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TMI Blog2001 (8) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... all these appeals, as noted above, are partners, approached the Settlement Commission with an application under section 245C on 25-5-1984, and the Settlement Commission disposed of the same by its order under section 245D(1) dated 3-6-1992. After determining the income of the assessee-firm, M/s. Meera Industries, the Commission had allocated the total income of the firm after firm's tax, among the partners under section 158, which for the assessment year 1984-85 read as under : 'ALLOCATION ------------------------------------------------------------------------- Sl Name of partner %of Share of Interest Total No. share Profit --------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 4,56,229 . . . . ." ------------------------------------------------------------------------- Similar allocation of income among the partners for other years was also made by the Settlement Commission. 3. Thereupon, the Assessing Officer passed orders under section 155 in the cases of the respective partners, enhancing their share incomes from the firm. Subsequently, the Assessing Officer rectified the orders under section 155 on the ground that the assessee-partners were liable to pay interest under section 245D(6A) of the Act, and by mistake the same was not charged while revising the incomes of the assessees under section 155 of the Act. The assessees objected to the proposals for rectification on the ground that the party who approached the Settlement Commission under section 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was decided in favour of the assessees by the CIT(A) in the cases of the two assessees before him, a contrary fate awaited the cases of other set of partners, whose appeals went before the Dy. Commissioner (Appeals). The Dy. Commissioner (Appeals) referred to the order of the CIT(A), but preferred to take a contrary view in the matter. Her observations in the 'Case of one of the partners, viz, Shri Vinod K. Desai, in her order dated 23-12-1996 are extracted below - '. . . I beg to differ from the decision taken by the Commissioner of Income-tax (Appeals)-II, relied upon by the appellant. A firm is a compendium of partners, and the partners are jointly and severally responsible for all activities undertaken by a Firm, as well as its statutory obligations. The interest in the impugned case has been charged on the appellant's share only, for which the appellant is individually responsible by virtue of being a partner in the Regd. Firm M/s. Meera Industries. Therefore, if the Firm has filed an application before the Settlement Commission, and if the Firm is obliged to pay interest under section 245D(6), it is imperative that the partners should pay such interest similarly on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners in terms of section 155 therein. So, there is no reason for them to dispute the charging of interest under section 245D(6A), which is only consequential, according to him. It is also mentioned that in its application before the Settlement Commission, the firm M/s. Meera Industries, made the following prayer - 'the Hon'ble Commission would be pleased, not to impose any penalty or any other liabilities on the applicant and the partners under the Income-tax Act, in respect of the aforementioned assessment years and also grant immunity to it and its partners from prosecution for any offence that might be alleged to have been committed under the Income tax Act, 1961 or any other Central Act for the time being in force.' In the light of the above prayer made before the Settlement Commission, it is pleaded that as the firm pleaded for immunity for its partners also, the partners are liable to pay interest under section 245D(6A) as a natural consequence of the order of the Commission. 7. The learned counsel for the assessee on the other hand, pleaded that it is settled law that the firm and partners are separate assessable entities under Income-tax Act, and it is also accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee shall be liable to pay simple interest at fifteen per cent per annum on the amount remaining unpaid from the date of expiry of the period of thirty-five days aforesaid. (7) ............... It may be observed that the provision comes into picture when the tax payable in terms of and in pursuance of an order under section 245 is not paid by the assessee within 35 days of the receipt of the copy of the order by him. Admittedly, the assessee before the Settlement Commission is the firm, M/s. Meera Industries, and the order under section 245D(4) passed by the Commission is received by the firm only. Even if the order is received by one of the partners, it is received by him only on behalf of the firm and not in his individual capacity as a partner of the firm. Under section 245C, an assessee may approach the Settlement Commission at any stage of the case relating to him by an application in the prescribed form . In the present cases, the application in the prescribed form is made by the firm, M/ s. Meera Industries and not by the individual partners who are distinct assessable entities under the Scheme of the Income-tax Act. The partners conceivably can have other income a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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