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TMI Blog2023 (12) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... For the purpose of adjudication, ITA No.652/Chny/2022 has been taken to be the lead case. This appeal arises out of the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 30-05-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29-11-2019. The grounds taken by the assessee read as under: "1. The order of the learned Commissioner of Income-Tax (Appeals) ['CIT(A)'] is erroneous and bad in law. Invoking of Section 56(2)(vii) of the Income-tax Act, 1961_('the Act') is void-ab-initio 2.The learned CIT(A) failed to appreciate that since Section 56(2)(vii) is an anti-abuse provision, the facts should be analyse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , wherein the entire transaction would need to be looked at as a whole, without dissecting it. In the facts of the case, if the transaction is looked as whole without dissecting, it is clearly evident that the transaction, for all intents and purposes is between the firm M/S Chandran Steels (through its partners) and the independent unrelated third party. Hence, 56(2)(vii) of the Act shall not be applied in the current facts since the Property in substance is purchased by the firm M/s. Chandran Steels. Principle of substance over form to be preferred as per the Act 5. The learned CIT(A) failed to appreciate the legal principle laid by Commissioner of Income-tax Vs Podar Cement's Private Limited (1997] 226 ITR 625 (SC) that anyone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles, the income, if any, has to be assessed only in the hands of the firm M/s Chandrasekaran Steels (the real owner) and not on the Appellant (beneficial owner). Given the section 56(2)(vii) of the Act is applicable only for Individual/HUF, invoking of same by learned CIT(A) is erroneous and bad in law. Penalty 7. The learned CIT(A) erred in levying penalty under 271(1)(c) of the Act whereas there is no concealment of income. 8. The learned CIT(A) erred in levying penalty under section 271(1)(c) of the Act whereas there is no furnishing of inaccurate particulars." As is evident, the sole issue that arises for our consideration is addition made by Ld. AO by invoking the provisions of Sec. 56(2)(vii). 2. The Registry has noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tore for Rs. 95.72 Lacs. This amount was stated to be debited in the firm. It was also submitted that building loan of Rs. 70 Lacs was obtained against the same. However, Ld. AO noted that as against guideline value of the property for Rs. 155.77 Lacs, the property was purchased for Rs. 85 Lacs. Therefore, the provisions of Sec.56(2)(vii)(b)(ii) would apply and accordingly, the differential amount was to be added as 'income from other sources' to the extent of assessee's share therein i.e., one-fourth. 4.2 The assessee, inter-alia, submitted that as per Section 14 of Indian Partnership Act, any property and rights and interest in property acquired with money belonging to the firm is deemed to be have been acquired by the firm. The entire a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot make the firm the owner of the property. Accordingly, the impugned addition was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 5. From the facts, it emerges that the impugned property has been purchased in joint ownership of 4 persons all of whom happens to be partner in a firm M/s Chandran Steels. From the financial statements as placed on record, it emerges that the said property has been introduced by the partners in the firm and the said property is in business use of the firm. The same is also evidenced by the fact that the depreciation has also been allowed to the firm. The firm is repaying the loan installment and for all practical purposes, it is the firm only which is exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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