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2015 (7) TMI 43 - ITAT PUNEIncome received after dissolution of firm - Whether Sec. 189(1) empowers the Assessing Officer to bring to tax any income arising out of any transaction when the firm was not in existence and no business was carried out? - Legality and validity of the proceedings initiated u/s. 147 - Held that:- The only objection to its chargeability to tax in the hands of the firm is on the ground that at the time of receipt, the firm had discontinued its business. This objection, however, is no more valid after incorporation of sub-s. (3A) in s. 176 of the Act which is intended specifically to meet such objections. Sub-s. (3A) clearly provides that any sum received after the discontinuance of the business shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if the same would have been chargeable as income had it been received before such discontinuance. This sub-section constitutes an exception to the rule that business receipts are chargeable only if the business or profession is carried on in the year of receipt. - the amount of ₹ 9,80,000 was assessable in the hands of the assessee-firm in the year of receipt despite dissolution and discontinuance of its business by virtue of sub- s. (3A) of s. 176 r/w s. 189 of the Act. Nowhere it is the case of Assessing Officer that the said sum belong to the period during which the assessee firm was in existence and carried out its business. We are of the opinion that as there is no evidence to suggest that the transaction allegedly noted on loose paper with name analogous to the name of the assessee firm pertains to the year, in which the assessee firm was in existence. Admittedly the assessee firm has been dissolved on 31-03-2002 and alleged transaction is found in December, 2003, no income can be brought to tax treating unexplained income of the assessee in the A.Y. 2004-05. We, accordingly, allow the contention of the assessee on this specific plea and quash the proceedings initiated u/s. 147 and cancel the assessment framed by the Assessing Officer and upheld by the CIT(A). - Decided in favour of assessee.
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