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2014 (8) TMI 1188 - AT - Income TaxDisallowance of remuneration - disallowance by invoking section 184(5) of IT Act, 1961, considering the firm as an Association of Persons (AOP) - HELD THAT:- There is no dispute that the assessee had not filed any return voluntarily, as prescribed u/s 139(1) of the IT Act, 1961 or belatedly or prescribed u/s 139(4) of the IT Act, 1961. The returns filed by the assessee were pursuant to notices issued u/s 148 of the IT Act, 1961. Reading of sub-sec.1 of Sec.148 of the IT Act, 1961, clearly show that a return filed in pursuance of notice u/s 148 of the IT Act, 1961 is to be treated as a return required to be furnished u/s 139 of the It Act, 1961. Failure of an assessee to file the return u/s 139(1) of the IT Act, 1961 would give powers to the AO to issue a notice for filing return as set out in Sec.142(1) of the IT Act, 1961. Once an AO chose not to issue such notice but to proceed u/s148, the consequence mentioned therein has to follow. Once a return has been filed by the assessee pursuant to a notice u/s 148 of the IT Act, 1961, the clause that would apply to him is clause(c ) of sub-sec.(1) of Sec.144 of the IT Act, 1961. He goes out of the ambit of clause(a). For applying clause(c ), it is necessary that assessee should have failed to comply with the terms of notice issued under sec.143(2) of the IT Act, 1961 - Thus, it is clear that there was no failure in complying with the notices issued u/s 143(2) of the IT Act, 1961. The result is that assessee could not have been fastened with the consequences that arise out of a best judgment assessment u/s 144 of the IT Act, 1961. It is not that section 184(5) come into operation whenever an assessment is made u/s 144. The claim for deduction by way of payment of interest, salary, bonus, commission or remuneration to the partners could not have been disallowed. The disallowance of remuneration to partners for impugned assessment year therefore, stands deleted - Appeal of the assessee allowed in part.
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