The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that two entities/persons cannot be subject to tax for the same business turnover as the same is against the provisions of the Income Tax Act, 1961.
Facts of the case:
The original assessment completed against the assessee, an individual has been re-opened on the ground that the Investigation Wing received a tax evasion petitions stating that the assessee being a proprietor of M/s. Satyam Builders has undisclosed income on account of booking of bogus expenses by the bogus bills for Assessment Year 2008-09. The investigation wing summoned the assessee to produce the necessary details.
Interpretation of law:
The department also alleged that as per letter dated 26.03.2014 there is an allegation of booking of bogus expenses in case of proprietorship namely Satyam builders of the assessee and another partnership firm namely M/s. Satyam Builders.
The assessee argued in his defence that the CIT(A) is directed to give the benefit to the turnover in the partnership firm as well as the proprietary concern. He further contended that the turnover has to be been taxed only in case of one assessee, i.e. either in the hands of the assessee individual or in the case of the partnership firm.
The Tribunal held that one turnover cannot be taxed in the hands of two different assessee one being partnership firm M/s. Satyam Builders and another being proprietary concern of the assessee namely Satyam Builders.
“Therefore, the ld AO is directed to delete the addition in the hands of the assessee to the extent of the turnover considered in the case of Ms/. Satyam Builder a partnership firm. Therefore, the ld AO will reduce the addition in the hands of the assessee on the turnover which has already been taxed in the hands of M/s. Satyam Builders as a firm,” the Tribunal noted.