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2006 (11) TMI 650 - ALLAHABAD HIGH COURTValidity Of Assessment framed in the status of AOP - Undisclosed sources Of Income - bogus purchase - income earned by preparing fake purchase vouchers and rental bills - Whether, in determining the taxable ‘income’ of the assessee, the Tribunal should not have given due regard to the legitimate outgoings in the form of entire purchases of gas cylinders but for which the returned income could not have been earned? - HELD THAT:- We find that the applicant is a partnership firm duly constituted under the provisions of the Indian Partnership Act, 1932. The registration, under the Act, has been refused by the Assessing Authority on the ground that the income which has been earned by preparing fake purchase vouchers and rental bills and also other incorrect means, have not been distributed by the applicant. The existence of the firm has neither been doubted nor disputed by the authorities. Only the registration has been refused. Thus, for the purposes of assessment the provisions of section 183 of the Act would be applicable. Even in the assessment order we find that the Assessing Authority had loosely described the applicant to be an AOP only on the ground that the registration has been refused. The Income-tax Officer while making the assessment had proceeded to compute the income of the applicant treating it to be a firm. However, the status of AOP has been mentioned only because the registration of the firm has been refused. In fact, the assessment has been made in accordance with section 183 of the Act. The CIT(A) has rightly corrected the status from that of AOP to URF as it was only an error. It is to be remembered that u/s 251 of the Act the appellate authority has been conferred a very wide power while deciding the appeal. It includes power to correct all the errors which may have crept in the order under appeal. In the present case we are of the considered opinion that the Income-tax Officer had only committed an error in mentioning the wrong status of AOP instead of URF in the assessment order which error has rightly been corrected by the CIT(A). Whether the Tribunal should have given due regard to the legitimate outgoings in the form of the entire purchases of gas cylinders or not - In the present case we find that the CIT(A) as also the Tribunal has recorded a categorical, finding of fact that the applicant did not make purchases to the extent he has shown. The purchases in question have conclusively been provided to be bogus. If the purchases of the gas cylinders have not been made and on the other hand have been found to be bogus by all the authorities including the Tribunal, the question of legitimate outgoings in the form of purchases of the gas cylinders would not arise. Therefore, the Tribunal was justified in not giving benefit of the alleged amount spent towards the purchases of gas cylinders. Thus, we answer all the questions except the first two questions referred to us in Income-tax Reference, referred to us, in both the Income-tax References, in favour of the revenue and against the assessee. In view of our aforesaid opinion, the remaining questions have become academic and are returned unanswered. However, on the facts and in the circumstances of the case, the parties are left to bear their own costs.
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