TMI Blog2019 (7) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and truly disclose all material facts necessary for assessment, are not sustainable in the eyes of law and as such consequent assessment framed u/s 143 (3)/148 of the Act is liable to be quashed. - Decided in favour of assessee - CO No.84/Del/2016 (in ITA No.963/Del./2016) - - - Dated:- 22-7-2019 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the ASSESSEE : Shri Saurav Rohatgi, CA For the REVENUE : Ms. Ashima Neb, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Present cross objections are filed in ITA No.963/Del/2014 decided by the coordinate Bench of the Tribunal vide order dated 24.10.2018, available on the file, whereby appeal filed by the Revenue was dismissed on account of low tax effect as per Circular No.3/2018 dated 20.08.2018. However, cross objections remained pending as assessment record was not available before the Bench. Now, assessment record has been received and cross objections are being disposed off vide this order. 2. The Objector, M/s. Chand Industry, by filing the present cross objections challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune of ₹ 2,85,360/- @ 12% per annum was not allowable and was required to be capitalized; that no corroborative evidence has been brought on record by the assessee regarding deduction of TDS on making payment of rent, jobwork, freight and cartage, etc. and thereby reopened the assessment after recording reasons and issued the notice u/s 148 of the Act. Declining the contentions raised by the assessee that there was no failure on his part to disclose fully and truly all necessary facts for computation of income and as such, reopening is legally not sustainable, AO made addition of ₹ 44,14,162/- and thereby assessed the total income of the assessee at ₹ 57,93,430/-. 4. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, both the Revenue as well as the assessee have come up before the Tribunal by way of filing the present appeal as well as cross objections respectively. However, appeal filed by the Revenue has been dismissed on account of low tax effect. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / increasing your liability and, therefore, if you wish to be heard in this connection you are requested to appear in person or by an authorized representative in my office at Faridabad on 21.01.2011 at 3:00 P.M. if, however, you intend sending a written reply to this notice and do not wish to be heard in person, you are requested to ensure that your reply reaches me on or before the date mentioned above. Yours faithfully, Sd/- ( N.K. Bansal) Asstt Commissioner of Income Tax Circle-II, Faridabad. DETAILS OF MISTAKE (1) As per provisions of section 184, return of firm be accompanied with instrument and salary payable to working partners be also specified in deed, otherwise no salary is allowable. In this case, partnership deed was executed on 01.04.2004 and amount of salary of ₹ 1,92,000/- payable to partners during the assessment year 2005-06 and 2006-07 was not mentioned in partnership deed. The Salary of ₹ 1,92,000/- paid to partners during assessment year 2005-06 and 2006-07 was not allowable and needs to be disallowed. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,43,724/- was filed on 31.10.2005. Assessment u/s 143(3) was completed on 13.12.2007 at total income of ₹ 13,79,270/-. It has been noticed that, 1. As per the provisions of section 184 of the Act a firm shall be assessed as a firm if the partnership is evidenced by an instrument and the individual shares of the partners are specified in that instrument. Further, as per the provisions of section 40(b) in the case of any firm assessable as such, any payment of remuneration to any partner who is a working partner but which is not authorized by or is not in accordance with the terms of the partnership deed, shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession . 'In the instant case, a partnership deed was executed on 01.04.2004, but amount of salary payable to partners is not mentioned in the said partnership deed. Hence, in view of the provisions of section 40(b) of the Act, salary of ₹ 1,92,000/- paid to partners in the A.Y. 2005-06 was not deductible In the assessment year 2005-06 and the same was not allowable. In this way, income of ₹ 1,92,000/- has esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason to believe that income chargeable to tax amounting to ₹ 58,85,621/- (1,92,000 + 2,85,360 + 1,772 + 54,06,489) has escaped assessment by reason of the failure on the' part of the assessee to disclose fully and truly all material facts necessary for his' assessment for the assessment year 2005-06. Accordingly, notice u/s 148 is being issued after obtaining necessary approval from the Ld. CIT, Faridabad. 9. Simultaneous perusal of notice issued u/s 154 of the Act and reasons recorded goes to prove that both are on the same footing which proves apparently that there was no failure on the part of the assessee to disclose fully and truly all necessary facts for computation of income and in these circumstances, reopening of assessment amounts to change of opinion which is not permissible. 10. Ld, DR for the Revenue contended that the proceedings initiated for rectification of the order were presumed to be dropped and thereafter valid reopening has been made. But we are of the considered view that when neither there is any order sheet for dropping the proceedings nor there is any final order of rectification, AO was not empowered to r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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