TMI Blog1998 (4) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... certified copy of instrument of partnership alongwith return of income. The assessee has failed to comply with the provisions of section 184 of Income-tax Act, 1961 and, therefore, the status to the firm is assigned as that of PFAOP under section 185 of Income-tax Act, 1961. 3. The assessee/filed an appeal against the said intimation issued under section 143(1)(a) and a separate appeal was also filed against the order under section 185. The DCIT(A) vide his order dated 31-7-1995 relating to intimation under section 143(1)(a) held that the requirement to furnish certified copy of Partnership Deed alongwith return of income was a curable fact. He placed reliance on judgment of Hon'ble Calcutta High Court in CIT v. Rai Bahadur Bissesswarlal Motilal Malwasie Trust [1992] 195 ITR 825/65 Taxman 273 in which it was held that the requirement of furnishing audit report by a Charitable Institution in the prescribed form No. 10B as required under section 12A of Income-tax Act, 1961 was a procedural requirement and such defect or omission could be cured under section 139(9). In the present case, the assessee, in fact, had cured the said defect by filing the certified copy of the Partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly. 5.1 The Ld. D.R. submitted that the assessee did not comply of the provisions of section 184(1)(ii) by not submitting the instrument of partnership alongwith return of income furnished on 27-12-1993. Therefore, the Assessing Officer was bound to adopt the status of 'AOP' in view of clear provisions contained in section 185 of the Act. He submitted that the provisions of section 143(1)(a) clearly provide that if any tax or interest is found due on the basis of such return, an intimation shall be sent to the assessee specifying the sum so payable and such intimation shall be deemed to be a notice of demand issued under section 156 of Income-tax Act, 1961. Since the return of income was not accompanied by the certified copy of the Partnership Deed, the tax was payable by the assessee as AOP and deduction in respect of remuneration to working partner was also not allowable. Hence, the Assessing Officer was justified in adopting the status as AOP and charging tax at maximum marginal rate as per section 167B(2). He contended that the aforesaid action of the Assessing Officer of adopting the status of AOP is not only covered by the permissible prima facie adjustments enumerated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made only in relation to any arithmetical error or in relation to any loss carried forward, deduction, allowance or relief which is either prima facie admissible but not claimed in the return or which is prima facie inadmissible, which has been wrongly claimed in the return. The scope of prima facie adjustments permissible under the proviso to section 143(1)(a) is confined to only such adjustments which are specifically enumerated in proviso (i), (ii) and (iii). The change of status from Firm to AOP is not covered within the ambit of prima facie adjustments permissible under section 143(1)(a). 6.3 The Ld. counsel further contended that the CBDT vide Circular No. 549, dated 31-10-1989 has given an illustrative list of such permissible adjustments, which can be made while processing the return of income under section 143(1)(a). The change of status is not covered in the said Circular issued by the Board. He further invited my attention towards Circular No. 669, dated 25-10-1993 in which it has been clarified that evidence for payment of tax or duty etc. covered by section 43B, even though not enclosed with the return of income, can be submitted alongwith an application for recti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee : Provided that in computing the tax or interest payable by, or refundable to, the assessee the following adjustments shall be made in the income or loss declared in the return, namely:--- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which on the basis of the information avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed under sub-section (1) or within the time allowed under a notice issued under section 142(1) calling for the return, may furnish a return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Section 139(5) also enables the assessee to file a revised return before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. It is therefore, clear that the assessee could file a successive return under section 139(4) on or before 31st March, 1995. 6.13 The provision of section 184(2) does not provide that the instrument of partnership should be furnished alongwith the return of income of the firm before the date specified in section 139(1) or alongwith the return of income under section 139(1). It does not place any restriction for submission of the certified copy of the instrument of partnership alongwith a return of income under section 139(4) or under section 139(5). The assessee could, therefore, validly file the certified copy of the instrument of partnership alongwith a return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer chooses to assess the firm in accordance with the provisions of section 143(3) or 144 etc. after granting a specific opportunity to the assessee in this regard. It is an admitted fact that the Assessing Officer did not give any opportunity to the assessee in the present case before changing the status from firm to PFAOP (sic.). The grant of opportunity to the assessee before changing the status from firm to AOP is also necessary in view of the fact that before determining the tax payable by the assessee, the Assessing Officer will have to ascertain the basic facts as to whether the AOP in such a situation will be liable to tax at normal rates or it will be taxable at maximum marginal rates as contemplated in section 167B. The Assessing Officer will have to find out as to whether the individual shares of the members/partners are in determinate or unknown. He will have to further ascertain whether the total income of any member/partner exceeds the maximum amount which is not chargeable to tax in the case of that member as per the Finance Act of the relevant year. Unless the Assessing Officer ascertains all these necessary and relevant facts, he cannot validly charge tax at maxi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
