TMI Blog1970 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... is, in favour of the assessee and against the department - - - - - Dated:- 15-9-1970 - Judge(s) : P. GOVINDAN NAIR., M. U. ISAAC. JUDGMENT The judgment of the court was delivered by GOVINDAN NAIR J.The Income-tax Appellate Tribunal, Madras Bench " B ", has stated two cases in relation to the assessment years 1960-61 and 1961-62 and has referred the following common question arising for the two years for our decision : " Whether, on the facts and in the circumstances of the case, the penalty imposed on the assessee under section 27 1 (1)(a) for the assessment years 1960-61 and 1961-62 is liable to be cancelled ? " The assessee, a firm, was registered by certificate issued on March 26, 1962, for the assessment year 1960-61. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it could not be taken to have been registered then, the certificate of registration being dated March 26, 1962, a date after the date before which the return should have been submitted. It was held that the registration will have effect for the assessment year and must, therefore, govern the provision relating to the submission of returns for that assessment year. This view of the Appellate Assistant Commissioner has been accepted by the Income-tax Appellate Tribunal but is hotly contested before us by counsel on behalf of the revenue. We have been referred to various sections of the Indian Income-tax Act, 1922, such as sections 23(5), 26 and 28, proviso (d), and it is submitted that the income of the firm at least in so far as the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is a firm and the total income of the firm has been assessed under sub-section (1), sub-section (3) or sub-section (4), as the case may be, (a) in the case of a registered firm, the sum payable by the firm itself shall not be determined but the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined: Provided that if such share of any partner is a loss it shall be set off against his other income or carried forward and setoff in accordance with the provisions of section 24: Provided further that when any of such partners is a person not resident in the taxable ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of inclusion in the total incomes of the partners, be apportioned between the partners who in such previous year were entitled to receive the same: Provided further that when the tax assessed upon a partner cannot be recovered from him it shall be recovered from the firm as constituted at the time of making the assessment. (2) Where a person carrying on any business, profession or vocation has been succeeded in such capacity by another person, such person and such other person shall, subject to the provisions of sub-section (4) of section 25, each be assessed in respect of his actual share, if any, of the income profits and gains of the previous year : Provided that, when the person succeeded in the business, professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not been determined, that amount shall be taken to be an amount equal to the tax which could have been payable by an unregistered firm on an income equal to the firm's total income, and, in the cases referred to in clauses (b) and (c), the amount of the income-tax and super-tax which would have been avoided if the income as returned had been accepted as the correct income, shall be taken to be the difference between the amount of the tax which would have been payable by an unregistered firm on an income equal to the firm's total income and the amount of the tax payable by an unregistered firm on an income equal to the income of the firm as actually returned by the firm." Only a person who without reasonable cause fails to furnish the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther fact that if the firm was liable to be penalised the quantum of the liability would have been fixed under clause (d) of the proviso to section 28(1). These sections cannot add to the provisions in section 22(1) of the Indian Income-tax Act a failure to comply with which is penalised under section 28(1)(a). These sections have only applicability regarding the manner and the method of assessment and may be termed to be what are known as machinery sections. We are of the view that these sections cannot be pressed into service to change the ordinary meaning according to the literal grammatical sense of the words used in sections 22(1) and 28(1)(a). The meaning that counsel for the revenue seeks to place on section 22(1) that if any income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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