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2013 (4) TMI 665 - AT - Income TaxValidity of assessments u/s.153C - search and seizure operation u/s.132 covering the residential premises as well as business premises of assessee - appellant challenged the proceeding initiated u/s.153C on the ground that no satisfaction was recorded by the A.O. of case in which a search conducted - Held that:- For initiating proceeding u/s.153C, it is not necessary that these books of account should be incriminating. When books of account of the appellant found and seized from the search place of the partner of the firm, the A.O. is fully empowered to initiate proceeding u/s. 153C against the firm i.e. other person. The A.O. of the both partners as well as firm was same therefore, no separate satisfaction is required to be recorded as held in case of CIT v. Panchajanyam Management Agencies & Services [2010 (11) TMI 366 - Kerala High Court]. In assessee's case, in all the years, no scrutiny assessment has been made by the A.O. The return of the appellant had been process u/s. 143 (1) (a) and it was held by in case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007 (5) TMI 197 - SUPREME Court] intimation u/s.143(1)(a) cannot be treated to be an order of assessment and there being no assessment u/s.143(1)(a). The Section 153D has been amended w.e.f. 01.06.2007 whereas the A.O. has passed orders u/s. 153C in all the years on 24/03/2006. Thus, no approval of JCIT/ACIT is required. Thus CIT(A) was right in confirming the action of the A.O. u/s.153 - Against assessee. Addition of capital gain u/s. 45(4) relying on CIT v. A.N. Naik Associates [2003 (7) TMI 46 - BOMBAY High Court] - Held that:- As per Section 2(47) the distribution of capital assets that dissolution of a firm would be regarded as transfer. It is now clear that when the assets are transferred to a partner that falls within the expression 'otherwise' and the rights of the other partners in those assets of the partnership firm extinguished. In appellant's case, the land and building had been revalued as against book value and credited the amount on account of revaluation in the respective partners' capital account in their ratio in the firm. The retiring partner paying his share. As decided in Suvardhan v CIT [2006 (8) TMI 142 - KARNATAKA High Court] any distribution of capital assets and dissolution of firm was chargeable tax as the income of the firm in the light of the fact that a transfer had taken place. In this case, one partner retired and two were continue in the partnership firm. The Court held that provisions of Section 45(4) is applicable as it amounts to transfer. Hence, capital gain is applicable - the assessee's case is fully covered u/s. 45(4) - Against assessee. Disallowance of salary and wages - Held that:- Nothing incriminating documents for inflating on wages were found, whatever found incriminating has been considered in case of partner who had disclosed the additional income under this head. A.O. made addition on the basis of presumption that in case of firm also such types of inflation on wages had been made. But the burden on the revenue to prove that wages expenses had been inflated by the appellant which has not been discharged by bringing out any evidence on record. Thus the order of the CIT(A) reversed. The assessee's appeal on this ground is allowed.
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