9911796707
TMI Blog1999 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... oved by B.J. Desai and Sons, by which, directions with regard to tax payable were given. In paragraph 25 it is observed that the Income-tax Officer will issue a demand notice and also revise the assessment of partners so far as it covers the share income from the applicant firm. Tax payable by the applicant and the partners will be paid in eight quarterly instalments, the first instalment starting after 35 days of service of demand notice. Interest under section 220(2) of the Income-tax Act was to be charged from the firm as well as the partners with the last quarterly instalments. It was also observed that the settlement shall be declared void if either on a report received from the Department or otherwise, it is subsequently found by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order that the terms of settlement are set out and that the settlement is effective in accordance with the provisions of section 245D(6). The settlement cannot be considered to be effective unless consequential effect is given in the case of partners and for that reason, the petition was dismissed. Against these proceedings, the petitioner has come up before this court. Learned counsel for the petitioner submitted that a Division Bench of this court in the case of CIT v. A.V. Venkatakeshava Shetty (I. T. R. C. Nos. 137 to 142 of 1994 decided on June 14, 1996) observed that fixing the liability of the partner by rectifying the assessment order under section 155 consequent to the enhancement of tax liability of the firm in pursuance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In other words, it is an opportunity to surrender and to have the matter settled through the Settlement Commission. The decision of the Settlement Commission is made final and conclusive by section 245-I of the Income-tax Act, 1961. Section 245L declares all proceedings before the Settlement Commission to be judicial proceedings. The provision for settlement would show that it is in the nature of statutory arbitration to which a person may submit himself voluntarily. A contention was raised by learned standing counsel for the Department that the Settlement Commission has granted registration to the firm under section 184 only with the understanding that the partners will also be made liable to pay tax in respect of their share of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, but during the relevant time, since the partners were not before the Settlement Commission no orders could have been passed against the partners. If it is also necessary to pass an order against the partners, then it is also necessary to hear them by the Settlement Commission. Nothing has come on record that the partners were heard or they have moved the Settlement Commission, fixing their liability or even the Commissioner of Income-tax in his report referred to the liability of the partners. Since the amendment of section 155(2)(c) was not considered to be procedural or retrospective in its application by the Division Bench of this court, the Settlement Commission could not have directed to fix the liability of the partners. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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