also similar in these appeals, respectfully following the reasons for the decision in the case of Shri Manish Gupta in ITA.No.803/Del./2020 hereinabove, addition of Rs.6,20,333/- made by the A.O. being 1/3 rd equal share of each partner in the partnership firm is hereby deleted. Accordingly, ITA.Nos.804 & 805/Del/2020 are allowed. 9. In the result, ITA.Nos.804 & 805/Del/2020 are allowed. 10. To sum-up, all the appeals of Assessees are allowed. Order pronounced in the open Court on 07.10.2022. Sd/- [CHANDRA MOHAN GARG] JUDICIAL MEMBER Delhi, Dated 07 th October, 2022 VBP/- 11 ITA.Nos.803, 804 & 805/Del./2020 Sh Manish Gupta, Sh Sanjay Gupta & Smt. Shyam Lata, Delhi. Copy to 1. The appellant 2. The respondent 3. Ld. CIT(A) concerned 4. CIT concerned 5. DR ITAT “SMC” Bench, Delhi 6. Guard File //By Order// Assistant Registrar, ITAT, Delhi Benches, Delhi.