TMI Blog2019 (2) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... the Deepali. Thereafter, If it is held to be a member of the AOP , then it should be given a proper opportunity of hearing and then the ld AO should pass a fresh assessment order in accordance with law. If Deepali Design and Exhibits Pvt. Ltd is held to be not a member of AOP, then it does not have any locus standi in the present appeal against those orders passed by the lower authorities and further the tax demand raised on the AOP is not recoverable from the Deepali Design and Consortium Pvt. Ltd but by other means . In view of this, we set aside ITA for Assessment Year 2011-12 filed in the name of PICO Deepali Overlays Consortium and signed by Deepali Design and Exhibits Pvt. Ltd back to the file of the ld AO, with a direction to first decide whether Deepali Design and Exhibits Pvt. Ltd is a member of AOP or not. If it is held to be a member, then Deepali be given a proper opportunity of hearing on the merits of the various additions made in the assessment order u/s 69A and other disallowances u/s 37 in the hands of assessee AOP. After that ld AO may pass an order on assessee AOP in accordance with law and all other consequences u/s 177 (3) of the act Shall also be applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting India Pvt. Ltd; (iii) M/s. Deepali Design and Exhibits Pvt Ltd, both of them having 20% share in the joint venture. Further, the order of the ld AO was challenged before the ld CIT (A) who vide order dated 23.12.2016 dismissed the appeal of the assessee. As the demand crystallized against the AOP, by order u/s 177 (3) of the act it was held to be recoverable from the Deepali design and Exhibit Private Limited. Therefore, this appeal has been filed by Deepali Design and Exhibits Pvt. Ltd stating that it is alleged member of the consortium. 4. Initially it is the contention of the assessee that assessee has been treated as member of the association of persons and the tax recovery has been fastened in term of section 177(3) of the Act. The main contention of the assessee is that the assessee is aggrieved with the order of the ld CIT (A) and the ld AO in confirming the additions in the hands of the AOP where the assessee is alleged to be a member, and tax demand of AOP is held to be recoverable from Deepali and this appeal is filed. 5. According to provisions of Income Tax Act as per section 253 of the Act an assessee‟ who is aggrieved by the specified order may file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt categorically giving his finding as to whether assessee is member of AOP or not . If it is member, then what is determinate share of the assessee in the AOP. 9. Meanwhile, M/s. PICO Deepali Overlays Consortium filed an appeal on 11.07.2018 against the same order of the ld CIT(A)-27 which is signed by the Deepali listed as ITA No 4929/del/2018. An application for condonation of delay was also filed. The main reasons stated are that appeal No. 1561/Del/2017 was filed by alleged member of the AOP. During the course of hearing of that appeal, the bench expressed its apprehension on validity of form No. 36 stating that appeal can be filed by the Member of the AOP in the name of the AOP, however, ITA NO. 1561/Del/2017 was filed by the member as alleged member of the AOP. Therefore, on such apprehension the assessee has now filed the appeal in ITA No. 4929/Del/2018. It was stated that the documents and paper book and remand report etc filed in that appeal may be considered as filed in this appeal. Simultaneously, in ITA No. 1561/Del/2017 assessee has stated that as the AOP, itself has now filed the appeal in ITA NO. 4921/Del/2018 on 12.07.2008, the appeal in ITA No. 1561/Del/2017 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lays and Consortium, M/s. Deepali Design and Exhibits Pvt. Ltd is considered as a member by the ld AO which is denied by the assessee. vide direction dated 03.01.2008, the ld AO has submitted the remand report dated 27.03.2018 as under:- On the directions dated 03.01.2018 of Hon'ble ITAT The Remand Report is submitted as under: 1. The assessee M/s Pico Deepali Overlays consortium filed its return income for the assessment year 2011-12 on 22.06.2012 in the state of AOP during the cause of assessment proceedings. The assessee furnished following replies which clearly showed that the assessee AOP was a consortium between Pico Hongkong Limited, Pico event marketing (India) Pvt. Ltd. M/s Deepali Design Exhibits Pvt. Ltd. 1. Letter dated 09.10.2012 Annexure'A' 2. Letter dated 19.12.2012 Annexure 'B' 3. Letter dated 03.12.2012 Annexure C In state of account of the assessee were duly audited by M/s Nangia Co Chartered Accountants and the amount proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f AOP for this purpose of changeability of tax. No contrary view has been taken by the department while adopting the status of the assessee. Case laws cited by the M/s Deepali Designs and Exhibits (P) Ltd are also of no help to it. In the case of Konkani Bharat Dairy Farm (AOP) vs. Assistant Commissioner of Income Tax, Circle-2, Nashik (2008) 113 ITD 72 (Pune), the Hon'ble ITAT while deciding the issue has referred to decision of the Hon'ble Supreme Court in the case of G. Murgesan Brothers vs. CIT(1933) ITR 432 (SC). In this case the Apex Court held that for forming an AOP, the members of the Association must join together for the purpose of producing an income. An AOP can be formed only when two or more individuals voluntarily combine together for a certain purpose. Hence volition on the part of the members of the association is an essential ingredient. In this case, 4 Brothers driving income from life interest in a house property and dividend from companies in respect of shares jointly held by them had filed their return for the A.Y. 1957- 58 1958-59 in the status of AOP and for the A.Y.s 1959-60 1962-63, they submitted their returns as individual specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m filed its return of income in the status of AOP. (Reply - Undisputedly the return of income was filed by Mr. Tham Kok Fai who is a director of Pico Event Marketing (India) Pvt. Ltd.; he is not the manager or AR of M/s Pico Deepali Overlays Consortium nor of M/s Deepali Designs Exhibits Pvt. Ltd. or in any way related to it. No evidence to suggest any role, involvement, consent etc. of M/s Deepali Designs Exhibits Pvt. Ltd. in the filing of the return.) (ii) The replies furnished during assessment proceedings showed that M/s Pico Deepali Overlays Consortium is an AOP. (Reply - No evidence to suggest that the status of the assessee was ever made an issue during the assessment proceedings despite overwhelming material to suggest that Deepali Designs Exhibits Pvt. Ltd. could not have been a member of the AOP. No notice was ever issued to Deepali Designs Exhibits Pvt. Ltd. and no authorised representative of Deepali Designs Exhibits Pvt. Ltd. ever participated in the assessment proceedings. The status of Pico Deepali Overlays Consortium as an AOP was simply presumed by ignoring materials to the contrary.) (iii) Assessment proceedings were attended by M/s Nangia C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It is further submitted that the remand report admits that during the assessment proceedings the AO had knowledge of and on record both the agreements viz. agreement dated 19.12.2009 and 01.06.2010. However despite this, the AO and the assessment order has relied only on the agreement dated 19.12.2009 and has ignored the agreement dated 01.06.2010 that wholly, substantially and materially amended the legal relationship of the parties and was entered into several months before the income generating activity commenced. Further, it was never the case of the revenue either during the assessment proceedings or the remand proceeding that the agreement dated 01.06.2011 is a sham or a non-genuine document. 8. Without prejudice to above submission it may also be submitted that income in respect of scope of work of DDEPL is already included and taxed in the hand of DDEPL, whereas the same is also included by AO in the case of AOP. This amounts to double taxation of the same income. 9. As per direction of the Bench, all the relevant documents and written submission were submitted before Assessing Officer on 24.01.2018. The copy of remand report was supplied to DDEPL on 28 March 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facade of Pico Deepali Overlays Consortium to generate income in India, repatriate it to Hong Kong and remain unaccountable for income tax. 12. It is reiterated that this reply is limited to the findings and observations in the remand report. Deepali Designs Exhibits Pvt. Ltd. would rely on the materials submitted during the remand proceedings and written submissions submitted before the Hon'ble Tribunal to further substantiate its case that Deepali Designs Exhibits Pvt. Ltd. is not member of the AOP and that receipt towards its scope of work is wholly and solely the income of Deepali Designs Exhibits Pvt. Ltd. 16. On the basis of above, the first issue that is required to be adjudicated as to whether the M/s. Deepali Design and Exhibits Pvt. Ltd is the member of AOP or not. This issue has arisen because this appeal is signed by M/s. Deepali Design and Exhibits Pvt. Ltd which itself says that it is not a member of AOP but the ld AO has treated it as AOP. According to Rule 47(1) of the Income Tax Rules, 1962, the appeal shall be signed by the persons specified in Rule 45(2) of the Income tax Rules 1962. The Rule 45(2) provides that such form is to be signed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AOP. Though the ld AR has submitted that while filing the return of income in case of APO, same was undeniable filed in the status of AOP but the grievance of the Deepali is that no consent etc was taken of Deepali while filing return as such. We do not find any such provision in the act that at the time of filing of the return of AOP each of the member must consent. It is entrusted to one party only. Therefore this arguments of the ld AR does not deserve any consideration. Further the AOp has been assessed as such where the AOP members participated in the assessment proceedings. The submission as well as the annual audited accounts of the AOP also confirms the status of the assessee a AOP, For subsequent assessment years also the assessee has been assessed as AOP. There is no objection to this during the assessment as well as appellate proceedings. Subsequently also asseessee is assessed as AOP which is evident from order u/s 177 (3) of the act. Therefore now this arguments also deserves rejection. Further argument raised that the authorized represesntative appearing before the ld AO were not the authorized repersestative of Deepali but of other members of AOP. This argument also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Assessment Year 2011-12 filed in the name of PICO Deepali Overlays Consortium and signed by Deepali Design and Exhibits Pvt. Ltd back to the file of the ld AO, with a direction to first decide whether Deepali Design and Exhibits Pvt. Ltd is a member of AOP or not. If it is held to be a member, then Deepali be given a proper opportunity of hearing on the merits of the various additions made in the assessment order u/s 69A and other disallowances u/s 37 of the Act in the hands of assessee AOP. After that ld AO may pass an order on assessee AOP in accordance with law and all other consequences u/s 177 (3) of the act Shall also be applicable on Deepali. 17. We also make it clear that order passed u/s 177(3) of the act by the ld AO is neither disputed before us in this appeal nor before the lower authorities. Therefore as the same was not subject matter of this appeal we do not adjudicate the same. 18. In the result, ITA No. 4929/Del/2018 is allowed for statistical purposes. 19. In the result ITA No 1651/Del/2017 is dismissed and ITA No 4929/del/2018 is allowed for statistical purposes. Order pronounced in the open court on 19/09/2018. - - TaxTMI - TMITax - Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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