TMI Blog2018 (10) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... tended by him that due date for filing of income-tax return cannot be 15th October, 2010. In our considered opinion, AO has rightly invoked section 154 because the assessee wanted to take benefit of the notification issued by the CBDT. In the present case, as per judicial precedents, the HUF itself cannot become a partner in the partnership firm and as such the HUF can also not be a working partner in partnership firm as defined u/s. 40(b) Expln. 4 of the IT Act. The due date of filing of IT return will be 31st July and in the given case, the assessee has filed his return on 01.10.2010 which has been later on revised and claimed deduction u/s. 80C of ₹ 1 lakh which was accepted by the Assessing Officer in the original assessment proceedings. The return cannot be revised because the assessee had filed belated return. Therefore, there was a mistake apparent from the record. Accordingly, this issue is rejected. Disallowance of deduction claimed u/s. 80C - Held that:- Assessing Officer is always required to assess correct income of the assessee even if the claim was not made in the original return. For this, he has referred to CBDT circular No. 14 dated 11.04.1955 and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alternative claim of the assessee that as per the Board Circular No. 14 dated 11.4.1955 and much precedents in favour of the assessee, any claim permissible under law can be made even during the course of assessment proceedings without filing a revised return. The AO is to assess the correct income as per the provisions of the Act even if a claim permissible under the Act is not made in the return. As such non allowance of the claim of the assessee u/s 80C is based on erroneous views and / or non-appreciation of the facts and law involved. The claim of the assessee deserves to be allowed. 6. That the interest charged u/s 234B 234C of ₹ 13104 and ₹ 11007/- respectively is incorrect. 7. That the grounds of Appeal as herein are without prejudice to each other. 2. From the above grounds, it is clear that the sole issue involved in this appeal is regarding disallowance of deduction claimed u/s. 80C of ₹ 1 lakh made by the assessee. 3. The brief facts of the case are that the assessee filed return of income declaring income of ₹ 36,69,790/- on 01.10.2010. Subsequently, the assessee filed revised return of income on 20.11.2011 claiming deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT. 4. The ld. AR of the assessee submitted a written synopsis, which is as under : GROUND NO. 1 2. This ground relates to validity of the order u/s 154 of the Act confirmed by the Ld. CIT(A) by disregarding the fact that there is no mistake apparent from record capable of being rectified u/s 154 of the Act in this case and as such too the disallowance as made in the order under appeal is unlawful. SUBMISSION 3. At the outset it is submitted that in the present case, there is no mistake apparent from record capable of being rectified u/s 154 of the Act and as such the disallowance as made in the order under appeal is unlawful. Section 154 of the Income-tax Act provides for rectification of mistakes, which are apparent from the record. The phraseology mistake apparent from the record has been considered by several judicial opinions and all those judicial opinions uniformly held that an error, which is not self-evident, and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of the record. There is a clear distinction between an erroneous order and an error apparent on the face of the record, while the first could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee being an HUF cannot be a working partner in the firm and accordingly the due date of filing the return cannot be that applicable to firm where accounts are required to be audited. Further, the Ld. A.O. has erred in relying upon the definition of working partner as defined in explanation 4 of clause (b) of section 40 in context of section 139(1). Further the said definition of Working Partner is only for the purpose of Section 40(b) only and the same cannot be used in context of Section 139(1) for the purpose of determining Due Date of filing of return of income. 5.1 Mr. Ajay Kumar Gupta is Karta of the assessee HUF, Sh. Ajay Kumar Gupta (HUF). As borne out from the partnership deed, Sh. Ajay Kumar Gupta, an individual, is a partner in the firm, M/S Arushi Exports in his representative capacity as Karta of Ajay Kumar Gupta (HUF). Ajay Kumar Gupta HUF as such is not a partner in the firm. The assessee HUF is represented by its karta who is an individual and is involved in the conduct of the business of the firm. 5.2 Explanation-4 to section 40(b) as mentioned in the audit objection is only for the purpose of section 40(b) where salary is paid to the working p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashed. GROUND NO. 5 6. This ground relate to disallowance of ₹ 1,00,000/- being the amount of deduction claimed u/s 80C by way of revised return. The said disallowance has been made by the Ld. AO on the ground that the same was not permissible under law because the 6. This ground relate to disallowance of ₹ 1,00,000/- being the amount of deduction claimed u/s 80C by way of revised return. The said disallowance has been made by the Ld. AO on the ground that the same was not permissible under law because the same was not claimed in the original return and was claimed by way of revised return which is invalid return. SUBMISSIONS 6.1 As submitted in Para 5 above, the original return is not a belated return and the revised return filed by the assessee is a valid return. Accordingly, the deduction claimed u/s 80C of ₹ 1,00,000/- as per the revised return and allowed as per the order u/s 143(3) is in accordance with law. Disallowance thereof as made as per the order u/s 154 is unmerited and the same deserves to be deleted. 6.2 Without prejudice to the above, it is submitted that the claim of the assessee u/s 80C of ₹ 1 Lac on account of premium pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form for claim under section 80-IB. There was no requirement for filing any revised return. 6.4 In any case, as per the decision of the Apex Court in the case of Goetze (India) and various decisions of other High Courts, if claim is not made before the assessing officer, it can be made before appellate authorities. As such, we request your goodself to kindly consider and allow the appellant s additional claim of deduction u/s 80C which was inadvertently could not be claimed in the income tax return due to non-availability of the documents at the time of filing return. In view of the above, disallowance of deduction u/s 80C vide order u/s 154/143(3) is unlawful and deserves to be deleted. The assessee is duly entitled for the deduction u/s 80C as explained above. Ground No. 6 relates to charging of interest which is incorrect. 5. On the other hand, the ld. DR relied on the order of the lower authorities and submitted that the lower authorities are justified by holding that the HUF cannot become working partner as per provision of the Act. Therefore, the return filed by the assessee is a belated return as per section 139. In view of this return cannot be revised. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee partner, in a partnership, neither the HUF nor any member of the HUF can claim to be a partner or connected with the partnership through a nominee. 28. From the judgments cited above it stands established that an HUF as such cannot be a partner in a firm but it is competent to the manager or karta acting on behalf of the HUF to enter into a valid partnership with a stranger or with the karta of another family. From the above judgment, it is clear that the Hon ble Court has considered the earlier judgments and concluded that the HUF itself cannot become a working partner in the partnership firm. Therefore, there is no question for the HUF to become a working partner. 7. The due date of filing of return of income will be 31st July of the relevant assessment year as per section 139 of the Act and the due date for filing of return for working partner has been mentioned in Section 139(1) Explanation 2(iii). The benefit of extended date by the CBDT will not help the assessee as contended by him that due date for filing of income-tax return cannot be 15th October, 2010. 8. The next issue raised by the assessee is that the order passed u/s. 154 is not a mistake apparent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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