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2025 (2) TMI 40

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.... 2. That on facts and in law the CIT(A) has erred in not appreciating that the assessment order dated December 30, 2019 and all notices issued during proceedings therein have been framed/issued in name of a non-existent entity Te a partnership firm which stood dissolved on September 30, 2011. 2011 3. That on facts and in law the CIT(A) has erred in not adjudicating upon Ground Nos. 2. 2(b), 2(c), 2(d) and 2(e) of the appeal filed in Form No. 35. 4. That on facts and in law, the CIT(A) has erred in upholding assumption of jurisdiction to re-assess invoking provisions of section 147. 5. That on facts and in law, the CIT(A) has erred in upholding that there is a remission / cessation of liability to the tune of Rs 56,84,733/- and therefore provisions of section 41(1) stand attracted. 6. That on facts and in law the CIT(A) has erred in upholding / observing that the appellant has not furnished: (a) Details of Sundry Creditors, and (b) Confirmations from Sundry Creditors 7. the appellant craves leave to add, amend, modify, or alter the grounds of appeal." 2. Brief facts of the case are that an information in this case was received from ITO (Inv)(OSD), Unit-3, New Delhi in....

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.... Neither any details of sundry creditor nor confirmation of creditors was furnished and the Ld. AO further observed that even if it is presumed that the assessee has paid the sundry creditors out of cash withdrawn, it is also in violation of provision of section 40A(3) of the Income Tax Act. 2.3 The facts as aforesaid, the Ld. AO hold that there is a cessation of liability in the hands of firm to the tune of Rs. 56,84,733/- in terms of section 41(1) of the I.T. Act 1961 and accordingly, same is hereby added to the business income of the assessee. 3. Heard rival submissions and carefully scanned the material available on record for just disposal of the appeal. 4. Reiterating the grounds of appeal, the Ld. AR submitted that the Ld. CIT(A) wrongfully upheld assumption of jurisdiction to re-assessee invoking provisions u/s 147 of the Act and also that there is a remission / cessation of liability to the tune of Rs. 56,84,733/- and erroneously found that the provisions of section 41(1) of the Act stand attracted. When the matter was called for hearing, the Ld. AR submitted that the matter containing such a jurisdictional issue in grounds nos. 4 & 5 of the appeal, which goes root of t....

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....) of the I.T. Act 1961 and accordingly. same is hereby added to the business income of the assessee. The undersigned is satisfied that the assessee has concealed the particulars of his income, therefore, penalty proceedings u/s 271(1)(c) of the I.T. Act are initiated separately." 7. In this context, the Ld. AR submitted that alleged cessation of liability in form of creditors resulting addition u/s 41(1) was never been an issue forming part of reasons recorded u/s 148(2) of the Act, and addition of Rs 56,84,733/- has been made on an issue which is different from the issue on which case was reopened u/s 148 of the Act. Provisions of section 147 (as applicable to the year under consideration) are very clear as under. "147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as....

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....h he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148. 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the Items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under sections 80HH and 80-1 as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under sections 80HH and 80-1 and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under sections 80HH and 80-1 which as per our discussion was not per....

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....s. Tanmay International and related accounts, maintained by parties belonging to a group of persons, have frequently deposited cash amounts in the account where the source of funds could not be ascertained. There were inter-transfers of funds from within various accounts. During the investigation, bank statement of a/c no 208010200021401 belonging to M/s Tanmay International was procured. It was found that the total of credits in this account during the FY 2011-12 was Rs. 1,12,94,314 and major portion of the credits was through cheques. The total of debit entries in the account during the same period was Rs. 1,12,80,902 Major portion of the debit entries was by cash withdrawal through self-cheques. Summons issued at the address of the assessee firm were received back un-served with postal comments 'no such firm on the address." It was informed by one of the partners Shri Harminder Singh Chadha (r/o House No. 190, 3rd Floor, Jor Bagh, New Delhi 110.003) that assessee firm M/s. Tanmay International has filed ITR for AY 2012-13, however, ITD analysis showed that no ITR was filed in the name of M/s. Tanmay International. Thus the credit entries in the above referred bank accoun....