TaxTMI 
TaxTMI 
2014 (4) TMI 849
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....under: All the appellants/assessees were running partnership business in gold and also other items. Assessment for the above year came to be completed under Section 143(3) of the Income Tax Act (hereinafter referred to as 'the Act'). Commissioner of Income Tax invoking the powers under Section 263 of the Act cancelled the assessment on the ground that assessment orders passed by the assessing authority were erroneous and prejudicial to the interest of the revenue. Aggrieved by the same, appellant firms approached the Appellate Tribunal which confirmed the orders of Commissioner. Therefore, appellants are before us. 3. We heard learned counsel for appellant firms and also learned Standing Counsel for the revenue. Accordin....
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....deration, it was not open to the Commissioner to indicate any formula how the calculations have to be adopted in order to compute the tax liability. Therefore, viewed from any angle, the orders of the Tribunal deserve to be set aside. 4. As against this argument of appellants/assessees, learned Standing Counsel for Department contends that though the factual situation discussed in A. L. A Firm (supra) is different from the factual situation of the present cases, the fact remains, the business of gold is discontinued in the assessees' firm. Therefore, irrespective, whether it is by virtue of dissolution or otherwise, once a particular business is discontinued, the stock transfer has to be valued based on market value and not on book v....
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....itting to notice that the appellant firm was not dissolved and it had not ascertained its assets and liabilities to distribute among its partners and therefore the decision in respect of a dissolved firm cannot be applied to the case of the appellant? iii) Whether the appellant is liable to pay income tax on a deemed income which has not accrued to the appellant? iv) Has not the authorities below gone wrong in determining market value on the basis of gross profit determined by the assessing authority at the time of assessment which is under challenge when gold is a standard commodity having definite market value? 6. On perusal of orders of the Commissioner, what we notice is, Form No.3CB furnished by the assessees pertaining to aud....
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....r otherwise by the assessee, then profits cannot be ascertained except by taking closing stock at market value. This decision of Ramachari (supra) was subsequently followed by the Kerala High Court in Popular Workshops v. CIT [(1987) 166 ITR 348 (Ker)] and also in Popular Automobiles v. CIT [(1989) 179 ITR 632 (Ker)]. 8. Learned counsel for appellants took us to the last paragraph of judgment in A.L.A Firm (supra) to contend that what was decided among the partners, that is at what rate the stock has to be transferred alone will hold good and there is no rule that it should always be at the market price. The said paragraph reads as under: "The real rights of the partners cannot be mutually adjusted on any other basis. This is what hap....
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.... will not be the value at which the stock would be transferred. So far as partners are concerned, in the present case, though they are members of the same family, their liabilities and assets would depend upon their share capital etc. Therefore, it is not open to them to say that one of the partners being head of the family is continuing Dona Gold business as a proprietary concern, therefore, at their choice, at what value they transfer the entire closing stock they have transferred. 10. Having regard to discontinuance of entire business in gold, we have to analyse the entire issue from that point and not with the decision of both the partners. Therefore, there is no justification in the stand of the appellants in contending that o....