TMI Blog1981 (12) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 annas share. In his order made under s. 185(1)(b) of the Act on March 16, 1970, the ITO found that the assessee-firm had not carried on any business in the status of the firm and the business actually belonged to Deo Prakash Gupta. As such the proceedings in the case of the firm were filed (sic). The income shown in the return filed by the firm was to be considered in the case of Deo Prakash Gupta in his individual capacity. Deo Prakash Gupta in his individual return, had disclosed an income of Rs. 20,100. However, the assessment was framed in his case on a total income of Rs. 48,801. In other words, the entire income of the assessee-firm was included in the case of Deo Prakash Gupta, individual. The assessee filed an appeal against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings did not suffer from any legal defect. The assessee then took up the matter in further appeal before the Appellate Tribunal, The Appellate Tribunal on a consideration of the provisions contained in s. 150(1) read with Expln. 3 to sub-s. (3) of s. 153 posed the question as to whether in the instant case the AAC can be said to have allowed the assessee-firm an opportunity of hearing while disposing of the appeal filed by Deo Prakash Gupta? The Tribunal found that technically no notice had been given to the assessee-firm, but since " it was the case of the firm itself that it was genuine and Sri Deo Prakash Gupta was 10 annas partner in the firm and the other partner was his son only, we are inclined to hold that the assessee-firm wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47, cl. (a) thereof not being attracted because it was not the case of the department that the assessee-firm had not disclosed fully and truly all material facts necessary for its assessment for the year under consideration. It is also not disputed that action under s. 147(b) in the instant case was barred by limitation. Limitation can be saved only if s. 150(1) read with s. 153(3)(ii), Expln. 3, is attracted to the case. We shall hence extract these provisions: " 150. (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revision under this Act. Similarly, sub-s. (3) of s. 153 provides for exceptional cases in which the time-limit laid down in subs. (1) for the completion of an assessment under s. 143 or s. 144 and the time-limit under sub-s. (2) for the completion of an assessment or reassessment under s. 147 do not apply. This provision is, however, subject to the provisions of sub-s. (2A). Explanation 3 to this sub-section embraces within its scope persons other than the assessee as well but lays down the condition that the third party should be given an opportunity of hearing before the order depriving him of the right of pleading limitation is passed. It was submitted before us by Sri R. K. Gulati that in the instant case the assessee-firm was not gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefits of the partnership. The expression " registered firm " has been defined in cl. (39) of this section to mean a firm registered under the provisions of cl. (a) of sub-s. (1) of s. 185 or under that provision read with sub-s. (7) of s. 184. Thus, though under the general law a firm is not legal person or juridical entity, but for the purposes of this Act a firm is treated as an entity distinct from the persons who constitute the firm : [See CIT v. Kirkend Coal Company [1969] 74 ITR 67 (SC)]. Therefore, in the case of Deo Prakash Gupta before making an order that a part of the income which had been assessed in his case was the income of the assessee-firm, it was necessary to give an opportunity of a hearing to the assessee-firm. Admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to proceed against the individual partners under the second proviso to s. 34(3) of the Indian I.T. Act, 1922, and consider the assessability or otherwise of the part or whole of their investments in the firm. On the basis of that direction the officer reopened the assessment of the partners and assessed the amounts in their hands as income from undisclosed sources. The AAC, on appeal, held that the direction in the firm's appeal was not valid and hence the proceedings of the officer were time barred. The Tribunal agreed with that view. On a reference, the Mysore High Court upheld that view and observed that even Expln. 3 to s. 153(3) cannot assist the department as the AAC had not recorded a finding that the sum which was excluded from th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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