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2020 (3) TMI 497 - HC - Income TaxValidity of assessment passed u/s 158BD r.w.s. 143(3) - absence of valid satisfaction recorded by the assessing officer after application of his mind on the materials gathered in the course of search of partner of the appellant firm - undisclosed income from transaction of used empty bottles belonged to the Appellant firm - HELD THAT:- From perusal of the aforesaid satisfaction note, it is evident that the satisfaction note has been recorded in respect of the appellant and the profit of G.T.Krishna Murthy as well as profit of M/s Sree Venkatesha Bottles has also been worked out. Therefore, we are satisfied that the requirement as laid down by the decision of the Supreme Court in case of Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] as well as the Circular dated 31.12.2015 issued by Central Board of Direct Taxes has been complied with. In result, substantial question of law No.(i) framed by this court is answered in favour of the revenue and against the assessee. Undisclosed income from transaction of used empty bottles belonged to the Appellant firm - Tribunal justification in surmising that the document found in the partner’s premises refers to an entity with 9 shares belonged to the appellant firm which has only 5 partners to justify the impugned addition - demand notice under Section 154 of the Act amending the order of assessment under Section 143(3) read with Section 158BD being not in the name of the appellant - HELD THAT: From the perusal of the statement of G.T.Krishna Murthy, it is evident that he is a partner in M/s Venkateshwara Bottles and he has affirmed that he has a share of 9% out of 105%. From perusal of the statement of aforesaid G.T.Krishna Murthy, it is also evident that when he was confronted with the document seized during the course of search, he admitted that he is not aware as to why the shares are given to Mallikarjuna, H.V.S., Vijay Kumar Shetty and Kareem Sab. The aforesaid witness in his evidence has not stated that there is another partnership firm with nine partners, which deals in same business. From the trial balance sheets of the appellant’s firm, it is evident that the aforesaid persons names have been reflected and their percentage of profit has also been shown. On the basis of the trial balance sheet seized during the search operation, the tribunal has recorded a finding that names of all nine partners including the five partners of the assessee firm appear therein, which goes to prove beyond any shadow of doubt that assessee firm has been indulging in two types of business in the same line and parallel business was being carried out clandestinely with the active participation of four other persons. The aforesaid finding is a finding of fact which has been recorded by the Income Tax Appellate Tribunal on the basis of meticulous appreciation of material on record. Therefore, the substantial question of law Nos.(ii), (iii) and (viii) are answered against the assessee and in favour of revenue. When the appellant having complied with the provisions of Section 184 can the appellant be assessed in the status of AOP - HELD THAT:- Section 184 of the Act deals with assessment as a firm. Section 184(1) provides that a firm shall be assessed as a firm for the purposes of this Act if the partnership is evidenced by an instrument and the individual shares of the partners are specified in that instrument. In the instant case, even though, in a registered partnership firm though names of five partners appear yet, in fact, there are nine partners. Therefore, in the fact situation of the case, the provisions of Section 184 of the Act do not apply. In result, the substantial question of law No.(iv) is answered against the assessee. Levy of interest under Section 158BFA(1) by passing an order under Section 154 - This court has upheld the validity of the order of assessment passed under Section 158BD read with Section143(3) of the Act, we hold that Assessing Officer was justified in levying interest under Section 158BFA(1) of the Act. Accordingly, substantial question of law No.(vi) is answered in the affirmative and against the assessee.
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