TaxTMI 
2026 (11) TMI 531
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....expenditure amounting to Rs. 6,50,07,884/-. M/s. IEGLO Developers had entered into Joint Development Agreements with Shri. Veeraswamy Reddy for development of two residential projects, namely Krishna Kuteera Phase-I and Krishna Kuteera Phase-II. The project relating to Krishna Kuteera Phase-I was completed, the income arising therefrom was duly offered to tax by the partnership firm, and the same was accepted by the Revenue. On the basis of information, the Income Tax Officer (inv) Unit-1(1), Bengaluru had carried out the investigation and had concluded that the assessee has made unexplained expenditure of Rs. 6,50,07,884/- [19,50,00,000/- minus 12,99,92,116/-] for the F.Y. 2015-16 relevant to the A.Y. 2016-17 as the full and final settlement with the landowner for Krishna Kuteer White House Phase-II in the hands of the assessee. Accordingly, the case was re-opened u/s. 147 and notice u/s. 148 dt 28.04.2023 was issued. The assessee did not file return of income in response to such notice u/s. 148 dated 28.04.2023. Thereafter the learned Assessing Officer (Ld AO) issued notice u/s. 142(1) on 18.09.2024, 17.10.2024 and Show Cause Notice (SCN) on 17.01.2025. In response to the SCN dat....
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....ry of tax dues of a firm and does not confer jurisdiction to substitute the firms alleged unexplained expenditure as personal unexplained expenditure of a partner. 5. The learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the addition of Rs. 6,50,07,884/- under section 69C without recording any finding that the appellant had personally incurred any unexplained expenditure. Section 69C applies only WHARE expenditure is incurred by the assessee in his own capacity. The recipient, Shri Veeraswamy Reddy, in his statement recorded under section 131(1A) dated 06.06.2022 (Q. No. 26), admitted receipt of only Rs. 12,99,92,116/- from M/s. Ieglo Developers, and the appellant statement dated 30.05.2022 (Q. No. 9) does not disclose any personal expenditure. The addition is therefore without jurisdiction and liable to be deleted. 6. The learned Commissioner of Income Tax (Appeals) erred in law and on facts in upholding the reassessment proceedings, as the notice issued under section 148A(b) and the consequent notice issued under section 148 of the Income-tax Act, 1961 are barred by limitation and not in accordance with the provisions of the Ac....
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....ercial understanding between the parties regarding the proposed sale of villas and was executed on the basis that villas would be constructed on all the allotted plots. During the course of the project, the partnership firm paid an aggregate sum of Rs. 12,99,92,116/- to the landowner towards his share of consideration. In addition thereto, the partnership firm had also paid a sum of Rs. 2,20,00,000/- as a non-refundable amount/advance in connection with Krishna Kuteera Phase-I and Krishna Kuteera Phase-II. The said amount was subsequently adjusted and appropriated towards the full and final settlement arrived at between the partnership firm, represented by the assessee and Late Shri. K. Shekar, and the landowner, Shri. Veeraswamy Reddy, during the Financial Year 2018-19. Accordingly, the total amount paid and settled in favour of the landowner aggregated to Rs. 15,19,92,116/-. He further submitted that the aforesaid amount of Rs. 15,19,92,116/- represented the complete and final settlement between the partnership firm and the landowner. Further it was submitted that the landowner, Shri. Veeraswamy Reddy, in his own individual capacity sold the three plots as vacant sites, without c....
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....ied on by a firm has been discontinued 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 or ^79[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) in the course of any proceeding under this Act in respect of any such firm as is referred to in that sub-section is satisfied that the firm was guilty of any of the acts specified in Chapter XXI, he may impose or direct the imposition of a penalty in accordance with the provisions of that Chapter. (3) Every person who was at the time of such discontinuance or dissolution a partner of the firm, and the legal representative of any such person who is deceased, shall be jointly and severally liable for the amount of tax, penalty or other sum payable, and all the provisions of this Act, so far as m....