TaxTMI 
TaxTMI 
2023 (12) TMI 405
X X X X Extracts X X X X
X X X X Extracts X X X X
....issues are identical in both the appeals. For the purpose of adjudication, ITA No.652/Chny/2022 has been taken to be the lead case. This appeal arises out of the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 30-05-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29-11-2019. The grounds taken by the assessee read as under: "1. The order of the learned Commissioner of Income-Tax (Appeals) ['CIT(A)'] is erroneous and bad in law. Invoking of Section 56(2)(vii) of the Income-tax Act, 1961_('the Act') is void-ab-initio 2.The learned CIT(A) failed to appreciate that since Section 56(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al nature of the transaction and while doing so, a 'look at' principle needs to be applied, wherein the entire transaction would need to be looked at as a whole, without dissecting it. In the facts of the case, if the transaction is looked as whole without dissecting, it is clearly evident that the transaction, for all intents and purposes is between the firm M/S Chandran Steels (through its partners) and the independent unrelated third party. Hence, 56(2)(vii) of the Act shall not be applied in the current facts since the Property in substance is purchased by the firm M/s. Chandran Steels. Principle of substance over form to be preferred as per the Act 5. The learned CIT(A) failed to appreciate the legal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessing authority has power to assess the income in the hands of the real owner and not on the beneficial owner. Based on the above legal principles, the income, if any, has to be assessed only in the hands of the firm M/s Chandrasekaran Steels (the real owner) and not on the Appellant (beneficial owner). Given the section 56(2)(vii) of the Act is applicable only for Individual/HUF, invoking of same by learned CIT(A) is erroneous and bad in law. Penalty 7. The learned CIT(A) erred in levying penalty under 271(1)(c) of the Act whereas there is no concealment of income. 8. The learned CIT(A) erred in levying penalty under section 271(1)(c) of the Act whereas there is no furnishing of inaccurate particulars.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before lower authorities 4.1 The assessee being a partner in a firm M/s Chandran Steels, along with 3 other partners of the firm, purchased certain building situated at Coimbatore for Rs. 95.72 Lacs. This amount was stated to be debited in the firm. It was also submitted that building loan of Rs. 70 Lacs was obtained against the same. However, Ld. AO noted that as against guideline value of the property for Rs. 155.77 Lacs, the property was purchased for Rs. 85 Lacs. Therefore, the provisions of Sec.56(2)(vii)(b)(ii) would apply and accordingly, the differential amount was to be added as 'income from other sources' to the extent of assessee's share therein i.e., one-fourth. 4.2 The assessee, inter-alia, submitted that as per Section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, the property was purchased in individual names. This being so, the firm was required to pay the rent to the co-owners. The mere repayment by firm on behalf of the partners would not make the firm the owner of the property. Accordingly, the impugned addition was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 5. From the facts, it emerges that the impugned property has been purchased in joint ownership of 4 persons all of whom happens to be partner in a firm M/s Chandran Steels. From the financial statements as placed on record, it emerges that the said property has been introduced by the partners in the firm and the said property is in business use of the firm. The same is also evi....