Mahesh Enterprises (R.F.), Ghaziabad vs Assessee

Appellant by : Shri C.S. Anand and Ms. Shinka Nagpal, Advocates. Respondent by : Shri P. Dam Kanunjna, Sr.DR.

ORDER

PER G.D. AGRAWAL, VP :

This appeal by the assessee is directed against the order of learned CIT(A), Ghaziabad dated 7th August, 2012 for the AY 2009-10.

2. Since the grounds of appeal raised by the assessee were not clear, the assessee filed the revised grounds of appeal. Ground Nos.1 to 4 of revised grounds of appeals are all against the estimation of business income of the assessee at `6,35,800/- by the learned CIT(A) as against `4,47,895/- declared by the assessee.

3. At the time of hearing before us, it is submitted by the learned counsel that the rejection of books of account as well as the estimate of profit by the Assessing Officer was not justified and the CIT(A) was also not justified in rejecting the books of account and estimating the profit, of course, on a lesser amount than the Assessing Officer.

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However, due to smallness of the disputed additions which remain after the order of learned CIT(A), the assessee does not want to pursue these grounds of appeal any further. Since the learned counsel for the assessee has not pursued the grounds against the estimation of profit by the CIT(A), the order of learned CIT(A) in this regard is upheld and ground Nos.1 to 4 of the assessee's revised grounds of appeal are rejected.

4. Ground Nos.5 to 9 of the revised grounds of appeal are against the addition of `17,50,000/- made by the Assessing Officer for unexplained credit.

5. At the time of hearing before us, it is submitted by the learned counsel that during the year under consideration, the assessee which is a partnership firm had received the sum of `17,50,000/- from its two partners Shri Ashish Garg and Shri Manish Garg. That Shri Ashish Garg and Shri Manish Garg both are assessed to income tax separately and they are carrying on the business in their individual capacity. That the Assessing Officer as well as learned CIT(A) doubted the carrying on of the business by the partners on the ground that the partners filed the return in form No.3 which is not for business income. He stated that if the partners have filed the return in a wrong form, the assessee, which is a partnership firm, cannot be held responsible for the same. He stated that the partners are assessed to income tax and therefore, the source of the money given by them to the firm can be examined in their case. In support of this contention, he relied upon the decision of Hon'ble Apex Court in the case of CIT, Orissa Vs. Orissa Corporation P.Ltd. - [1986] 159 ITR 78.

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6. Learned DR, on the other hand, relied upon the order of authorities below.

7. We have carefully considered the submissions of both the sides and perused relevant material placed before us. In the case of Orissa Corporation P.Ltd. (supra), their Lordships held as under:-

"That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so- called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case."

8. The facts of the assessee's case are much better than the facts of the case before the Hon'ble Apex Court. In the said case, the assessee had given the income tax number of the creditors upon whom the notice could not be served by the Assessing Officer. Despite these facts, it was held by the Hon'ble Apex Court that the assessee has duly discharged the onus. In the case under appeal before us, the creditors are the partners of the firm and are assessed to income tax in their individual capacity. Merely because they have filed their return of income in a wrong form or the business transaction in their hands was in cash would be no ground for making the addition under Section 68 in 4 ITA-5780/Del/2012

the case of the assessee. Undisputedly, the partners are assessed to income tax and therefore, the above decision of Hon'ble Apex Court in the case of Orissa Corporation P.Ltd. would be squarely applicable so far as the addition under Section 68 of the Act in the case of the assessee firm is concerned. Accordingly, we delete the addition of `17,50,000/-.

9. In the result, the appeal of the assessee is partly allowed.

Decision pronounced in the open Court on 28th January, 2015.

Sd/- Sd/- (CHANDRA MOHAN GARG) GARG) (G.D. AGRAWAL) AGRAWAL) JUDICIAL MEMBER VICE PRESIDENT

Dated : 28.01.2015 VK.

Copy forwarded to: -

1. Appellant : M/s M/s Mahesh Enterprises (R.F.), 39, Naya Ganj, Ghaziabad.

2. Respondent : Income Tax Officer, Ward- Ward-1(4), Ghaziabad. 3. CIT 4. CIT(A) 5. DR, ITAT

Assistant Registrar