TMI Blog2016 (3) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... basis in the hands of the assessee. As the income of M/s Madhu & Others has been assessed in the hands of assessee wherein disallowance u/s 40A(3) of ₹ 16,99,558/- and addition u/s 68 of ₹ 8,50,000/- has been made, it is apparent that no opportunity is given by assessing officer to the assessee. Reason for the same is that both the orders u/s 143(3) read with section 148 in the hands of the assessee as well as M/s Madhu & Others are passed on 20th March, 2006 and therefore we set aside ground no. 2 and 3 of the appeal of the assessee contesting the addition u/s 68 as well as u/s 40A(3) of the Act back to the file that assessing officer with direction to deal with both the issues on merit after giving proper opportunity of hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and merits of the case the assessment so framed is bad in law and needs to be modified. 5. That the assessee reserves the right to have additions/ or deletions to the grounds of appeal in order to have justice. 2. Brief facts of the case are that assessee is an individual who was granted license for sale of liquor by District Excise officer. However in AY 2002-03 , the year in which she was granted license, it was submitted that business of sale of liquor is carried on in the name of the Firm in name and style as M/s Madhu Others which is constituted by the deed of partnership dated 26.3.2002. For the year Ld AO was of the view that there is no transfer of license from assessee to the partnership firm and as the license was gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erself. CIT (A) while deciding the issue relied up on the decision of Honorable supreme court in case of CIT V Rangila Ram Other 254 ITR 230 (SC) where in it has been held that firm is not entitled to registration as it some of the partners of the firm hold the license to sell liquor. 3. On this ground no. 1 no arguments were placed by the AR and Ld DR relied on the orders of lower authorities. 4. As held by Ld. CIT (A) relying on the decision of Honorable Supreme court in case of CIT V Rangila Ram Others where honourable court has held that:- The partnership (the assessee) dealt in liquor. Only some of the partners held the liquor license. Our attention was drawn by the learned Solicitor-General, appearing for the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deal in liquor, all the other partners would, as partners, also be dealing in liquor and holding the same. This would be contrary to the basic principle and illegal. Learned counsel for the assessee relied upon a judgment of this court in Addl. CIT v. Degaon Ganga Reddy G. Ramakrishna and Co. [1995] 214 ITR 650; [1995] Suppl. 2 SCC 146. It dealt with the A. P. (Telangana Area) Abkari Act, which contained a prohibition similar to that stated above. This court held (page 655): In view of the clear findings of fact recorded by the Tribunal, there can be no doubt that the sub-partnerships formed by individual partners of the main partnership which were lessees, with some others, merely to finance the business of a partner of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cond, third and fourth grounds are relating to additions made in the hands of M/s Madhu Ors which is a partnership firm vide order dated 20th March 2006 as under :- a. Ground NO 2 - ₹ 1,92,000/- were disallowed on account of salary paid to partners because assessment is made in the status of AOP on protective basis b. Ground No 3. an addition of ₹ 16,99,558/- u/s 40A(3) for a payments of ₹ 84,97,791/- is made in violation of section 40A(3) and therefore a disallowance @ 20% thereof amounting to ₹ 16,99,558/- is made c. Ground No 4 - unexplained deposit taxed u/s 68 of the Act with respect to six persons amounting to ₹ 8,50,000/-. 6. Over and above sum of ₹ 50,633/- was the returned income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these issues of addition u/s 68 as well as disallowance u/s 40A (3) of the Act. Therefore the matter may be set aside to the file of AO. 9. Ld. DR relied on the order of CIT(A) stating that CIT(A) has considered all the aspects and therefore the appeal of the assessee may be dismissed. 10. We have carefully considered the rival submission. On the basis of additions made in the M/s Madhu Others on protective basis Ld. AO has made the addition of ₹ 27,92,190/- on substantive basis in the hands of the assessee. As the income of M/s Madhu Others has been assessed in the hands of assessee wherein disallowance u/s 40A(3) of ₹ 16,99,558/- and addition u/s 68 of ₹ 8,50,000/- has been made, it is apparent that no opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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