In the recent case of Hanuman Singh vs Income Tax Officer, Jaipur bench of Income Tax Appellate Tribunal (ITAT) held that once the assessment in the hands of AOP has been made, then another assessment of same income in the individual capacity would be amount to double assessment under the Income Tax Act.
Assessee, in the instant case, is an individual filed his return of income and declared his total income of Rs. 1,27,900 and the assessee also deriving income from liquor business carried on in AOP’s status. During the year the gross receipt shown by the assessee in the liquor business was Rs. 1,09,42,255. As per provisions of law, the assessee was to keep its account audited but the assessee has failed to do so. Regarding this, the Assessing Officer (AO) has levied a penalty at ½ percent of the gross turnover under section 271B of the Income Tax Act 1961.
On appeal CIT(A) also upheld the decision of the AO and confirmed the penalty initiated by him.
Aggrieved by the order of the CIT(A) assessee was on appeal before the tribunal. Before the bench, the assessee had submitted that the turnover was included in the books of accounts of AOP.
After considering the rival contentions of the parties, Tribunal bench comprising Accountant Member Bhagchand objected the findings of the lower authorities. The bench observed that the assessee in the present case was one of the members of AOP named as M/s Umrao Singh. Therefore, once the assessment in the hands of AOP has been made then the assessment of the same income in the individual capacity that amounts into the double assessment of the same income, which is impermissible in the eyes of law. The bench has concluded the issue while deleting the penalty made by the lower authorities.
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