ACIT, CIR -02, Solapur v. SHRI SONI SHRINIWAS BANKATLAL (HUF), Solapur

ITA 447/PUN/2009 | 2000-2001
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 44724514 RSA 2009
Assessee PAN AAFFS2270R
Bench Pune
Appeal Number ITA 447/PUN/2009
Duration Of Justice 1 year(s) 11 month(s) 13 day(s)
Appellant ACIT, CIR -02, Solapur
Respondent SHRI SONI SHRINIWAS BANKATLAL (HUF), Solapur
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-03-2011
Date Of Final Hearing 28-03-2011
Next Hearing Date 28-03-2011
Assessment Year 2000-2001
Appeal Filed On 17-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER. SR.NO. ITA NO. A.Y. APPELLANT RESPONDENT 1. 1337/PN/2009 2001-02 ASSTT. CIT CIR. 2 SOLAPUR SONI SHRINIVAS B. HUF 50 SAKHAR PETH SOLAPUR PAN AAFFS 2270 R 2. 1338/PN/2009 2002-03 -DO- -DO- 3. 1339/PN/2009 2003-04 -DO- -DO- 4. 1340/PN/2009 2004-05 -DO- -DO- 5. 1341/PN/2009 2004-05 -DO- -DO- 6. 447/PN/2009 2000-01 -DO- -DO- APPELLANT BY : SHRI ABHAY DAMLE RESPONDENTS BY : NONE O R D E R PER D. KARUNAKARA RAO A.M. THESE SIX APPEALS RAISING COMMON ISSUES IN RESPECT OF SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THOUGH NOTICE OF HEARING WAS SENT TO THE ASSESSEE BUT NONE APPEARED ON THE DATE OF HEARING. WE THEREFORE PROCEED TO DECIDE THESE APPEALS AFTER HEARING THE LEARNED DR AND PERUSING T HE MATERIAL ON RECORD. ITA NO. 447/PN/2009 2. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE HONBLE CIT(A)-III PUNE ERRED BY NOT CONSIDERING THE ACTION OF THE A.O IN CLUBBING THE INCOME OF OTHER HUFS IN THE HANDS OF THE ASSESSEE H UF. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE HONBLE CIT(A)-III PUNE HAS FAILED TO APPRECIATE THE FACT O F THE ASSESSING OFFICER S FINDING OF COMMON FACTORS LIKE SAME BUSINESS SAME PLACE C OMMON STOCK CONTROLLING BY ONE FAMILY SAME INSURANCE COMPANY SAME SELLERS AND PURCHASERS COMMON EMPLOYEES ETC. FOR CLUBBING THE INCOME OF FOUR OTHE R HUFS IN THE HANDS OF THE ASSESSEE HUF. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE HONBLE CIT(A)-III PUNE HAS FAILED TO APPRECIATE THE RELIAN CE PLACED BY THE ASSESSING OFFICER IN THE CASE OF LADHU RAM TAPARIA (44 SITR 521) WHICH IS SQUARELY APPLICABLE IN THE ASSESSEES CASE. 3. THE ASSESSING OFFICER FOUND THAT BESIDES THE BIG GER HUF THERE WERE FOUR MORE HUFS WHICH CAME INTO EXISTENCE IN NOVEMBER/DEC EMBER 1978 AND ALL THESE HUFS CARRIED SAME BUSINESS. THE ASSESSING OF FICER ALSO FOUND THAT ASSESSEE HUF WAS CREATED ON THE MARRIAGE OF SHRI SH RINIWAS B. SONI AND THE ITA NO.1337 TO 1341 AND 447/PN/2009 SHRINIVAS SONI 2 ASSESSEE WAS ENGAGED IN TRADING OF YARN BUSINESS SI NCE 1959. THE PARTITION TOOK PLACE IN THE YEAR 1978. AFTER GOING THROUGH TH E RETURNS OF INCOME FILED BY THE CONCERNS WHICH CAME INTO EXISTENCE BY VIRTUE OF PAR TITION TOOK PLACE IN THE YEAR 1978 THE ASSESSING OFFICER FOUND THAT (A) ALL THE CONCERNS DO THE SAME BUSINESS (B) ALL THE CONCERNS OPERATE FROM SAME PLACE; (C) T HE STOCK OF ALL THE CONCERNS WAS MIXED AND PUT TOGETHER; (D) THE BUSINESS IS CON TROLLED BY ONE FAMILY AND (E) THE INSURANCE COMPANY IS SAME (F) THE SELLERS AND T HE PURCHASERS OF THE CONCERNS ARE NEARLY SAME; (G) ACCOUNTANT AND EMPLOY EES ARE COMMON FOR ALL THE CONCERNS; (H) BANK ACCOUNTS AND FUNDS ARE CONTROLLE D BY MEMBERS OF SONI FAMILY; (I) FUNDS ARE SINTER TRANSFERRED; (J) GROSS PROFIT PERCENTAGE IS MORE OR LESS SAME IN ALL THE CONCERNS AND (K) THE BUSINESS PREMI SES IS RENTED ONE BUT NONE OF THESE CONCERNS PAY ANY RENT TO LANDLORD FOR THE USE OF THE BUSINESS PREMISES. IN THE LIGHT OF THESE FACTS THE ASSESSING OFFICER CON CLUDED THAT THE ALLEGED THEORY OF PARTIAL PARTITION WAS AN OUTCOME OF SYSTEMATIC PLAN OF TAX EVASION. HE ACCORDINGLY CLUBBED THE INCOME SHOWN BY THE OTHER F OUR HUFS IN THE HANDS OF THE ASSESSEE HUF WHICH RESULTED INTO AN ADDITION OF RS. 20 45 262/- IN THE CASE OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER I N APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO FOUND NO JUSTIFICATION IN T HE ACTION OF THE ASSESSING OFFICER IN DISCARDING THE PARTIAL PARTITION AND CLU BBING THE INCOMES OF OTHER HUFS IN THE HANDS OF THE ASSESSEE HUF. THE CIT(A) ACCOR DINGLY DIRECTED THE ASSESSING OFFICER NOT TO INCLUDE THE INCOME OF OTHE R FOUR HUFS IN THE HANDS OF ASSESSEE HUF WHICH HAS BEEN CHALLENGED BY THE DEPAR TMENT BEFORE US. 4. AFTER HEARING THE LEARNED DR AND PERUSING THE MA TERIAL ON RECORD WE FIND THAT THE CIT(A) WAS JUSTIFIED IN HIS CONCLUSION THA T THE ASSESSING OFFICER WAS NOT JUSTIFIED IN CLUBBING THE INCOMES OF OTHER HUFS IN THE HANDS OF THE ASSESSEE HUF. THE RELEVANT PORTION OF CIT(A)S OBSERVATION AND CONCLUSION IS REPRODUCED AS FOLLOWS: 3.7 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT IN THE LIGHT OF THE FACTS OF THE CASE AND THE PROVISIONS O F LAW AND I FIND IT ONLY PARTLY ACCEPTABLE. SO FAR APPELLANTS CONTENTION R EGARDING REOPENING OF THE ASSESSMENT IS CONCERNED I FIND NO MERIT IN IT. THE ONLY REQUIREMENT FOR INITIATING PROCEEDINGS U/S 147 OF THE ACT IS TH AT THE A.O SHOULD HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX FOR THE RELEVANT YEAR HAS ITA NO.1337 TO 1341 AND 447/PN/2009 SHRINIVAS SONI 3 ESCAPED ASSESSMENT. A REASON TO BELIEVE MEANS A CA USE TO BELIEVE. IN THE PRESENT CASE AFTER GATHERING THE FACTS OF THE CASE AND AFTER EXAMINING THE CASE OF THE ASSESSEE IN THE LIGHT OF THE JUDGME NT OF HONBLE SUPREME COURT IN THE CASE OF LADHU RAM TAPARIA THE ASSESSI NG OFFICER FORMED THE VIEW THAT THE PARTIAL PARTITIONS WERE NOT MADE TO B E ACTED UPON IN THE REAL SENSE AND THEREFORE ON ACCOUNT OF NON-CLUBBING OF INCOMES OF OTHER FOUR HUFS IN THE HANDS OF THE ASSESSEE HUF INCOME CHARG EABLE TO TAX HAD ESCAPED ASSESSMENT. UNDER THESE CIRCUMSTANCES IT C ANNOT BE SAID THAT THERE WAS NO REASON FOR THE ASSESSING OFFICER TO BE LIEVE THAT INCOME CHARGEABLE TO TAX FOR THE YEAR UNDER CONSIDERATION HAD ESCAPED ASSESSMENT. SINCE BASIC REQUIREMENT OF INITIATION O F PROCEEDING U/S 147 IS FULFILLED THE ACTION OF THE ASSESSING OFFICER IN REOPENING THE ASSESSMENT IS HELD TO BE JUSTIFIED. ACCORDINGLY AP PELLANT'S GROUND OF APPEAL IN RESPECT OF REOPENING OF ASSESSMENT FAILS. 3.8 AS REGARDS THE ISSUE OF CLUBBING THE INCOMES OF SMALLER HUFS IN THE HANDS OF THE ASSESSEE HUF NEITHER AS PER PROVI SIONS OF LAW NOR ON THE FACTS OF THE CASE I FIND ANY STRENGTH IN THE A CTION OF THE ASSESSING OFFICER IN IGNORING THE FACT OF PARTIAL PARTITION A ND ASSESSING THE INCOMES OF OTHER FOUR HUFS IN THE HANDS OF THE ASSESSEE HUF. T HERE CAN BE NO DENIAL OF THE FACT THAT THE HUFS OF VIKAS SONI & CO . SUHAS SONI & CO. ULHAS SONI & CO. AND S.B. SONI & CO. CAME INTO EXISTENCE IN NOVEMBER / DECEMBER 1978 AS A RESULT OF THE PARTIAL PARTITION AND SUCH CLAIM OF PARTIAL PARTITION WAS DULY ACCEPTED BY THE ASSESSING OFFICE R BY PASSING ORDER U/S 171 ON 31.10.1980 AFTER EXAMINING THE MAJOR MEMBERS OF THE FAMILY AND THE BOOKS OF ACCOUNT. THEREFORE IN MY VIEW IT NO MORE REMAINS OPEN FOR THE ASSESSING OFFICER TO DISCARD THE FACT OF PARTIA L PARTITION OF OLD HUF AND CREATION OF NEW HUFS. IN FORMING THIS VIEW I GATHE R SUPPORT FROM THE JUDGMENT GIVEN BY HON'BLE ALLAHABAD HIGH COURT IN T HE CASE OF JAGDISH LAL AND SONS 157 ITR 620 WHEREIN HON'BLE HIGH COUR T HELD AS UNDER: ORDINARILY THERE IS NO BAR AGAINST THE INVESTIGAT ION BY THE INCOME-TAX OFFICER OF THE SAME FACTS IN RESPECT OF WHICH A DECISION WAS ARRIVED AT IN AN EARLIER YEAR. BUT THI S RULE DOES NOT APPLY WHEN DEALING WITH AN ORDER RECOGNIZING PA RTITION IN A HINDU UNDIVIDED FAMILY. INCOME FROM PROPERTY OF A H INDU UNDIVIDED FAMILY MAY BE ASSESSED SEPARATELY IF AN O RDER RECOGNIZING THE PARTITION HAS BEEN PASSED. THEREAFT ER THAT FAMILY CANNOT BE ASSESSED IN THE STATUS OF A HINDU UNDIVIDED FAMILY UNLESS THAT ORDER IS SET ASIDE BY A COMPETEN T AUTHORITY. 3.9 FURTHER THE GRANT OF REGISTRATION TO A FIRM CA NNOT BE EQUATED WITH THE ACCEPTANCE OF PARTIAL PARTITION OF HUF. THE REG ISTRATION TO A FIRM IS GRANTED ON YEAR TO YEAR BASIS. ON THE CONTRARY UNLIKE GRANT OF REGIST RATION TO A FIRM THE TOTAL PARTIAL PARTITION OF HUF IS A CCEPTED ONCE FOR ALL UNLESS THE ORDER ACCEPTING PARTITION IS SET ASIDE BY A COM PETENT AUTHORITY AND AS SUCH THERE IS NO REQUIREMENT FOR GIVING ANY FINDIN G FOR TOTAL OR PARTIAL PARTITION OF THE HUF IN SUBSEQUENT YEARS. ON ACCOUN T OF THIS CLEAR CUT DISTINCTION IN MY OPINION THE RATIO OF THE DECISI ON IN THE CASE OF LADHU RAM TAPARIA VS. GIT 44 ITR 521 (SG) AS RELIED UPO N BY THE ASSESSING OFFICER CANNOT BE SAID TO BE APPLICABLE TO THE CAS E UNDER CONSIDERATION. EVEN OTHERWISE BY WAY OF ITS ELABORATE SUBMISSION THE APPELLANT HAS EXPLAINED AS TO HOW THE FACTS OF THE PRESENT CASE A RE DISTINGUISHABLE FROM THE FACTS OF THE CASE OF LADHU RAM TAPARIA. 3.10 IN VIEW OF THE AFORESAID I FIND NO JUSTIFICAT ION IN THE ACTION OF THE ASSESSING OFFICER IN DISCARDING THE PARTIAL PARTITI ON (DULY ACCEPTED BY THE DEPARTMENT) AND CLUBBING THE INCOMES OF OTHER HUFS IN THE HANDS OF THE APPELLANT HUF. ACCORDINGLY THE ASSESSING OFFICER I S DIRECTED NOT TO INCLUDE THE INCOME OF OTHER FOUR HUFS IN THE HANDS OF ASSESSEE HUF. ITA NO.1337 TO 1341 AND 447/PN/2009 SHRINIVAS SONI 4 5. AFTER GOING THROUGH THE ABOVE FINDINGS OF THE CI T(A) WE FIND THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE AT OUR HAND. THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED . ITA NO. 1337 TO 1341/P/2009: 6. IN ALL THESE FIVE APPEALS COMMON ISSUE IS RAISE D IN RESPECT OF CLUBBING OF INCOME FROM FOUR ENTITIES OF HUFS. SIMILAR ISSUE W AS RAISED IN AN APPEAL IN ITA NO. 447/PN/2009 FOR A.Y. 2000-01WHEREIN WE HAVE UPH ELD THE ORDER OF THE CIT(A) ON THE ISSUE OF CLUBBING OF INCOME OF OTHER ENTITIES WITH THE INCOME OF THE ASSESSEE. FACTS BEING SIMILAR WE ARE NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE CIT(A) FOR THESE YEARS AS WELL. THE ORDERS OF THE CIT(A) ARE UPHELD AND THE GROUNDS RAISED BY THE REVENUE IN THESE APPEALS ARE DISMISSED. 7. IN THE RESULT ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF MARCH 2011. SD/- SD/- (I.C. SUDHIR) ( D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 31 ST MARCH 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT- AURANGABAD 4. CIT(A) AURANGABAD 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE