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2019 (12) TMI 517 - ITAT MUMBAIRevision u/s 263 - AO allowed the deduction of interest and remuneration to partners while passing order u/s 144 ignoring the provisions of section 184 - Hawala Transactions - allegation that the assessee is a beneficiary of accommodation entries provided by some entities identified as hawala operators - in spite of the statutory notice issued under section 143(2) of the Act, the assessee neither appeared nor made any compliance - AO has completed the assessment invoking the provisions of section 144 of the Act, to the best of his judgment. Whether the assessment order passed is erroneous and prejudicial to the interests of Revenue due to non–application of the provision contained under section 184(5) of the Act while allowing interest / remuneration paid to the partners? HELD THAT:- In the facts of the present case, admittedly, the Assessing Officer has completed the assessment under section 144 of the Act to the best of his judgment alleging non–compliance to the statutory notices issued under section 142(1) and 143(2) of the Act. Provisions of section 184 of the Act lay down the procedure for the assessment in case of a partnership firm. Sub–section (5) of section 184 of the Act, which begins with a non–obstante clause, makes it clear that in a case where the assessment is completed under section 144 of the Act for any such failure on the part of the firm as mentioned in the said provision, assessment has to be made without allowing any deduction by way of payment of interest, salary, bonus, commission or remuneration, etc., to any partner. Thus, once the assessment is completed under section 144 of the Act, the provision of section 184(5) of the Act gets triggered automatically and it will override all other provisions of the Act. In the facts of the present case, by the very reason of the Assessing Officer completing assessment under section 144 of the Act, the provision of section 184(5) would automatically come into play. However, while completing the assessment, the Assessing Officer completely overlooking the provisions of section 184(5) of the Act has allowed deduction on account of interest / remuneration paid to partners - In the facts of the present case, the failure on the part of the Assessing Officer to apply or at least even examine the applicability of section 184(5) of the Act, certainly makes the assessment order erroneous and prejudicial to the interests of Revenue. Therefore, the exercise of power under section 263 of the Act to revise the assessment order is valid. Appeal dismissed.
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