TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1424
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....eedings under section 147 of the Act. The ld.counsel for the assessee contended that the reasons for reopening the case of all the four years of the assessee was identical, being that, the assessee had allegedly taken accommodation entries from the concerns Orange Tradex P. Ltd. ("OTPL" for short) and Krish Enterprise ("KE" for short). The amounts pertaining to the same being different in all the years. The AO being in possession of this information, had accordingly, reopened the case of the assessee and made addition of the same to the income of the assessee. 4. Solitary contention of the ld.counsel for the assessee before us was that it was repeatedly pointed out both to the AO and the ld.CIT(A) that the assessee, a partnership firm was not in existence in the impugned year, and it had dissolved much earlier, and its business had been taken over by one of the partners, who was running it as a proprietary concern; the partner being, Bharat Chaturbhai Patel ("BCP" for short); that all these transactions were accounted for in the business of the proprietor and since the assessee firm was not in existence, there is no question of making any assessment, and for that matter, any addit....
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....nd the copy of the dissolution deed of the partnership filed during the assessment proceedings placed before us at PB Page no.5 to 10 and 11 to 13 respectively. Similarly, from the order of the ld.CIT(A) also it was pointed out that identical arguments had been made by the assessee before him also. The ld.counsel for the assessee further drew our attention to acknowledgment of return of income for the impugned years of the proprietor Shri "BCP", placed at PB Page No.56. His computation of income placed at PB page no.60 to 62. His acknowledgment of return of income placed at PB Page No.63; his tax audit report with audited P&L and balance sheet of JP Marketing are placed at PB Page No.64 to 83. 6. Referring to the above, he pointed out that the above documents sufficiently demonstrated the fact of JP Marketing carrying on business in proprietary firm by the proprietor Shri "BCP". Our attention was further drawn to the notice issued during the assessment proceedings of Shri B.C. Patel placed at PB Page No.84 to 87. Reply filed by the "BCP" and the assessment order passed in the name of Shri BCP, acknowledging the fact of Shri B.C. Patel, running his business as a proprietor in the n....
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....counts and PAN were used even if the firm has been dissolved. c. Further, in case of dissolution of partnership of firm, the firm ceases to exist. This process includes the discarding and disposing of all the assets of firm or and settlements of accounts, assets, and liabilities. There is not single evidence produced by the assessee, which proves that these settlements ever happened. Therefore, it is not proved that the dissolution of the "J.P. Marketing (firm)" ever happened. d. Further, the assessee has not produced a single cogent evidence that all the transactions with M/s. Orange Tradex Pvt. Ltd. and M/s. Krissh Enterprise in the name of J.P. Enterprises were undertaken by Shri Bharat Chaturdas Patel in his individual capacity. Therefore, its contentions in this regard are not acceptable. e. Further, the assessee must have to give a notice to the A.O. about the dissolution/discontinuance of the entity/business as per provisions of section 176(3) of the Act. However, no such notice was given by the assessee. Even Shri Bharat Chaturdas Patel has stated in statement taken on oath during assessment proceedings that no such notice was given. 4.6. The assessee has requested ....
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....lution is liable to submit the explanation sought for vide notices and show cause issued to it. The firm has not submitted any document, books of account or any explanation regarding transactions with M/s. Orange Tradex Pvt. Ltd. and M/s. Krissh Enterprise. 9. The ld.DR, however, relied on the finding of the authorities below. 10. We have considered contentions of both the parties, and we find merit in the contentions of the ld.counsel for the assessee that the assessee had sufficiently demonstrated to the Revenue authorities that the assessee partnership firm was dissolved and not in existence in the impugned assessment years. As rightly pointed by the ld.counsel for the assessee, even the Revenue does not dispute the fact of the assessee-firm being dissolved by virtue of dissolution deed dated 24.11.2010. 11. Having noted so, we find that the authorities below have held the assessee-firm to have been in existence in the impugned year for absolutely flimsy and irrelevant reasons. One of the reasons given by the Revenue authorities for holding that the assessee firm continued to exist was that the PAN of the partnership firm was not surrendered on dissolution. This we find, is n....
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.... the business in the eyes of the law. Therefore, reliance on the provisions of section 176 of the Act by the AO for holding the assessee's business cannot be treated to have dissolved in the absence of any notice given to the AO, is, we hold, incorrect. The AO, has also noted/ referred to section 189 of the Act, and has held that the said section provides that, where any business carried out by a firm is discontinued or the firm is dissolved, the AO shall make an assessment of the total income of the firm, as if, no such discontinuation or dissolution has taken place. 13. The provisions of section 189 are reproduced hereunder: 189. (1) Where any business or profession carried on by a firm has been disconti-nued or where a firm is dissolved, the Assessing Officer shall make an assessment of the total income of the firm as if no such discontinuance or dissolution had taken place, and all the provisions of this Act, including the provisions relating to the levy of a penalty or any other sum chargeable under any provision of this Act, shall apply, so far as may be, to such assessment. (2) Without prejudice to the generality of the foregoing sub-section, if the Assessing Officer o....