TMI Blog2019 (12) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act lay down the procedure for the assessment in case of a partnership firm. Sub section (5) of section 184 of the Act, which begins with a non obstante clause, makes it clear that in a case where the assessment is completed under section 144 of the Act for any such failure on the part of the firm as mentioned in the said provision, assessment has to be made without allowing any deduction by way of payment of interest, salary, bonus, commission or remuneration, etc., to any partner. Thus, once the assessment is completed under section 144 of the Act, the provision of section 184(5) of the Act gets triggered automatically and it will override all other provisions of the Act. In the facts of the present case, by the very reason of the Assessing Officer completing assessment under section 144 of the Act, the provision of section 184(5) would automatically come into play. However, while completing the assessment, the Assessing Officer completely overlooking the provisions of section 184(5) of the Act has allowed deduction on account of interest / remuneration paid to partners - In the facts of the present case, the failure on the part of the Assessing Officer to apply or at l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas, it failed to furnish other information called for by the Assessing Officer. Due to failure on the part of the assessee in furnishing the required details, the Assessing Officer proceeded to complete the assessment under section 144 r/w section 147 of the Act, to the best of his judgment, vide order dated 12th February 2016, determining the income at ₹ 4,03,980. Subsequently, learned Principal Commission, in exercise of power conferred under section 263 of the Act, called for the assessment records for examination. After examining the assessment records, he found that, though, the Assessing Officer completed the assessment under section 144 of the Act to the best of his judgment, however, he has wrongly allowed deduction towards interest and remuneration paid to partners totaling ₹ 6,67,153, completely overlooking the provisions of section 184(5) of the Act. Therefore, he issued a show cause notice to the assessee requiring it to explain as to why the assessment should not be revised under section 263 of the Act. After considering the submissions of the assessee in the context of facts and material on record, learned Principal Commission observed that when the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Mubarak Trading Co. v/s CIT, [2008] 174 Taxman 339 (Kar.); ii) Mas Properties Developers v/s ITO, [2014] 52 taxmann.com 22 (Bang.) (Trib.); iii) Vijay Vir Singh v/s ITO, [2014] 52 taxmann.com 462 (Agra); and iv) Bhagwat Prasad Sharma v/s JCIT, [2013] 38 taxmann.com 102 (Agra). 4. The learned Departmental Representative strongly relying upon the observations of learned Principal Commission submitted, once the Assessing Officer proceeds to invoke the provisions of section 144 of the Act and completes the assessment to the best of his judgment, it is mandatory on his part to give effect to the provision of section 184(5) of the Act. He submitted, section 184(5) of the Act makes it clear that in a case where the assessment is completed under section 144 of the Act, no deduction on account of payment of interest and remuneration to the partners can be allowed. He submitted, while completing the assessment, the Assessing Officer totally ignored to give effect to the provision of section 184(5) of the Act and erroneously allowed deduction on account of interest and salary payment to the partners. Thus, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , bonus, commission or remuneration, etc., to any partner. Thus, once the assessment is completed under section 144 of the Act, the provision of section 184(5) of the Act gets triggered automatically and it will override all other provisions of the Act. In the facts of the present case, by the very reason of the Assessing Officer completing assessment under section 144 of the Act, the provision of section 184(5) would automatically come into play. However, while completing the assessment, the Assessing Officer completely overlooking the provisions of section 184(5) of the Act has allowed deduction on account of interest / remuneration paid to partners. Even, the facts on record make it clear that the Assessing Officer has never examined the aspect of applicability of section 184(5) of the Act. Thus, there is a complete failure on the part of the Assessing Officer in making necessary enquiry with regard to the deduction claimed by the assessee qua the statutory provisions. At the cost of repetition, we must observe, in the present appeal we are not concerned with the validity of the assessment order passed under section 144 of the Act. We are only concerned with the v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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