TaxTMI 
TaxTMI 
2023 (10) TMI 622
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.... and payments. The assessee, it was stated, is partner in a partnership firm, M/s.Laxmi Constructions. Search operation under section 132 of the Act was conducted at the residential premises of the assessee, and simultaneous survey operation under section 133A of the Act was carried out at the business premise of M/s. Laxmi Construction on 21.10.2016. The partnership firm had filed a petition before the Settlement Commission and offered income on account of noting in this diary for settlement. The ld.Pr.CIT, Ahmedabad in his report under Rule 9 had stated that proceedings under section 153A are on-going in the case of partner Shri Shyamsundar R. Agrawal, and impact of the seized material found during the course of search shall be taken into consideration at the time of finalization. The assessee had objected to the same, and thereafter the order was passed by the Settlement Commission accepting the income returned by the assessee on account of unaccounted expenditure to the tune of Rs. 1,66,98,800/- pertaining to the noting in the diary found during the search at the assessee's premises. 3. During assessment proceedings, the assessee had not disclosed any income on account of no....
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....siness premises of the M/ Laxmi Constructions, in which appellant is a partner. During the course of search at the residential premises, among other things, cash of Rs. 14,88,310/- was found out of which Rs. 13,50,000/- was seized. Further, jewellery worth Rs. 63,75,335/- was found out of which jewellery worth Rs. 11,41,810/- was seized. Further, a diary marked as Annexure A-l (containing pages 1 to 28) was also seized during the search. The notings in the said diary was related to receipts and payment mainly pertaining to the Partnership Firm, M/s. Laxmi Constructions and this fact was admitted by the appellant in the statement recorded u/s 132(4) of the Act. The said partnership firm subsequently filed a petition before the Hon'ble Settlement Commission, Mumbai for settling the case of the Firm for the assessment years from A.Y. 2011-12 to A.Y. 2017-18. In the said petition, the Firm had owned up the diary seized from the residential premises of the appellant being the Annexure A-l containing the pages from 1-28 and also disclosed income on well accepted basis of accounting and taxation with respect to the entries in the said diary as well as cash and other valuables found from t....
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.... made on account of expenditures as per said diary cannot be treated as unexplained expenditure in the case of appellant, as such payments were nothing but application of income for which there were corresponding incomes of receipts. Moreover, the income that is relatable to the entries in the said diary had already been offered for taxation in the case of Partnership Firm, M/s Laxmi Construction as per the petition filed before the Settlement Commission. 3.5 The appellant had also furnished to the AO on 19/12/2018, a copy of the final order u/s 245D(4) dated 17/12/2018 passed by the Hon'ble Settlement Commission, Mumbai which referred to the seized diary being Annexure A-1 and income disclosed w.r.t. said diary. 3.6 It is the case of the appellant that the AO without appreciating the facts in the proper perspective, finalized the assessment for the year under appeal vide his order u/s 143(3) dated 26/12/2018 wherein the addition of sum of Rs. 2,54,73,420/- was made on account of alleged unexplained expenditures by invoking the provisions of the section 69C of the Act w.r.t. aggregate of entries appeared in the seized diary and thus, the income in respect of t....
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....pheld the order of the A.O. 8. As evident from the grounds raised the Revenue is aggrieved by the deletion of addition made u/s 69C of the Act, by the Ld.CIT(A) finding: * the transactions noted in the diary to be surrendered by the partnership firm of the assessee to the Settlement Commission, when the ld.Pr.CIT had categorically stated in Rule 9 of his report to the Settlement Commission that the amount would be considered in the hands of the assessee. * Finding the assessee to have never stated the amounts noted in the diary as pertaining to his personal income and expenditure. 9. The ld.CIT(A), we find, has dealt both the aspects at para 5.2 to 5.5 of his order as under: "5.2 The appellant's submission before the AO as well as during the present appeal proceedings is very straightforward in the sense that as per the analysis of the seized diary Annexure-Al though the total of all transactions including repetitive entries was Rs. 3,91,33,420/-, the total after eliminating duplicate entries was Rs. 2,54,73,420/-, but in fact, it was basically payments of Rs. 1,66,98,800/- and receipts of Rs. 1,45,23,900/-, in substance, and thus the financial ....
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....he individuals only, be they partners or its employees. 5.4 Furthermore it is well settled in taxation law that double assessment in both partners and the firm on same income is not tenable [ITO v. Atchaiah (Ch.) (1996) 218 ITR 239 (SC)] and it is possible to hold that moneys may belong to the partners and not to the firm [India Rice Mills v. CIT (1996) 218 ITR 508 (All), Sunder Lal Jain v. CIT (1979) 117 ITR 316 (All)]. Thus the approach of the AO, taking the cases of firms and the partners (including the appellant in consideration) together, is not legally, tenable. This also is a trite law that a reasonable explanation of assessee has t be considered and in doing so the AO has to act reasonably and fairly. If the AO is still suspicious, it is for the AO to gather cogent materials to refute the assessee's explanation. This has not been done in the case here. 5.5 I find no wrong in the amount being owned up by the Partnership Firm and in such a case, the same amount cannot be added in the hands of the appellant. As to the difference between Rs. 2,54,73,420/- and Rs. 1,66,98,800/-, I find that the reconciliation and explanation by the appellant is plausible an....