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The ITAT held that the extra profit share received by the assessee-HUF on revaluation and reconstitution of the partnership firm, credited as goodwill in the current account, does not constitute taxable income under section 28(iv) of the Act. The arrangement was held to be a family arrangement rather than a business arrangement, negating the revenue's claim. The AO's treatment of the amount withdrawn as income under section 28(iv) was reversed, affirming the CIT(A)'s order. Regarding reopening under section 147, the AO failed to record valid reasons or provide them to the assessee, violating mandatory procedural requirements. The absence of a speaking order disposing of objections rendered the reassessment invalid. Consequently, the reopening and reassessment orders for AYs 2015-16 and 2016-17 were quashed, and the appeal was allowed.
The ITAT held that the extra profit share received by the assessee-HUF on revaluation and reconstitution of the partnership firm, credited as goodwill in the current account, does not constitute taxable income under section 28(iv) of the Act. The arrangement was held to be a family arrangement rather than a business arrangement, negating the revenue's claim. The AO's treatment of the amount withdrawn as income under section 28(iv) was reversed, affirming the CIT(A)'s order. Regarding reopening under section 147, the AO failed to record valid reasons or provide them to the assessee, violating mandatory procedural requirements. The absence of a speaking order disposing of objections rendered the reassessment invalid. Consequently, the reopening and reassessment orders for AYs 2015-16 and 2016-17 were quashed, and the appeal was allowed.
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