TMI Blog1985 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... o a partnership for carrying on this business. This claim of partition had not been accepted by the Income-tax Officer but the Appellate Assistant Commissioner accepted the claim of partition. The Appellate Assistant Commissioner also directed that the assessment should be made afresh in the correct status. This appellate order was passed on December 31, 1971, and the Income-tax Officer made the assessment on February 14, 1972, in the status of a registered firm. The, order of the Income-tax Officer has been annexed and marked is annexure A forming part of the statement of the case. Before the Appellate Assistant Commissioner, a plea was raised that the assessment in the status of a firm as made on February 14, 1972, was barred by limitation. The Appellate Assistant Commissioner, however, did not accept this plea as, according to him, this assessment was protected by sub-section (3) of section 153 of the Act. As the Income-tax Officer had acted on the direction of the Appellate Assistant Commissioner, the Appellate Assistant Commissioner held that the assessment was protected and could not be held to be time-barred. The Appellate Assistant Commissioner thus overruled the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed family. Thus, in view of these materials, it has to be held that the assessee filed one return on September 26, 1966, claiming the status as a registered firm and on the same date the other return was also filed in the status of a Hindu undivided family. However, the assessment order of the Income-tax Officer against the Hindu undivided family and even the order of the Appellate Assistant Commissioner relating to the Hindu undivided family have not been annexed to the statement of the case. But the Appellate Assistant Commissioner has mentioned in his order, annexure B, that the appellant originally filed a return on September 26, 1966, claiming the status of a registered firm and the claim was not entertained and the Income-tax Officer did not accept the partial partition which resulted in the partnership and made the assessment in the status of a Hindu undivided family which had not been properly partitioned and the appellant came up in appeal and it was decided by the Appellate Assistant Commissioner that the partition claim was genuine and should have been allowed, and the Appellate Assistant Commissioner, therefore, directed that the assessment should be made afresh in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1971, in the ordinary course. Before taking up the legal position, it is necessary to point out that the registered firm has been assessed as M/s. Dhanpatram Chhotelal and the share allocation has been made in the name of Shri Dhanpatram and Shri Chhotelal in equal shares. The assessee-Hindu undivided family is Dhanpatram Chhotelal and it also cannot be doubted that Dhanpatram is the father and Chhotelal is his son. Thus, these two persons will also have concern with the assessee-Hindu undivided family. Section 153(3)(ii) lays down that the provisions of sub-section (1) of section 153 shall not apply relating to the assessment, reassessment or recomputation which may, subject to the provisions of subsection (2A), be completed at any time where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250 of the Act. Sub-section (2A) is not applicable in the present case. Explanation 3 to section 153 of the Act lays down that where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of one person and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the Hindu undivided family and the firm are two different entities and both are different assessees. It also cannot be doubted that when the Appellate Assistant Commissioner in the assessment of the Hindu undivided family held that assessment should be made in the status of a firm and not in the status of a Hindu undivided family and while deciding the assessment of the Hindu undivided family, it has to be held that the finding of the Appellate Assistant Commissioner whether the assessment should be made on the Hindu undivided family or on the firm, was a necessary finding for the assessment year 1966-67. Appeals before the Appellate Assistant Commissioner are filed under section 246 of the Act. Section 250 of the Act relates to the disposal of the appeal. Under section 251(1)(a) of the Act, in disposing of an appeal, the Appellate Assistant Commissioner in an appeal against the order of assessment, may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the direction given by the Appellate Assistant Commissioner and after making such further enquiry as may be necessary, and the Income-tax Officer sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed an ex parte assessment on S as an individual. S thereupon filed an application under section 27 to cancel the ex parte assessment. In December, 1960, the Income-tax Officer set aside that order. Thereafter, on February 6, 1961, the Income Officer made an assessment on the Hindu undivided family on the basis of the return submitted by S. It was in those circumstances that it was held by their Lordships of the Supreme Court that the return submitted by S was in his capacity as karta of his family and he filed no return in his status as an individual and that the ex parte order which was set aside under section 27 was an assessment made on him in the status of an individual and that there was no assessment against the family. It was also held that the assessment made against the Hindu undivided family was not, therefore, an assessment under section 27 and so the assessment was clearly barred by time and the limitation Was not saved by the second proviso to section 34(3). It was also observed in this decision that the same person can be taxed both as an individual as well as a karta of his family and that the two capacities are totally different and that the individual and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on P; it was intimately connected with P and the assessment made on him; and (iii) that, therefore, the assessments made on the firm were saved from the bar of limitation by the second proviso to section 34(3) and were valid in law. As regards the aforesaid decision, Mr. K. N. Jain, learned advocate for the assessee-opposite party, has submitted that in this case the firm had filed a return but P was assessed as an individual and both the individual and the firm filed appeals before the Appellate Assistant Commissioner and so this decision is not applicable to the facts of this case. However, I find that in this case also, the assessment was made on the individual and, after the order of the Appellate Assistant Commissioner, the assessment was made on the firm and in those circumstances a plea was taken that the assessment on the firm was barred by limitation. Under such circumstances, the decision in the aforesaid case is exactly applicable to the case before us. Mr. B. P. Rajgarhia, for the Revenue, has also relied on the case of Daffadar Bhagat Singh Sons v. ITO [1969] 71 ITR 417 (SC). In this case, the appellant firm, comprising a father and his two sons, filed a return f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a Hindu undivided family and so this decision is not applicable. 1, however, hold that this decision is applicable to the facts of the present case before us. In the present case before us also the assessee wanted assessment as registered firm but the Income-tax Officer made assessment in the status of a Hindu undivided family and then the assessee-Hindu undivided family appealed before the Appellate Assistant Commissioner and asserted that the assessment should be made in the status of a firm and not in the status of a Hindu undivided family and the Appellate Assistant Commissioner held that the assessee could not be assessed in the status of a Hindu undivided family and it should be assessed in the status of a firm and so he directed the Income-tax Officer to make a fresh assessment in the correct status and, accordingly, the Income-tax Officer made assessment on the firm as registered firm, vide annexure A. Under such circumstances, even if it is held that the assessment had not been made on the basis of the return filed in the status of a firm and the assessment was originally made against the assessee in the status of a Hindu undivided family, it will be deemed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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