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2019 (1) TMI 1493 - ITAT PUNEPenalty u/s. 271(1)(c) - assessment u/s.153C - unexplained income - loan taken from firm stood dissolved - delay in recording satisfaction from the completion of the assessment of the person searched - income assessable in hands of firm after dissolution - Held that:- The fact that the firm M/s. K. R. Boob & Sons got dissolved on 28-12-2003 and the assessee took over the dissolved firm as an individual, cannot alter the legal position which requires the assessment of the dissolved firm, if any, in the hands of the firm itself Once it is found as an admitted position that the entity taking loan from Shri Shriram H. Soni was M/s. K.R. Boob & Sons, a partnership firm, we fail to comprehend as to how the addition on account of interest and brokerage thereon could be made in the hands of the assessee in his individual capacity. We are satisfied that the addition in respect of any undisclosed income from the transaction of payment of interest and brokerage from undisclosed sources, if any, should have been considered only in the hands of M/s. K.R. Boob & Sons, a partnership firm and not the assessee. Since the instant additions have been made in the hands of the assessee, an individual, a hitherto partner of the firm M/s. K.R. Boob & Sons, we set-aside the same and order to delete them in the hands of the assessee. The AO is at liberty to take any other suitable remedial action as per the provisions of the Act, if any. We hold that the delay of 6-7 months in recording satisfaction from the completion of the assessment of the person searched cannot be held as vitiating the assessment on this count, but the delay beyond this period would call for quashing of assessment of the person other than the person searched on account of delay in recording satisfaction. CBDT Circular No.24/2015 dated 31-12-2015 has recognized that the judgment of Hon’ble Supreme Court in CIT Vs. Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] in the context of section 158BD applies to the assessment u/s.153C as well. As advert to the facts of the instant case, it is found that the assessment of Shri Shriram H. Soni, the person searched was completed on 27-03-2006. The AO of Shri Shriram H. Soni recorded satisfaction on 20-02-2007 and remitted the incriminating material etc. to the AO of the assessee. This shows that there was a delay of about 11 months from the completion of assessment of Shri Shriram H. Soni. Delay of around 11 monthly is clearly hit by the threshold period of 6-7 months, as held supra by us to be reasonable. Additions have been wrongly made and sustained. We, therefore, order to delete these additions. In view of our decision on the deletion of additions on merits, there remains nothing requiring imposition or confirmation of penalty u/s.271(1)(c) of the Act in respect of three assessment years under consideration. We, therefore, order to delete the penalty in all the three years under appeal. - Decided in favour of assessee.
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