TaxTMI 
TaxTMI 
2025 (11) TMI 1970
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..../- u/s.69A of the Act on account of alleged undisclosed and unexplained income. (2) On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in taxing the total business receipts by taking the rate @77.25% by attracting section 115BBE instead of estimation of profits at normal tax rate. (3) On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in taxing the income u/s.115BBE @ 77.25% in a retroactive manner by applying the duly substituted section 115BBE inserted retrospectively instead of taxing at it 35.54% as per the old provision of section 115BBE. (4) It is, therefore, prayed that above addition made by AO and confirmed by the Ld. CIT(A) may please be deleted. (5) Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal." 3. The grounds of appeal raised by assessee in ITA No. 414/SRT/2024 (AY 2017-18) are as under: "(1) On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has e....
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....otices u/s 142(1) of the Act and show cause notice requesting the assessee to furnish details regarding the nature and source of cash deposits and credit/debit entries in the bank account maintained by it during the year under consideration, however, assessee neither filed any return of income nor furnished any details. As the assessee did not give any reply, notice u/s 142(1) of the Act were issued to partners, Shri Zakirali H. Khan and Shri Mansoor Ahmed Choudhary as per the latest address of the partners available on records. However, both notices were returned unserved. Despite providing sufficient opportunities, assessee neither filed the return of income nor furnished any explanation regarding the nature of business and source of the credits made by him during the demonetization period or during the entire year. In view of the same, cash and credits made by the assessee in its Dena bank account amounting to Rs. 82,92,950/- (15,63,000 + 30,61,000 + 36,68,950) remained unexplained and therefore, the entire amount of Rs. 82,92,950/- was treated as assessee's undisclosed and unexplained income for the AY 2017-18 u/s 69A of the Act. Accordingly, the assessment order u/s 144 r.w.s.....
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....was dissolved on 31.03.2015 by executing the dissolution deed in writing on 17.04.2015 which was notarized on 30.07.2015. The assessee firm had two partners, Shri Zakirali H. Khan and Shri Mansoor Ahmad, each having 50% share of profit/loss. But after dissolution of the firm, Shri Mansoor Ahmad continued the business of the partnership firm as proprietor. The ld. AR also submitted that the partnership firm was ultimately succeeded by one of the partners, Shri Mansoor Ahmad as a proprietorship firm after 30.07.2015 and the deposits in the alleged bank account was made after the dissolution of firm and Shri Zakirali H. Khan was not the part of the partnership firm during the period of alleged transactions. It was also submitted that the alleged transaction in Dena bank account no. 086811023892 were related to Mr. Mansoor Ahmad. In support of this contention, the appellant furnished the copy of certificate issued by the Bank of Baroda certifying that Mr. Mansoor Ahmad Chaudhary was the authorized signatory of the account from 22.08.2015 and the firm was dissolved on 22.08.2015. The ld. AR submitted that assessment proceedings in the case of dissolved/non-existent partnership firm is v....
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....Y 2017-18 pertained to the business of Shri Mansoor Ahmad in his individual capacity and not of the so-called dissolved partnership firm. However, on perusal of the records, we find that this claim is not substantiated by any cogent or verifiable documentary evidence. Even before the CIT(A), no corroborative evidence such as closure of the partnership bank account or opening of a fresh bank account by the alleged successor proprietor has been furnished. The assessee also failed to file documentary evidence such as GST registration, Shops and Establishment license, PAN or ITR of the alleged sole proprietorship firm of Shri Mansoor Ahmad for AY 2017-18 to demonstrate that income from these deposits was duly offered to tax in his individual return. The mere certificate from Bank of Baroda indicating that Shri Mansoor Ahmad was an authorized signatory from 22.08.2015 does not conclusively establish that the business was exclusively carried on by him in a proprietary capacity or that the bank account was no longer that of the partnership firm. The bank account can be operated by any of the partners or by an authorized signatory. This does not mean that the firm solely belonged to the au....
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.... in ITA No. 245/SRT/2021, Jitendra Nemichand Gupta vs. ITO, in ITA No. 211/SRT/2021 and Sanjaybhai Mansukhbhai Patel vs. DCIT, in ITA No. 869/SRT/2023; the Indore Bench in DCIT vs. Punjab Retail Pvt. Ltd., in ITA No. 677/Ind/2019 and the Jabalpur Bench in ACIT vs. Sandesh Kumar Jain, in ITA No. 41/Jab/2020 held that applicability of amended provision of Section 115BBE of the Act is not retrospective. The Hon'ble Madras High Court in case of S.M.I.L.E. Micro Finance Ltd. vs. ACIT, 479 ITR 172 (Mad.) has held that amendment to section 115BBE increasing rate of tax on income referred to in section 68 from 30% to 60% with w.e.f. 01.04.2017 is not applicable to transactions prior to 01.04.2017. Hence, the enhanced rate is not applicable for AY 2017-18. Respectfully following the above decisions, the AO is directed to tax the addition at normal rate of tax and applicable surcharges and cess. Accordingly, this ground is allowed. 12. In the result, the appeal of the assessee is partly allowed. ITA No.414/SRT/2024 (AY.2017-18): 13. This appeal is against the levy of penalty u/s 271AAC(1) of the Act by the AO vide order dated 22.12.2021. Penalty proceedings u/s 271AAC(1) of the ....
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....of income u/s 139 of the Act and the assessee was required to file return of income for the year under consideration within due date specified, however, no return of income had been filed by the assessee in this case. During penalty proceedings, the assessee was given sufficient opportunities of being heard vide notices/show cause notices; however, there was no compliance to any of them. It was, therefore, observed that assessee has nothing to say regarding its failure to file the return of income u/s 139 of the Act. Therefore, it was clearly established that appellant committed a default which was liable for penalty u/s 271F of the Act. Accordingly, penalty order u/s 271F of the Act imposing penalty of Rs. 5,000/- was passed on 10.07.2021. 18. Aggrieved by the penalty order, assessee filed appeal before the CIT(A). During appellate proceedings, the assessee submitted that the assessee firm was dissolved on 31.03.2015 by executing the dissolution deed in writing on 17.04.2015 which was duly notarized on 30.07.2015. Thus, during the year under consideration, the firm was not into existence. Therefore, the firm is not required to file return of income as it was dissolved and not h....