TMI Blog2019 (7) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of notice u/s.142(1) of the act i.e. dated 5.2.2015. Hence, the assessment should be framed by invoking the provisions of section 144 of the Act - Thus on non-compliance to notice u/s.142(1) dated 5.2.2015 of the Act by the assessee Assessing Officer was compelled to take recourse of provisions of section 144 in framing assessment under best judgement assessment. Assessing Officer was right in framing assessment order u/s.144 and in denying allowance of interest and salary paid to the partners by taking support of provisions of section 184(5). Hence, the sole ground of the assessee being devoid of merits is dismissed. - Decided against assessee. - ITA No.325/CTK/2017 - - - Dated:- 2-5-2019 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For The Assessee : Shri P.K.Mishra, AR For The Revenue : Shri Subhendu Dutta, DR ORDER This is an appeal filed by the assessee against the order of the Commissioner of Income Tax(Appeals)-2, Bhubaneswar dated 23.5.2017 for the assessment year 2009-2010. 2. The assessee has raised the following grounds of appeal: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No return of income was furnished in response to notice u/s.148 of the Act but the reopening was challenged by the assessee. Subsequently, notices u/s.142(1) of the Act were issued on various dates. It is observed that in some dates there was partial compliance and in some cases, there was no compliance by the assessee. Therefore, the Assessing Officer passed order u/s.147 r.w.s 144 of the Act on 2.3.2015 determining the total income at ₹ 6,25,330/- 6. On appeal before the CIT(A), the assessee also partially complied the notices and in some other dates, no compliance was made. Before the CIT(A), it was the contention of the assessee that the AO should have allowed salary and interest paid to partners for determining the income of the assessee. However, the CIT(A) was of the view that u/s.184(5) of the Act, the assessee is not entitled for deduction by way of any payment of interest, salary, bonus, commission or remuneration by whatever name called made by the firm to the partner, if the assessment order is passed as a result of failure of the assessee as mentioned in section 144 of the Act. Hence, he confirmed the action of the Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 144 - Best judgement assessment ( 1) If any person- ( a) fails to make the return required under sub-section (1) of section 139] and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section; or ( b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 1504[or fails to comply with a direction issued under sub-section (2A) of that section], or ( c) having made a return, fails to comply with all the terms of a notice issued under subsection (2) of section 143, The Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment] of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment : Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure as is mentioned in section 144, the firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income . This provision comes into play only when the assessment is framed under section 144 only as a result of the assessee s committing any such failure as is contemplated under section 144. However, in a situation in which the assessment is completed in the manner as prescribed in section 144 but such a course of action has been adopted because of the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee , referred to in section 145(3), clearly the disabling provisions of Section 184(5) do not come into play. 11. Clause (b) of sub-section(1) of Section 144 of the Income tax Act, 1961 provides that when the assessee fails to comply with all the terms of notice issued under sub-section(1) of section 142 of the Act or fails to comply with the direction issued under subsection( 2A) of that section, then the AO is empowered to frame the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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