TMI Blog2000 (4) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... se--- (i) the Tribunal is right in law in holding that the Assessing Officer has exceeded the jurisdiction under section 143(1)(a) while changing the status of the assessee to association of persons which could be done under section 185 only at the time of assessment ? (ii) Is not an order under section 143(1)(a) an assessment ? 3. Whether, on the facts and in the circumstances of the case and in the light of section 139(1) read with section 185 cannot change in the status from that of firm in the return to that of an association of persons be had in an order under section 143(1)(a) ?" As requested by the parties, the questions were reframed and consolidated to read as follows : "Whether, on the facts and in the circumstances of the case, the Assessing Officer can change the status of an assessee to 'association of persons' (in short 'AOP') which can be done under section 185 of the Income-tax Act, 1961, at the time of assessment, while passing an order under section 143(1)(a) of the Act ?" The factual position is undisputed and is essentially as follows : The assessee is a partnership firm carrying on business in hardware and paints. For the assessment year 1995-96, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was made either under section 143(3) or under section 144, it could not be done while processing the return of income under section 143(1)(a). The Revenue's stand, on the contrary, was that since there has been non-compliance with the requirements of section 184(4), the adjustment done was in order. The Tribunal observed that the course adopted by the Assessing Officer as upheld by the Commissioner of Income-tax (Appeals) was not proper. Its conclusion was that the adjustment envisaged under section 143(1)(a) did not encompass change of status. Learned counsel for the Revenue submitted that the specific provisions contained in sections 184 and 185 read together indicate the mandatory nature of the requirement and since the assessee had failed to comply with the provisions of section 184, the Assessing Officer had no alternative but to treat the status of the firm as an association of persons. The order under section 143(1)(a) is an assessment order and, therefore, the Tribunal was not justified. Learned counsel for the assessee, on the other hand, supported the order of the Tribunal submitting that the true parameter of section 143(1)(a) has been kept in view. In order to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation may, subject to the provisions of this section, be made either during the existence of the firm or after its dissolution, (3) The application shall be made to the Assessing Officer having jurisdiction to assess the firm, and shall be signed (a) by all the partners (not being minors) personally ; or (b) in the case of a dissolved firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased. Explanation.---In the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf, or, as the case may be, by a person entitled under law to represent him. (4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought : Provided that the Assessing Officer may entertain an application made after the end of the previous year, if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year. (5) The application shall be accompanied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it only provides for proper recovery of tax or interest due from the assessee on the basis of the return. Clause (a) of section 143(1) of the substituted provision provides that after a return has been filed under section 139 or in response to notice under section 142(1), the following actions can be taken : (1) if any tax or interest is found due on the basis of the return, after adjustment of pre-paid tax, an intimation shall be sent to the assessee specifying the amounts so payable and such intimation shall be deemed to be a notice of demand ; and (2) if any refund is due it shall be granted to the assessee. The first proviso to clause (a) of sub-section (1) enables the Department to make the following adjustments to the return of income for the purpose of computing tax or interest payable or refundable to the assessee : (1) rectification of arithmetical errors in the return or in the accompanying accounts or documents ; and (2) allowance or disallowance of any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return or the accompanying accounts or documents, is prima facie admissible or inadmissible, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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