AMCELL E SERVICES, Patiala V. ITO, W-2, Patiala

ITA 806/CHANDI/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6087 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-06-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANPREET DUGGAL
• Keywords: Bonafide belief; Set aside

Judgement Text

आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी िवŢम िसंह यादव, लेखा सद˟ एवं ŵी परेश म. जोशी, Ɋाियक सद˟ BEFORE: SHRI. VIKRAM SINGH YADAV, AM & SHRI. PARESH M. JOSHI, JM आयकर अपील सं./ ITA NO. 806/Chd/2023 िनधाŊरण वषŊ / Assessment Year : 2017-18 Amcell E Services 95B, Street No. 2, New Bhishan Nagar, Patiala, Punjab- 147001 बनाम The ITO Ward-2, Patiala ˕ायी लेखा सं./PAN NO: AAXFA0904A अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Rajiv Saldi, CA राजˢ की ओर से/ Revenue by : Shri Manpreet Duggal, JCIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 26/06/2024 उदघोषणा की तारीख/Date of Pronouncement : 03/07/2024 आदेश/Order PER PARESH M. JOSHI, J.M. : This is an appeal filed before the Tribunal under section 253 of the Income Tax Act, 1961. The Assessee is aggrieved by the order under section 250 of the Income Tax Act, bearing No. ITBA/NFAC/S/250/2023- 24/1057250796(1) dt. 20/10/2023 which is hereinafter referred to as the “impugned order”. The assessee PAN is AAXFA0904A. The A.Y. is 2017-18 corresponding to the F.Y. from 01/04/2016 to 31/03/2017. Factual Matrix 2. The assessee has raised following grounds of appeal in Form No. 36 before us. 1. That the CIT(A) appeal decided the appeal ex-party without providing proper opportunity of being heard as such the order is liable to deleted. 2. That the addition confirmed by CIT(A) of Rs. 90,88,250/- is illegal and against the fact of the case. 3. That the CIT(A) failed to appreciate that the AO has accepted the fact that the bank account in question is already incorporate in personal returns of the partner Shri Mukesh Kumar as such the same has resulted in double taxation. 2 3. The brief statement of facts are as under : "The appellant firm, M/s AM CELL E SERVICES was dissolved w.e.f. A.Y.2014-15 with continuing partner Sh. Mukesh Kumar taking over assets and liabilities of the partnership firm including current Account no. 079005500173 with ICICI Bank Ltd. Patiala in the name of erstwhile partnership firm. Sh. Mukesh Kumar has been running the business under the same name M/s AMCELL E SERVICES since A.Y.2014-15 as proprietor under PAN AIYPS0625D and current Account no. 079005500173 with ICICI Bank Ltd. is duly accounted for in the books of the proprietary concern. Sh. Mukesh Kumar made verbal request to ICICI Bank Ltd. to change the status of current Account no. 079005500173 from partnership to individual. He was under the bonafide belief that necessary changes will be made in due course by bank. Admittedly current Account no. 079005500173 remained in the name dissolved partnership firm due to laxity of bank. In the course of assessment proceedings, copy of current Account no. 079005500173 with ICICI Bank Ltd. for the period 01.04.2016 to 31.03.2017 was furnished. Ld. A.O. was apprised of the fact that said deposits and withdrawals in current Account no. 079005500173 are duly accounted for in the books of account of proprietary concern M/s AMCELL E SERVICES -PAN AIYPS0625D. However Id. A.O. has accepted the source of entire cash deposits in current Account no. 079005500173 in the hands of proprietary concern except for Rs.9088250/-without assigning any reason. Moreover, Id. A.O. has failed to disclose how he has arrived at the figure of Rs.9088250/-. There is no mention of section invoked for making impugned addition and levying tax. Aggrieved by the assessment order, appeal is being preferred as per separate grounds of appeal. 4. The Ld. CIT(A) in his impugned order at Para 4 has observed that notice was sent to assessee on 05/01/2021, 03/07/2023, and 03/10/2023 but there was no response from the assessee. 5. The Ld. CIT(A) in his impugned order at para 6 has held that assessee has no evidence / submission to make with regard to the grounds of appeal, hence the issues raised in the grounds of appeal are decided on basis of material available on the record. 6. The Ld. CIT(A) in the impugned order at para 7.2 & 8 has held as follows: 7.2 In the present case, more than sufficient opportunity was given to appellant at the time of appellate proceedings to furnish the necessary details/documentary evidences in support of his case but the appellant has failed to produce any supporting material in this regard. In the absence of any evidence to the contrary, the analysis of the AO in assessment order dated 26/12/2019 is clearly against the claim of the appellant. Accordingly, the appeal of the appellant is hereby dismissed. 3 8. In the result, appeal is dismissed. Record of Hearing 7. The hearing was held on 26/06/2024 when both Ld. AR and Ld. DR were heard at length on ground no. 1 which was that order of CIT(A) impugned in appeal is in violation of the principles of natural justice and that no opportunity was given by Ld. CIT(A). Both the parties stated before us that impugned order be set aside and matter be remanded back to the file of the Ld. CIT(A). The Ld. AR contended that the assessee M/s Amcell E Services was a partnership Firm with Shri Mukesh Kumar & Smt. Pooja W/o Shri Mukesh Kumar. They were carrying on business of tele services. Copy of partnership deed dt. 10/01/2013 is not on record nor filed before us. The banker’s of the firm were ICICI Bank Ltd. during the year under consideration. The firm’s account no. is 079005500173. The said firm was dissolved on 10/01/2013 and Shri Mukesh Kumar took over the business of the firm as sole proprietor. The Ld. AR conceded that bank was not informed in writing about dissolution of firm and no dissolution deed was filed with the bank. It was also conceded by him that even Department was not informed about dissolution of the firm. There is no record in writing about this, either before bank or the Department. PAN number of sole proprietor was not given to the bank. His sole contention was that bank account of ICICI and its details are however incorporated in personal return of Shri Mukesh Kumar who was last surviving partner after resignation of his wife and that he is now sole proprietor of the said firm. All details of said account are incorporated in audited balance sheet of Shri Mukesh Kumar who has filed his ITR vide PAN BIDPK8812N which is not the assessee firm PAN number. 8. We hold that it was incumbent upon the assessee firm to have informed both bank as well as Income Tax Department about dissolution of 4 firm and ought to have produced before them partnership deed and dissolution deed. They ought to surrendered PAN card of assessee’s firm. As a consequence the account continued in the name of firm where transaction is huge to the extent of sum of Rs. 90,88,250/-. 8.1 We further are not going into merits and restrict ourselves suffice to say both the parties must go by the harmonious reading of partnership Act, 1932 and provisions of Income Tax Act. Be it noted that income is required to be computed in accordance with Income Tax Act, 1961, then assessment thereof as per law. Upon failure recovery. The Income Tax Act, 1961 takes care of all the situation be it change in the constitution of firm, merger of firm and so also dissolution of firm. Be it noted upon dissolution the liability of partner’s does not get extinguished in so far as assessment, demand and recovery is concerned. Kind attention is invited to chapter XVI of the Income Tax Act, 1961 whereby special provision are made for firms. Herein provisions of Section 184, 185, 187, 188, 188A, 189, 189A are to be taken into consideration, if required and necessary. 8.2 Be it noted that sole proprietary firm and sole proprietor are one and same person in the eyes of law. Name and style of firm’s name with a sole proprietor are one and same person in the eyes of law. 8.3 Any change with regard to Constitution of firm, alongwith PAN No. is required to be informed to the Income Tax Department as the same is in the interest of tax payers only. System desires both honest tax payer the assessee be it a partnership firm or the sole proprietary firm. Income Tax Department has enough weapons in their armoury to reach out to erring assessee’s. 8.4 We hold that in present facts and circumstances of the case by default or otherwise bank account of assesee firm remained in the name of firm (partnership firm); changes were not informed to bank and Department promptly. PAN number was not changed of firm, accounts of firm’s were incorporated by sole proprietor Mukesh Kumar by using his personal PAN number. All these are required to be enquired into first and then only 5 assessment should be made in accordance with law. “Firm” has been defined under section 2(23)(1)(i)(iii) of Income Tax At and so also partner alongwith partnership. Under Section 2(31) person is too defined, which all the stakeholders should note. Order 9. In view of aforesaid we set aside the impugned order of CIT(A) and remand case with a direction to pass a fresh order on merits after giving full and complete opportunity to the assessee to place all material fact before Ld. CIT(A). The Ld. CIT(A) is directed to pass a speaking order which should be well reasoned on all the issues. The fresh order on denovo basis be passed within six months from date of receipt of this order. 10. The impugned order is set aside as and by way of remand. 11. The appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 03/07/2024. Sd/- Sd/- िवŢम िसंह यादव परेश म. जोशी ( VIKRAM SINGH YADAV) (PARESH M. JOSHI) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ / JUDICIAL MEMBER AG आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 5. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar