TaxTMI 
TaxTMI 
2023 (8) TMI 874
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....hat as per CBDT Instruction No. 1/2011 dated 31-01-2011. if the declared income of the assessee is less than Rs. 20 lakhs, the jurisdiction of the assessee case lies with ITO and not with DCIT. In the present case for AY 2016-17. the assessee has declared an income of Rs. 11,50,260/-. Therefore, in view of the aforesaid instruction, the jurisdiction of the assessee case lies with ITO and not with DCIT. Hence, the, assessment order passed by Ld. DCIT is wholly without jurisdiction and liable to be quashed." 2. The assessee is an individual and is a partner in various firms including the partnership firm, viz. M/s Monarch and Qureshi Builders, which is engaged in business of real estate and construction activities. The assessee filed the return of income for the assessment year 2016-17 on 12/10/2016 declaring the total income at Rs. 11,50,250/-. The case was selected for scrutiny and the notice under section 143(2) was duly served on the assessee. During the assessment proceedings, the Assessing Officer noticed that the assessee has shown share of income from partnership firm amounting to Rs. 11,97,78,596/- which has been claimed as exempt. The share of income consists of Rs. 6,16....
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....ntry on account of profit has been made in the capital account of partners, without showing corresponding profit in the P/L Account. In such situation, the genuineness as well as source of this credit entry stands unproved. Accordingly, the appellant has failed to discharge his primary onus as casted on him u/s 68 of the Act. It is a well settled legal position that if an assessee fails to discharge his primary onus u/s 68 of the Act, the Assessing Officer is justified in treating the credit as unexplained cash credit taxable u/s 68 of the Act. 16. The appellant has taken an argument that the profit of Rs. 12,33,67,010/- is taxable in the hands of the partnership firm and not in the hands of the partners. On the other hand, the partnership firm has filed appeal against the assessment order passed in its case. Thus, the appellant is taking contradictory stand. This flip-flop approach of the appellant cannot be accepted. The appellant has further contended that the entries in the books of accounts are not conclusive in determining the taxability of a transaction. While there is no dispute about this legal position, however, in the present case, the amount of Rs. 6,16,83,505/....
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....ces of the case and the additional ground raised before us we are convinced that its adjudication does not require any fresh investigation of facts and involves pure legal issue. Respectfully following the judgement of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT [(1998) 229 ITR 383 (SC)] we admit this additional ground for adjudication. Accordingly we will first proceed to adjudicate the legal objection raised by the Ld.AR through additional ground. 5. It is submitted that as per the return of income, the assessee has declared income of Rs. 11,50,260/-. The Ld.AR drew our attention to Instruction No.1/2011 dated 31/01/2011 whereby the non corporate returns filed in metro cities having declared income upto Rs. 20 lakhs should be assessed by the ITOs. The Ld.AR submitted that in the assessee's case, the assessment is done by DCIT, Central Circle-2, Thane instead of the ITO and, therefore, the order is void ab initio. The Ld.AR in this regard relied on the decision of Hon'ble Bombay High Court in the case of Ashok Devichand Jain vs UOI & Ors in Writ Petition No.3489 of 2019 judgement dated March 08, 2022, where the notice under secti....
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....issioner of Income-tax under section 143(2) of the Act is without jurisdiction in terms of the aforesaid instruction. In this connection we consider it fit to incorporate the relevant portion of Instruction No. 1 of 2011, dated January 31, 2011 of the CBDT Circular in respect of issuance of notice to non-corporate assessees which reads as under: Instruction No. 1 of 2011 [F. No. 187/12/2010-IT(A-I)], dated 31-1-2011 "References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to Income-tax Officers and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limi....
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....s for the process of selection of cases for scrutiny for returns for a particular financial year and allowing time of three months for completion of the same cannot be considered to override or detract from the provisions of the Act. It only directs that the above exercise should be completed within three months of the date of filing of return by the assessee, which amounts to an assurance to the assessee that the return filed by him can be scrutinised by the Assessing Officer within three months of filing of the return. The Hon'ble High Court, dismissing the appeal held that Instruction No. 9 of 2004 dated September 20, 2004, was applicable in the present case, in view of the specific stipulation in the circular that 'for returns filed during the current financial year 2004-05, the selection of cases for scrutiny will have to be completed within three months of the date of filing the returns' and considering that the return had admittedly, been filed by the assessee on October 29, 2004, i.e., during the current financial year 2004-05. The selection for scrutiny of the assessee's case and completion of the assessment was not valid. 6. We find that the Hon&#....
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....esentative at the time of hearing rather the assessee contested that this finding of fact is erroneous and actual case was selected by issuing notice as on October 18, 2004. Even the basis of recording this fact is only from the assessment order wherein it is mentioned that notice under section 143(2) is dated October 10, 2004 and the same was served on the assessee on October 19, 2004 fixing the date of hearing on December 16, 2004. When going through the order sheet entry, which is taken by the assessee from the assessment records clearly reveals that factually notice under section 143(2) was first time issued on October 18, 2004 and not on October 10, 2004. This fact has not been contested by the learned senior Departmental representative. Respectfully following the decision of the Hon'ble Chhattisgarh High Court in the case of Sunita Finlease Ltd. (supra), we quash the issuance of notice under section 143(2) of the Act and subsequent assessment framed under section 143(3) of the Act. Appeal of the assessee is allowed." Keeping in view of the above and the facts relating to I. T. A. No. 1426/Kol/2011 this Tribunal has quashed the assessment framed under section 143(....
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....quashed. 9. Though we have held the legal ground in favour of the assessee, for the sake of completeness we will consider the submissions of the ld AR on merits for adjudication. On merits, the Ld.AR submitted that the only reason stated by the Assessing Officer for making the addition under section 68 of the Act is that the partnership firm which has declared the income under IDS, 2016 has not paid the taxes on declared income. For this reason the assessing Office held that the share of profit received by the assessee cannot be claimed as exempt and thus taxable in the hands of the partners. The Ld.AR submitted that the income which is offered in the hands of the partnership firm on which taxes were not paid can only be assessed in the hands of the partnership firm. The Ld.AR further submitted that the additions towards the income declared have already been made in the hands of the partnership firm and the firm is in appeal before the CIT(A). Given that it is submitted that adding the same in the hands of partner once again would result in double taxation. The Ld.AR relied on the decision of the Special Bench of Cochin Tribuna in the case of ACIT vs KT. Joseph reported in 2009 ....
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....unal in the case of KT.Joseph (supra), the third member agreed with the view taken by the Judicial Member by holding that - 11. Reverting to the facts as found by both the learned Members, it is not in dispute that the documents found in the course of search from the premises of Shri K.K. Sasi belonged to the firms. The AO also took some share income (40 per cent and 70 per cent) in the hands of the assessee. jHhe income was earned by the firm or on behalf of the firm, whether disclosed or undisclosed, it has to be assessed in the hands of the firm only. Provisions of Chapter XIV-B relate only to assessment of undisclosed income which makes the position more than clear. There is no machinery to assess the income of the firm in the hands of the partner, merely because it is not disclosed in the accounts of the firm. Such assessment in the hands of the partner cannot be justified merely because the income is pocketed By the partner. In my opinion, the view taken by the learned AM is against the basic schemes of assessment contained in the IT Act and therefore cannot be accepted as correct. 12. It is further to be noted that in similar circumstances, undisclosed inco....