TMI Blog1982 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... nership firm and seized several documents therefrom. According to the Department, these documents indicated suppression of income by the partnership firm for the year ended March 31, 1960. Following the search and seizure as aforesaid, the ITO reopened the assessment of the firm for the assessment year 1960-61 under s. 147 of the I.T. Act, 1961. A notice for reopening the assessment was issued under s. 148 of the Act on the remaining partners of the firm as well as on the assessee as a retired partner thereof. In response to the notice under s. 148, the assessee represented that since he had ceased to be partner and was not in possession of any of the account books, papers or other materials of the partnership firm, he was not in a position to submit any return as called for the assessment year 1960-61 pursuant to the reopening of the proceedings under s. 147. He, accordingly, referred the ITO to seek for necessary materials from the other partners of the firm. As for the remaining partners, they participated in the reassessment proceedings. Ultimately the reassessment was made on the firm fixing the total income for the year ended March 31, 1960, as Rs. 85,049 as against Rs. 49,04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm it is found (a) on the assessment or reassessment of the firm ....... that the share of the partner in the income of the firm has not been included in the assessment of the partner, or, if included, is not correct, the Income-tax Officer may amend the order of assessment of the partner with a view to the inclusion of the share in the assessment or the correction thereof, as the case may be ; and the provisions of section 154 shall, so far as may be, apply thereto ........" This provision enables the ITO to amend or revise a determination of the share income of a partner consequent upon a reassessment of the firm in cases where the original determination of the share income follows the original assessment of the firm. This power conferred on the ITO has to be exercised in the same manner as the power of rectification which is exercisable by the ITO under s. 154. Section 154 provides that where as a result of rectification there is an enhancement of the assessment, such rectification can only be made after prior notice to the assessee concerned who would be affected by such rectification. In this case, it is not denied that the assessee was given notice of the revision of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO additional power to make an assessment oil escaped income-income which was not brought to his notice in the original assessment. There is, therefore, no need to refer specially to the provisions of s. 147 wherever it is intended to cover not merely the original assessment proceedings but also the reassessment proceedings. The fact that the Legislature has made special reference to s. 147 in the context of s. 159 does not mean that we will have to read the provisions of s. 187 in a different manner for lack of reference to s. 147 in that provision. The Tribunal in its order had held that s. 187 is large enough in its scope to take in not only an original assessment under s. 143 but also reassessment proceedings against a firm under s. 147 of the Act and the same consequences will flow following the reassessment of the firm as they flow following an original assessment on it. We feel that this is the correct view of s. 147 of the Act for reasons which we have discussed above. This disposes of the first question of law which has been referred to us. Our answer, shortly stated, is in favour of the Revenue and against the assessee. The second question of law raises a point about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is open to the assessee to deny his liability for an enhanced assessment on any ground which is open to him, other than those which pertain to the determination of the total income of the firm and the allocation as between the several partners of the firm. The reference to s. 187 by the Tribunal as a technical objection to the entertainment of the assessee's grounds of appeal was, therefore, wholly misplaced. Our answer to this question of law is, therefore, against the Department and in favour of the assessee. It only remains for us to deal with one further submission made by Mr. Balakrishnan in the course of his arguments. He urged that in the reassessment proceedings in which the remaining partners participated, an assessment order was finally rendered by the ITO as a matter of compromise between the Department and the remaining partners concerned. According to learned counsel, since the assessee was not a participant in the reassessment proceedings and was not a party to the compromise or settlement with the Department, the enhancement of his share of income will not be binding on him. Learned counsel referred to s. 19(2)(e) of the Indian Partnership Act, 1932. This prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of a retiring partner following the reassessment of the firm. The crucial ruling given by the court on that case is to be found in the following words (p. 368): It is not in dispute that under this provision (section 155(1)), if the petitioner has continued to be a partner of the firm and the assessment of the firm was a subject of reassessment under section 447, the assessment of the petitioner could be amended or revised. The petitioner's contention is that his assessment as a partner could not be reopened after his retirement even when there is a reassessment of the firm. We are unable to agree with this contention of the petitioner ...... The reassessment proceedings also could, therefore, be initiated in respect of a firm in which there has been change in the constitution of a firm or where the firm is dissolved or discontinued at the time when the proceedings were initiated ...... On a plain reading of section 187, therefore, the reassessment could be made on the reconstituted firm and if the firm's reassessment relates to an accounting period in which the petitioner had continued as a partner of the partnership firm, his assessment could be corrected or amended in r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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