TMI Blog1984 (5) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the Income-tax Officer could be said to be erroneous and prejudicial to the interests of the Revenue inasmuch as the ITO failed to add the sum of Rs. 40,750 in the assessment of the firm accepting the surrender made by the partners, particularly having regard to the provisions contained in section 68 of the I.T. Act ? B. IN THE CASE OF EACH OF THE PARTNERS: Whether, on the facts and in the circumstances of the case, the assessment order dated July 18, 1968, could be said to be erroneous and prejudicial to the interests of the Revenue, because the ITO failed to initiate penalty proceedings under sections 273 and 271(1)(c) while completing the assessment ? The facts of the case were as follows: The Income-tax Officer computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to him, an explanation should have been called for the balance and penalty proceedings initiated. And further, as no estimate of advance tax had been filed, action should have been taken for imposing penalty under section 273 and charging penal interest under section 217. As a result, the order was set aside and the Income-tax Officer was directed to make a fresh assessment, after giving due opportunity to the assessee. Orders were passed in respect of all the three assessees. The firm as well as the two partners filed separate appeals which were disposed of together. The conclusions of the Tribunal on the points raised before it were as follows. After analysing the accounts, it was held that though the order of the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, there is one important aspect of this case. Shri R. L. Kapoor had a share of 75 per cent. and Shri S. N. Sood had a share of 25 per cent. If the amount is taxed in the hands of the firm, then the share of Shri S. N. Sood would not be 25 per cent. but would be only 25 per cent. of Rs. 40,750, which is about Rs. 10,000 and the share of Shri R. L. Kapoor would be 75 per cent. which would be about Rs. 30,000 instead of Rs. 15,750. When the true picture was explained to the Income-tax Officer, we think that he was right in adding the income to the persons to whom it belonged rather than to tax the wrong person on the wrong amount. So, the answer to the first question has to be in the negative in the sense that the order is not erroneou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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