INCOME TAX ACT, 1961

Section 143(3)

Assessment - Additions to income - Taxing same turnover (suppressed) in hands of assessee-partnership firm and another proprietary concern of same assessee whether permissible -

AO alleged that assessee proprietor had undisclosed income on account of booking of bogus expenses by bogus bills. Assessee filed higher return of income in response to notice under section 148 compared to original return filed under section 139. AO took profit @10% of the gross receipt and made addition. CIT(A) confirmed addition but held that same receipts could not be taxed twice once in hands of assessee as proprietor(Satyam Builders) and second in partnership firm (M/s. Satyam Builders). Held: One turnover could not be taxed in hands of two different assessee one being partnership firm and another being proprietary concern of assessee. Therefore, AO was directed to delete addition in hands of assessee to extent of turnover considered in case of partnership firm. On issue as to what should be percentage of gross receipt to be taken as net income from suppressed turnover, in assessment proceeding under section 143(3) read with section 147 for assessment year 2008-09, AO himself accepted it @8%. There was no change in business model of partnership firm as well as business of assessee. Therefore, AO was directed to adopt profit ratio of 8% as net profit on gross receipts.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

SUBSCRIBE FOR FULL CONTENT