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2023 (4) TMI 942 - AT - Income TaxAccrual of income in the hands of dissolved partnership firm - Interest accrued for the period subsequent to dissolution - AR submitted that interest cannot be assessed in the hands of the assessee being a partnership firm which dissolved - HELD THAT:- Form 26AS reflects the receipt of interest by the assessee firm from ING Vysya Bank Ltd. on which the bank has deducted tax at source. It shows that the bank has credited the entire amount of interest of the year in the account of the assessee partnership firm in whose name the accounts stand in the books of the bank. CIT(A) has recorded a finding of fact that the fixed deposit in the bank continued in the name of the firm and interest income was received for the entire previous year and utilised by the firm. This finding has not been controverted by the Ld. AR. Section 189 mandates that where a firm is dissolved the AO shall make an assessment of the total income of the firm as if no such dissolution had taken place and all the provisions of the Act including the provisions relating to levy of a penalty or any other sum chargeable under any provisions of this Act shall apply to such assessment. It is thus obvious that section 189 keeps the firm alive for the purposes of assessment despite its dissolution. It ensures that the firm which is dissolved does not escape the liability to tax after its dissolution - No substance in the argument of the Ld. AR that the entire amount of interest received by the firm during the previous year cannot be assessed in the hands of the assessee firm - Decided against assessee. Assessment u/s 153A - Search under section 132 - whether no incriminating material has been found/seized during search? - AR did not advance any arguments in order to refute the findings of the Ld. CIT(A). It is not in dispute that the assessee had not filed its original return for AY 2016-17 under section 139(1) of the Act leading to the legitimate legal inference that the entire income pertaining to AY 2016-17 would be regarded as undisclosed income in a case where search under section 132 of the Act has been conducted. In such a scenario, in our view the CIT(A) has rightly held that the Ld. AO would get the jurisdiction to assess the entire income similar to that in regular assessment u/s 143(3) of the Act as assessment for AY 2016-17 is unabated. We endorse the finding of the Ld. CIT(A) and decide ground No. 1 against the assessee.
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