TMI Blog2023 (10) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... he same, the return of income was accepted, which is also reflecting from the order passed by the Ld. AO mentioned therein, in our considered opinion, assessment cannot be reopened by exercising power conferred u/s 263 of the Act by the Ld. PCIT in the manner it has been done. We find that the issue raised by the Ld. PCIT was already adjudicated upon due application of mind by the Ld. AO in the assessment proceedings under Section 143(3) of the act and return was accepted. The copy of the partners capital account, payment vouchers made to the partners, the ledger of cash book alongwith narration for the period 01/04/2016 to 31/03/2017 were duly placed before the Ld. AO during the original assessment proceeding and only upon verification of the same, the assessment was finalized. It is relevant to mention that the Ld. PCIT referred Explanation (2) to Section 263(1) of the Act while holding the order of assessment erroneous and prejudicial to the interest of the Revenue and exercising power in passing direction for re-assessment by the Ld. AO which in our considered opinion is not having any manner of application as the examination and/or verification of the issue involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,000.00 Withdrawal by Partner 4 839 31-08-2016 Rajesh N. Talaviya 50,000.00 Withdrawal by Partner 5 922 15-09-2016 Rashmiben A. Jha 50,000.00 Withdrawal by Partner 6 1247 31-10-2016 Animesh Kumar D. Jha 25,000.00 Withdrawal by Partner 7 1248 31-10-2016 Rajesh N. Talaviya 50,000.00 Withdrawal by Partner 8 1249 31-10-2016 Rashmiben A. Jha 50,000.00 Withdrawal by Partner 9 1250 31-10-2016 Varshaben R. Talaviya 50,000.00 Withdrawal by Partner 10 1500 31-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annexed to the paper book filed by the assessee appearing at Page No.3 to 5 therein is also reproduced herein below: 4. Followed by further notice dated 11.12.2021, which are reproduced herein below: 5. On 3 rd August, 2021, the assessee duly replied to the issue involved in the proceeding initiated under Section 263 of the Act by the Ld. PCIT, appearing at Page Nos. 10 to 14 of the paper book filed before us which is reproduced herein below: 6. The case of the assessee is this that the cash payment made is nothing but the withdrawal of the partners of the firm and the partners capital account has also been produced before the Ld. PCIT. 7. The Ld. Counsel Mr. Rindani appearing for the appellant submitted before us that this is nothing but a transaction between the partner and firm. Unlike companies, partnership firms are not considered to have separate legal entities as it is formed by two or more persons who decides to carry on business and share the resultant profits/losses is some agreed ratio. The partners are the contributors of capital and provide their own money to the firm. There is no common seal of a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Circle- 3(1), Rajkot to the assessee dated 26.07.2019 i.e. during the course of assessment proceeding, wherein all the financial details, particularly, the details of partners of the firm including the remuneration paid to them for A.Y. 2017-18, the rate of interest and interest paid for A.Y. 2017-18 were directed to be provided. Needless to mention, the assessee provided the entire details to the Ld. AO during the course of assessment proceeding including the ledger of cash book along with narration for the period 01.04.2016 to 31.03.2017. The same has also been annexed to the paper book. It, therefore, appears that the impugned payment being the withdrawal by the partner from the firm has duly been considered by the Ld. AO during the course of assessment proceeding and only upon due application of mind, the same has been not disputed. 8. On the other hand, Ld. DR relied upon the order passed by the Ld. PCIT holding the order passed by the Ld. AO dated 10.12.2019 under Section 142(3) of the Act erroneous and prejudicial to the interest of the Revenue. 9. Upon considering the documents annexed to the paper book as indicated in the foregoing paragraph, we find substance in s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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