TaxTMI 
TaxTMI 
2026 (7) TMI 1583
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....fit on account of partners capital waived off(we will confine ourselves to this disputed issue as other issue based on which reopening of the concluded assessment was made is not relevant for us as no additions to the income of the assessee was made by the AO on this other ground). No details whatsoever have been furnished by the assessee with respect thereto. Thus as per Revenue, an amount of Rs. 54,10,183/- has also escaped assessment. The AO after recording satisfaction as to reasons to believe that the income has escaped assessment, proceeded to reopen the concluded assessment after obtaining approval of competent authority i.e. ld. PCIT, wherein notice u/s 148 dated 30.03.2021 was issued by the AO to the assessee. The assessee did not file its return of income in pursuance to notice issued by the AO u/s 148 of the 1961 Act. Statutory notices u/s 142(1) and SCN were issued by the AO to the assessee from time to time during reassessment proceedings. The assessee participated in reassessment proceedings. The AO observed that while computing the taxable income, the assessee has made a deduction of Rs. 54,10,183/- from its profit on account of partners capital waived off. The asses....
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....itiated penalty u/s 271F for non compliance with the law. The ld. CIT(A) observed that reasons recorded for reopening of the concluded assessment were duly furnished by the AO to the assessee. The reasons recorded by the AO are disclosed in the body of the reassessment order. The ld. CIT(A) observed that there is no infirmity in the reassessment order passed by the AO. The ld. CIT(A) relied upon the judgment and order of Hon'ble Andhra Pradesh High Court in the case of GVK Gautami Power Limited v. ACIT (2011) 336 ITR 451(AP) ; Hon'ble Supreme Court judgment and order in the case of Phool Chand Bajrang Lal(1993) 203 ITR 456(SC) ; CIT v.India Terminal Connector System Limited 208 Taxman 231(Delhi) ; Raymond Woolen Mills Limited v. ITO (1999) 236 ITR 34(SC) ; AGR Investment Limited v. Addl. CIT (2011) 333 ITR 146. On merits, the ld. CIT(A) observed that the assessee has claimed deduction of Rs. 54,10,183/- from its profit on account of partners capital waived off. The ld. CIT(A) observed that the assessee is contending that at the end of 2012-13, Shri Puneet Ahuja left the partnership firm and his profit share was transferred to payable account of the firm. The ld. CIT(A) observed tha....
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....has also received contract income on which TDS has been made @2% which comes to Rs. 13,38,39,797/- [2676280X100/2=133839797]. Thus the gross turnover of the assessee should have been taken at Rs. 39,00,12,617/-. Thus the assessee has suppressed its profit by an amount of Rs. 13,38,39,797/-. Besides this the while computing the taxable income the assessee has also made a deduction of Rs. 54,10,183/- from its profit on account of partners capital waived off. No details what-so-ever have been furnished by the assessee. Thus, an amount of Rs. 54,10,183/- has also been escaped assessment." Thus, the AO has reasons to believe that income has escaped assessment. The AO obtained the prior approval of the 'Competent Authority' i.e. ld. PCIT u/s 151. The AO issued notice u/s 148 dated 30.03.2021 to the assessee, requiring assessee to file return of income in pursuance to aforesaid notice. The assessee did not file return of income in pursuance to notice u/s 148 issued by the AO. However, the assessee participated in reassessment proceedings. The AO supplied reasons recorded for reopening of the assessment, to the assessee, vide SCN dated 27.03.2022. This fact is admitted....
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.... production of books of accounts from where AO could have found that the said income is chargeable to tax but not offered to tax is not sufficient. The assessee ought to have made full and true disclosure that it is claiming deduction wrt amount lying to the credit of capital account of a retired partners which is offered to tax albeit credited to P&L account owing to such amount being not taxable under the specified provisions of the 1961 Act, but no such disclosure was made. Thus, we observed that the reopening was rightly done by the AO. At the stage of initiating of reassessment proceedings by recording of reasons for reopening of the assessment, conclusive evidence of escapement of income is not required but a prima facie belief is required based on material on record that income has escaped assessment. Thus reasons to believe that income has escaped assessment ought to have live link with the reasons recorded by the AO, which in the instant case do have, we have observed the said reasons recorded have live link with the formation of believe that income has escaped assessment. Reference is drawn to provisions of Section 41(1) and 28(iv) of the 1961 Act. Further, the assessee i....
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....oss as unsecured loan waived off. On retirement of Mr. Puneet Ahuja, it is claimed that capital account is converted into unsecured loan account, no interest was payable on it and ultimately it is credited to P&L Account being waived off. There are no documents/evidences etc available on records to verify the contentions of the assessee as the assessee has not filed any evidences/documents etc to this effect. Thus, what constitute this payable account over a period of time since Mr. Puneet Ahuja joined as partner till his retirement from the assessee's firm and thereafter, is not available on record. It is also not available on record whether any interest on capital was credited to partners capital account or any salary was credited to the said account, of which deduction was obtained by the assessee while computing income of the earlier years, is also not on record. Further, there is no document/evidences on record as to the mutual understanding arrived at by the assessee with Mr. Puneet Ahuja wrt waiving of said amount. Further, retirement deed is also not on record. Neither the AO nor ld. CIT(A) has went on to look into in details as to the chargeability to tax of the same under....