Order: Per Ahmad Fareed, Accountant Member. - These nine appeals filed by assessee, directed against orders of CIT(A) dated 15-3-2004 for assessment years 1993-94 to 2000-01 and dated 31-3-2005 for assessment year 2001-02, involving identical issue, were heard together and, therefore, these are being disposed off by common order for sake of convenience. 2. first and main issue involved in these appeals relates to decision of Assessing Officer and CIT(A) holding that four family members - father and his three sons, formed 'association of persons' (AOP) for carrying on their dairy business. 3. eight appeals in ITA Nos. 1173 to 1180/PN/04 for assessment years 1993-94 to 2000-01, were disposed off by Tribunal vide consolidated order dated 14-10-2005, and matter was restored back to file of CIT(A) with directions given in paragraph 4 of its order as under:-We have considered facts of case and rival submissions. Prima facie, notice under section 143(2) has not been issued within statutory period prescribed in proviso to section 143(2). decisions of Hon'ble ITAT, Delhi is that procedure in reassessment proceeding is same as in original assessment proceedings and, therefore, mandatory provisions of section 143(2) will have to be adhered to. However, full records were not produced before us and we are not in position to give categorical finding that impugned notice was first notice issued to assessee and no other notice under section 143(2) was issued to assessee prior to issuance of impugned notice. Therefore, it will be in fitness of situation that this matter is restored to file of learned CIT(A) with direction to examine full facts and decide whether impugned notice was barred by limitation or not. While arriving at conclusion, he shall take into account decision of Hon'ble ITAT in case of Raj Kumar Chawla (supra) and any other case which may be brought to his notice during course of hearing in appeal. In view of this finding, it is not necessary to decide other grounds of appeal.' 4. assessee filed miscellaneous petitions vide MA Nos. 89 to 96/PN/06 i n relation to aforesaid order of Tribunal dated 14-10-2005. These petitions were allowed by Tribunal vide order dated 28-7-2006 and order dated 14-10-2005 was recalled. In paragraph 3 of its order Tribunal observed as under:- We have considered facts of case and submissions made before us. In view of amendment effected by Finance Act, 2006, requirement of service of notice under section 143(2) within one year of filing of return has been dispensed with in case of reassessment of income and it has been provided that such notice can be served at any time before completing reassessment. Therefore, decision in impugned appeals on this issue does not represent good law. Consequently, other grounds of appeal have to be decided on merits. Therefore, orders are recalled with view to make fresh orders after hearing both parties.' 5. In mean time CIT(A), in compliance with directions given by Tribunal in its order dated 14-10-2005, passed fresh consolidated order for assessment years 1993-94 to 2000-01 on 31-1-2006. This order was challenged by assessee in ITA Nos. 524 to 531/PN/06. 6. Since earlier order passed by Tribunal in ITA Nos. 1173 to 1180/PN/04, dated 14-10-2005 was recalled, appeals filed by assessee against order of CIT(A), dated 15-3-2004 in ITA Nos. 1173 to 1180/PN/04 stand restored and have to be decided afresh. Further, subsequent order passed by CIT(A) dated 31-1-2006 became infructuous and consequently, appeals filed by assessee against this order of CIT(A) in ITA Nos. 624 to 631/PN/06 were dismissed vide our order dated 15-3-2007. 7. We, now, proceed to decide appeals filed by assessee in ITA Nos. 1173 to 1180/PN/04 against consolidated order of CIT(A), dated 15- 3-2004 for assessment years 1993-94 to 2000-01 and in ITA No. 1515/PN/05 against order of CIT(A), dated 31-3-2005 for assessment year 2001-02. 8. issue, whether there existed AOP, has been raised by assessee in these appeals through identical ground Nos. 5 and 6 as under:-5. On facts and in circumstances of case and in law alleged members of 'AOP' nowhere accepted that they have become members of 'AOP' by volition. There was also no material suggesting that there existed violation on part of alleged members to form and continue with 'AOP'. In absence of all this status of 'AOP' cannot be thrusted on assessee. status of 'AOP' is challenged. Therefore, assessment in Status of 'AOP' is bad in law and it be annulled. 6. On facts and in circumstances of case and in law there is no evidence nor any material to prove that 'AOP' earned any income taxable under Act. This is 'Sine qua non' for formation and continuation of AOP. There was also no consensus ad idem between alleged Members of AOP. In absence of that assessment in status of AOP also is bad in law and it be annulled.' 9. facts of case in brief are that four members of family-father and his three sons - S/Shri Peersaheb Kokani, Shahnawaz P. Kokani, Zakir P. Kokani and Hussain P. Kokani, were carrying on business of dairy farming. survey was conducted under section 133A of Act at their business premises on 3-8-2000, and on basis of statement given by one of them - Shri Zakir P. Kokani, during survey, Assessing Officer was of opinion that dairy business was being carried on by AOP formed by aforesaid four members of family. 10. Assessing Officer initiated proceedings under section 147 against such AoP and passed assessment orders accordingly in status of AoP. This action of Assessing Officer was upheld by CIT(A) in paragraph 66 of his consolidated order dated 15-3-2004 and this order of CIT(A) has been challenged by assessee in present appeals through ground Nos. 5 and 6 as reproduced in paragraph 8 above. 11. Shri M.K. Kulkarni, ld. AR reiterated arguments put forward on behalf of assessee before Assessing Officer and CIT(A). submissions made by him are summarized below:-that business of dairy farming was being carried on by members of Kokani family-father and his three sons, in their respective individual capacity. that all four members are regularly assessed to income-tax in respect of their individual income from their dairy business. that dairy was situated at one place but there were different identifiable compartments. that during survey conducted, under section 133A of Act on 3-8- 2 0 0 0 at dairy situated at Vadala Road, Nasik statements of Shri Peersahib Kokani and his son Shri Zakir P. Kokani were recorded. that Shri Zakir P. Kokani, subsequently, retracted his statement by filing affidavit. that statement of other two members were never recorded before holding that all four members of family formed AoP. that during survey conducted on 3-8-2000 authorized officer never asked anybody to identify buffaloes and stock belonging to individual members. that registrations are available in names of S/Shri Shahnawaz P. Kokani, Zakir P. Kokani and Hussain P. Kokani under Bombay Shops and Establishment Act, 1948 vide certificate Nos. J-00156, 57 and 58, dated 31-3- 1984. that members of family are enrolled under section 5(2) of Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975. that S/Shri Zakir P. Kokani and Shahnawaz P. Kokani have separate electric connections provided by Maharathstra State Electricity Board, Nasik. that municipal taxes are paid by S/Shri Shahnawaz P. Kokani, Zakir P. Kokani and Peersahib Kokani. that there exist separate electric connections, water connections, borewells, electric motor etc. that cattle belonging to individual members of family could be identified with help of badges affixed around their neck/ears. that employees received remuneration from respective employer members and confirmation letters from employees to this effect were filed. that only small quantity of milk was sold by one of members against milk card mentioned by Assessing Officer in his order. that photographs of borewells, milk cans and buffaloes wearing badges, belonging to individual members were filed. 12. Shri Atul Pranay, ld. DR placed reliance on orders of lower authorities. He vehemently argued saying that order of CIT(A) needed to be upheld. 13. We have considered rival submissions in light of material on record and precedents cited. Before proceeding further it appears necessary to examine legal position under Income-tax Act, 1961 with regard to formation of AOP. section 4 of Income-tax Act of 1961 is charging section, which reads as under:-(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and [subject to provisions (including provisions for levy of additional income- tax) of this Act] in respect of total income of previous year of every person:- Provided that where by virtue of any provision of this Act, income-tax is to be charged in respect of income of period other than previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at source or paid in advance, where it is so deductible or payable under any provision of this Act.' 14. charge of income is on every 'person' and expression 'person' appearing in charging section 4 is defined in section 2(31) of Act as under:- 31. 'person' includes- (i) individual, (ii) Hindu undivided family, (iii) company, (iv) firm, (v) association of persons or body of individuals, whether incorporated or not, (vi) local authority, and (vii) every artificial juridical person, not falling within any of preceding sub-clauses. Explanation. -For purpose of this clause, association of persons or body of individuals or local authority or artificial juridical person shall be deemed to be person, whether or not such person or body or authority or juridical person was formed or established or incorporated with object of deriving income, profits or gains.'15. In terms of above provisions 'association of persons' (AOP) must be one in which two or more persons join in common purpose or common action, object of which is to produce income, profits, or gains. Hence volition on part of members of 'association' is essential ingredient. 16. In case of G. Murugesan & Bros. v. CIT [1973] 88 ITR 432 (SC), four brothers - M, K, R and V were deriving income from life interest in house property and dividend from companies in respect of shares jointly held by them. For assessment years 1957-58 and 1958-59 they submitted their returns in status of AOP and for assessment years 1959-60 to 1962-63 they submitted their returns as individuals specifically stating that they were no more functioning as AOP. department assessed them in status of AOP for all six years in relation to income from property and income from dividends. 17. Supreme Court held, in above case, that for forming AOP, members of association must join together for purpose of producing income. AOP can be formed only when two or more individuals voluntarily combine together for certain purpose. Hence volition on part of members of association is essential ingredient. In above case members had specifically stated themselves that they were no more functioning s AOP for assessment years 1959-60 to 1962-63. In case of AOP it is always open to its members to withdraw from same. No one can be compelled to continue as member of association. 18. Now we proceed to examine facts of this case in light of legal position enumerated in above paragraphs. Assessing Officer and t h e CIT(A) were of view that assessee-AOP, engaged in dairy business, was constituted by four members - father and his three sons as under:-(i) S/Shri Peersahib H. Kokani (ii)Shahnawaz P. Kokani (iii)Zakir P. Kokani and (iv)Hussainsahib P. Kokani. 19. above decision of Assessing Officer is, primarily, based on statement of one of family members, Shri Zakir P. Kokani recorded, during survey conducted under section 133A of Act at their business premises on 3-8-2000. Assessing Officer has noted in his order that while giving his statement Shri Zakir P. Kokani had taken help of other members of AOP, that dairy business was being conducted, for last 8 years, by all four members from common premises (tabelas), that there were 498 buffaloes, that there was common activity and design of production and sale of milk by all members, that members were unable to identify their respective buffaloes, that during survey authorized officer did not find badges affixed on body of buffaloes for identification, that purchase and sale of milk was affected under common name, that during survey conducted under section 133A it was noted that credit cards were being used for selling milk in name of 'Konkani Bharat Cattle Farm Peersahib & Sons', that no books of account were maintained which could show that business was being done by members in their individual capacity, that cash, cattle feed, milk cans and other material were kept together without any separate identification, that salary, wages, electricity charges, municipal taxes were paid under common name and not separately by individual members, that Shri Ram Narayan Singh, employee, stated in reply to question Nos. 3, 4, and 5 that milk was brought to shop No. 9 Sai Vihar, Indira Nagar, from Konkani Bharat Cattle Farm, that Shri Zakir P. Kokani, in his statement recorded on 3-8-2000 stated that sale of about 2000 litres of milk was made by dairy which had 450 buffaloes out of which only about 350 were producing milk, that affidavits dated 6-3-2000 filed by members were afterthought. 20. ld. AR has challenged above observations made by Assessing Officer and CIT(A) in their orders. He reiterated that during survey no effort was made by authorized officer to identify buffaloes belonging to members individually, that buffaloes were identifiable by badges attached to their body - ears and/or neck, that members were filing their returns in their individual capacity in respect of their individual dairy business which were accepted by department. 21. Also, copies of documentary evidence have been filed to show that that registrations were available in names of individual members under Bombay Shops and Establishment Act, 1948, that members of family were enrolled under section 5(2) of Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975, that members had separate electric connection provided by Maharathstra State Electricity Board, Nasik, that municipal taxes were paid separately by members, that there existed separate electric connections, water connections, borewells, electric motors etc. 22. decision of lower authorities to hold that members of family formed AOP is primarily based on statement of Shri Zakir P. Kokani recorded during survey on 3-8-2000. reasons given by Assessing Officer for holding that AOP existed are not supported by relevant material on record. What actually transpired at time of survey is not borne out from records. For instance, Assessing Officer has noted in his order that at time of survey buffaloes belonging to individual members were not identifiable, but material/basis for this observation is not brought on record. Assessing Officer does not appear to have examined other two members - Shri Shahnawaz P. Kokani and Shri Hussain P. Kokani. 23. Assessing Officer and CIT(A) have put much emphasis on fact that books of account were not maintained in respect of dairy business. But, one could argue that this fact goes to support case of assessee that members were doing their business in their individual capacity and hence, there was no need to keep records, and that existence of AOP should h v e surely necessitated maintenance of books of account or some such records. In fact, apart from statement of one of members, no documentary evidence appears to have been found during survey to support conclusions reached by lower authorities. 24. We do not find any material on record to show that four members of family had joined together, of their own volition, and had pooled their funds/resources with view to jointly engage themselves in common activity of dairy business. facts brought on record only show that family members were doing their business at same premises and that they were helping each other in their business activities. CIT(A) has rightly noted in paragraph 23 of his order that onus was on Assessing Officer to prove that AOP existed and in our opinion Assessing Officer failed to discharge this onus. 25. Also, it was contended by ld. AR that notices under section 148 were not served on all four members and, therefore, proceedings under section 147 were not valid. In ground No. (1) raised before CIT(A) assessment order was pleaded to be annulled, being without jurisdiction. In ground No. (3) raised before us, proceedings initiated under section 147 have been challenged, on ground of 'being not in accordance with law'. It is seen that notices under section 148 dated 26-9-2000 were addressed to 'Kokani Bharat Dairy (AOP), Manager Member Zakir Peersaheb Kokani'. There i s nothing on record to show that these notices were served on all four members. 25.1 In case where existence of AOP is admitted by assessee and its members and its Principal Officer are duly identified, notice served on such Principal Officer alone will be valid notice in view of provisions of section 282(2)(c) of Act. But in case where four persons assessed individually are held by Assessing Officer to form AOP, in that case onus will be on Assessing Officer to prove that AOP existed and also notice under section 148 will have to be served on all members in order to validly assume jurisdiction under section 147 of Act. In taking this view we are fortified by decisions in following cases:(i) Rama Devi Agarwalla v. CIT [1979] 117 ITR 256 (Cal.); (ii)CIT v. Smt. Saraswati Bai [1982] 137 ITR 656 (Punj. & Har.) and (iii)Baijnath Hari Shanker v. CIT [1973] 91 ITR 208 (All.). 25.2 In present case there is no material on record to show that notices under section 148 were served on all four members. In our opinion, on this ground alone assessment orders become unsustainable and deserve to be quashed. 26. In view of facts and circumstances of case and position of law as discussed in above paragraphs, we are of considered opinion that decision of lower authorities that there existed AOP, constituted by aforesaid four family members - father and his three sons, cannot be sustained. And once it has been held by us that impugned AOP did not exist, all assessment orders passed by Assessing Officer in status of AOP will have to be quashed. We hold accordingly.27. In result, all nine appeals filed by assessee are allowed. *** KONKANI BHARAT DAIRY FARM (AOP) v. ASSISTANT COMMISSIONER OF INCOME TAX