A.C. CHENNA REDDY (FIRM), V. ASST CIT CEN CIR 2,

MA 525/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8809 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 04-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Keywords: Opportunity of being heard
• Section: 132

Judgement Text

MA NO 525 OF 2011 AC CHENNA REDDY, MUMBAI PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND M.A.NO.525/MUM/2011 (ARISING OUT OF ITA NO.333/MUM/2009) (ASSESSMENT YEAR: 2002-03) M/S AC CHENNA REDDY (FIRM) SHRI G.G. AGARWAL, ADVOCATE VS ACIT, CENTRAL CIRCLE-2 THANE 5,JOLLY BHAWAN NO.2 7 NEW MARINE LINES,CHURCHGATE MUMBAI 400 020 PAN AAIFA 5938 P (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI PRAKASH JHUNJHUNWALA DEPARTMENT BY: SHRI JITENDRA YADAV, DR DATE OF HEARING: 04/05/2012 DATE OF PRONOUNCEMENT: 08/06/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS MISCELLANEOUS APPLICATION IS PREFERRED AGAINST THE ORDER OF THE ITAT DATED 20.4.2011. ASSESSEE IN ITS APPEAL RAISED THREE GROUNDS WITH REFERENCE TO ASSESSMENT OF A PARTNERSH IP FIRM. IT WAS THE CONTENTIONS OF ASSESSEE THAT (1) AO IS NOT EMPO WERED TO VERIFY THE GENUINENESS OF THE APPELLANT PARTNERSHIP FIRM U NDER SECTION 184(1), AND (2) IF PARTNERSHIP FIRM IS ASSESSED AS SUCH FOR IN EARLIER ASSESSMENT YEAR, THEN IT SHALL BE ASSESSED IN THE S AME CAPACITY FOR SUBSEQUENT YEARS AND IN ANY CASE,(3) UNDER SECTION 185 INCASE THE PARTNERSHIP FIRM DOES NOT COMPLY WITH THE PROVISION S OF SECTION 184, THEN THE FIRM SHALL BE ASSESSED AS AOP. IN THE PRES ENT M.A IT WAS THE CONTENTION THAT EVEN THOUGH THE HON'BLE ITAT AD JUDICATED MA NO 525 OF 2011 AC CHENNA REDDY, MUMBAI PAGE 2 OF 4 ISSUES. 1 & 2, DID NOT ADJUDICATE THE 3 RD LEGAL ISSUE I.E. TREATMENT OF THE FIRM AS AOP. 2. BRIEF FACTS RELATING TO THE APPEAL OF ASSESSEE ARE THAT ASSESSEE WAS ASSESSED AS A FIRM IN EARLIER YEARS AND CONSEQU ENT TO A SEARCH UNDER SECTION 132 ON 26.03.2003, AO INQUIRED ABOUT THE GENUINENESS OF THE FIRM AND HELD THAT THE FIRM IS N OT A GENUINE ONE AND CONSEQUENTLY ASSESSEES INCOME ARISING OUT OF T HE FIRM WAS ASSESSED IN THE HANDS OF ONE OF THE PARTNER MR. A.C . CHENNA REDDY ON SUBSTANTIVE BASIS AND IN THE FIRMS HAND ON PROT ECTIVE BASIS. ASSESSEE RAISED THE ABOVE THREE CONTENTIONS IN APPE AL AND THE HON'BLE ITAT VIDE ORDER DATED 20.4.2011 ADJUDICATED THE MATTER AND HELD THAT AO HAS POWER TO EXAMINE WHETHER THE FIRM IS GENUINE OR NOT. WHILE ANALYZING THE ISSUE, THE ITAT ALSO DISCU SSED THE SCHEME OF ASSESSMENT OF PARTNERSHIP FIRM INCLUDING THE PRO VISIONS OF SECTION 185 AND THEN WENT ON TO DISCUSS ABOUT THE P OWERS OF AO IN EXAMINING THE CONSTITUTION OF THE FIRM. TO THAT EXT ENT ASSESSEES GROUND NOS.1 AND 2 ARE HELD AGAINST ASSESSEE. WITH REFERENCE TO THE GENUINENESS OF THE FIRM, SINCE AO DID NOT GIVE ANY OPPORTUNITY TO ASSESSEE AFTER TAKING STATEMENTS FROM SOME OF THE P ARTNERS AND SOME OF THE CONTENTIONS ARE ALSO TO BE EXAMINED, TH E ITAT HELD AS UNDER:- WE GET THE IMPRESSION THAT THE ENTIRE EVIDENCE BOT H FOR AND AGAINST ASSESSEES CLAIMS HAS TO BE APPRISED AG AIN IN ORDER THAT A PROPER CONCLUSION IS DRAWN REGARDIN G THE GENUINENESS OF THE FIRM. AFTER OBSERVING IT AS ABOVE, THE ITAT FINALLY RESTO RED THE MATTER TO THE FILE OF AO BY HOLDING AS UNDER: IN THESE CIRCUMSTANCES AND HAVING REGARD TO THE EVIDENCE IN THIS CASE, WE SET ASIDE THE ORDERS OF T HE DEPARTMENTAL AUTHORITIES AND RESTORE THE MATTER TO THE FILE OF AO, WHO SHALL TAKE A FRESH DECISION REGARDI NG THE GENUINENESS OF THE FIRM IN THE LIGHT OF OR OBSERVAT IONS MADE ABOVE AND IN ACCORDANCE WITH LAW, AFTER GIVING MA NO 525 OF 2011 AC CHENNA REDDY, MUMBAI PAGE 3 OF 4 ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. WE DIRECT ACCORDINGLY AND ALLOW ASSESSEES APPEAL, IN PART, FOR STATISTICAL PURPOSES. 3. IT IS THE CONTENTION OF THE LEARNED COUNSEL THAT TH E ITAT DID NOT ADJUDICATE THE THIRD ISSUE REGARDING TREATMENT OF THE FIRM AS AN AOP. HIS CONTENTIONS ARE BASED ON HIS ARGUMENTS MAD E BEFORE THE ITAT AND PLEADED THAT SINCE THE GROUND WAS NOT ADJU DICATED, THE ORDER MAY BE RECALLED AND HEARD. THE LEARNED DR HOW EVER, RELIED ON THE ORDER OF THE ITAT TO SUPPORT THAT THERE IS NO M ISTAKE APPARENT FROM RECORD SO AS TO RECALL THE ORDER. 4. WE HAVE CONSIDERED THE ISSUE. AT THE OUTSET IT IS T O BE STATED THAT THE MISCELLANEOUS APPLICATION IS NOT WARRANTED ON THE FACTS OF THE CASE. THE ITAT HAS NOT ADJUDICATED THAT THE FIR M IS NOT GENUINE. INVOKING THE PROVISIONS OF SECTION 185 WILL ONLY AR ISE IN CASE IT IS HELD THAT THE PARTNERSHIP FIRM DOES NOT SATISFY/COM PLY WITH THE PROVISIONS OF SECTION 184. WHAT THE ITAT HAS ADJUDI CATED IS ONLY WITH REFERENCE TO THE POWERS OF AO IN EXAMINING THE GENUINENESS OF THE FIRM IN THE COURSE OF ASSESSMENT. SINCE THE ENT IRE EVIDENCE FOR AND AGAINST ASSESSEE IS TO BE APPRISED AGAIN, THE I TAT RESTORED THE MATTER TO THE FILE OF AO TO EXAMINE WHETHER THE FIR M IS GENUINE OR NOT. UNLESS A FINDING IS ARRIVED AT ON THIS ISSUE T HAT THE FIRM IS NOT GENUINE, QUESTION OF INVOKING THE PROVISIONS OF SEC TION 185 DOES NOT ARISE. THEREFORE, THERE IS NO NEED FOR ANY FINDING ON THE ABOVE ISSUE OR ADJUDICATION ON THIS AS THE ISSUE OF GENUINENESS OF THE FIRM ITSELF IS RESTORED TO THE FILE OF AO FOR FRESH EXAMINATION . ASSESSEE CAN COMPLY WITH THE PROVISIONS OF SECTION 184 WHICH IS PENDING BEFORE AO. IN CASE AO HOLDS THAT THE FIRM IS GENUINE, THE GROUND RAISED BECOMES ACADEMIC IN NATURE AND DOES NOT REQUIRE TO BE ADJUDICATED AT ALL. ASSESSEE IS FREE TO RAISE THE ISSUE BEFORE AO CONSEQUENT TO HIS FINDING ON THE GENUINENESS OF THE FIRM. IN VIEW OF THIS, WE HOLD THAT THE M.A. IS NOT MAINTAINABLE AND ACCORDINGLY DISMIS SED. MA NO 525 OF 2011 AC CHENNA REDDY, MUMBAI PAGE 4 OF 4 5. IN THE RESULT, MISCELLANEOUS APPLICATION FILED BY A SSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2012. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE-PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 8 TH JUNE, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI