TMI Blog2001 (11) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, relevant to the assessment years under consideration. It is claimed that each of them had equal share in the said venture. The IT Department conducted a search under s. 132 of the Act at the assessees' residential/business premises on 31st July, 1992, during the course of which certain incriminating documents, papers, maps, conveyance deeds showing large scale transaction in immovable property, development of residential colonies, etc. were found. The seized documents revealed that an agreement was entered into for purchasing of 8-1/2 acres of land at village Masudabad, Najafgarh Road, New Delhi, between the owner of the land on one hand as vendor and Janak Raj Chauhan, Jagdish Raj Chauhan and Smt. Sohagwanti on the other hand, as vendees. This land was developed into plots during the accounting periods, relevant to the asst. yrs. 1987-88, 1988-89 and 1989-90. It is apparent that Janak Raj Chauhan filed his return of income for the asst. yrs. 1987-88 and 1988-89 on 17th Dec., 1993, in response to the notices issued under ss. 147/148 of the Act. Similarly, Jagdish Raj Chauhan filed his returns of income in response to the notice under s. 148 on 27th Jan., 1993, for the asst. yrs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e three assessment years in respect of the profits of the said AOP. were made by the AO as under: Asst. yrs. Shares or profits in respect of Janak Raj Chauhan Smt. Sohagwanti Total 1987-88 2,95,548 2,95,548 5,91,096 1988-89 3,72,680 3,72,680 7,45,360 1989-90 33,072 33,072 66,144 4.1. For the assessment years under consideration, the AO framed the assessments under s. 143(3) in the status of individual. While framing the assessments, the AO also charged interest under ss. 139(8) and 215/217 of the Act. 5. When the matter was taken to the CIT(A) in appeal, by Jagdsih Raj Chauhan (Indl.), the learned CIT(A) following the ratio laid down by the Hon'ble Supreme Court in the case of ITO vs. Ch. Atchaiah accepted this contention of the assessee that income was earned by the AOP. and, therefore, the assessment has to be made in the hands of the AOP. alone. Accordingly, he directed the AO to initiate the proceedings for the assessment of the AOP. for the assessment years under consideration. The additions made by the AO were deleted. 5.1. Similarly, while dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. Accordingly, it was submitted that in view of the said circular the AO, who had exercised option by framing the assessment in the hands of the individual members, was precluded from the proceedings and thereupon framing assessment in the hands of the AOP. Ravish Sood, advocate, the learned counsel for the assessee, also referred to the decision of the Hon'ble Supreme Court in the case of ITO vs. Ch. Attchaiah and submitted that the Hon'ble Supreme Court reversing its earlier judgment in the case of State of Uttar Pradesh vs. Raza Buland Sugar Co. Ltd. (1979) 118 ITR 50 (SC) held that the AO was under an obligation to tax the right person and the right person alone, and therein if the income belonged to an AOP the same has to be taxed in the hands of the AOP alone, and the AO therefore, had no option to assess the same either in the hands of the AOP. or in the hands of the members. The aforesaid decision was delivered by the Hon'ble Supreme Court on 11th Dec., 1995. It was also brought to our notice that when the members of the AOP came to know about the aforementioned proposition of law, they voluntarily filed an application on 5th Aug., 1996, to the AO and requested him that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel for the assessee. In support of the above contentions, reliance was placed on the decision of the Hon'ble Karnataka High Court in the case of S. Govindaraju vs. CIT (1981) 25 CTR (Kar) 340 : (1982) 138 ITR 495 (Kar) and of the Hon'ble Andhra Pradesh High Court in the case of Ambica Chemical Products vs. ITO (1991) 191 ITR 382 (AP). In view of the above, it was submitted that interest under ss. 139(8) and 215/217 of the Act was not leviable on the assessee-AOP. Alternatively, it was contended that the AO was not justified in levying interest under ss. 139(8) and 215/217 of the Act without affording any opportunity to the assessee of being heard in the matter. 9.2. S.C. Pahwa, the learned Departmental Representative strongly supported the orders of the authorities below. He further submitted that the assessee has filed the return in the status of AOP, which was late and, therefore, the AO was justified in levying the interest under s. 139(8) of the Act. Similarly, the interest under s. 215/217 of the Act has rightly been levied by the AO, submitted the learned Departmental Representative. 9.3. We have carefully considered the rival submissions and have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also made under s. 143(3) of the Act, and against the orders of the AO, the assessees filed appeals before the CIT(A), Jalandhar. It is clear that the CIT(A), Jalandhar disposed of the appeals on 20th June, 1997, and 27th June, 1997. The learned CIT(A) directed the AO to assess the income arising out of the purchase/sale of agricultural land at village Masudabad, New Delhi, in the hands of the AOP alone. It seems that the learned CIT(A) has decided the appeals keeping in view the judgment of the Hon'ble Supreme Court in the case of Ch. Attchaiah. An application was moved by the individual members on 5th Aug., 1996, to the AO, who was having jurisdiction in their cases and requested him that in view of the judgment of the Hon'ble Supreme Court the income from the 'venture' of sale of agricultural land of village Masudabad, New Delhi, may be assessed in the hands of the AOP independent of individual members. In view of the decision of the Hon'ble Supreme Court in the case of Ch. Attchaiah, the AO issued notice under s. 148 to the assessee. In the case of Ch. Attchaiah the Hon'ble Supreme Court has held that if it is the income of the AOP in law, the AOP alone has to be taxed, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the said income had already been assessed in the hands of the individual members. In our view, there is merit in this contention of the learned counsel for the assessee that the AOP cannot be made liable for chargeability of interest under ss. 139(8) and 215/217 of the Act on the ground that it has failed to anticipate the said subsequent judgment of the Hon'ble Supreme Court. Accordingly, the order of the CIT(A) is against the law and is liable to be reversed. 9.8. In the case of Bharat Conductors (P) Ltd. vs. CIT (1999) 154 CTR (Kar) 535 : (1999) 238 ITR 89 (Kar), wherein it has been held that "If for any reason the law is amended retrospectively creating liability of tax then, it would be sufficient cause for not charging interest under s. 139(8) of the IT Act, 1961." It was also held by the Hon'ble Karnataka High Court that "Interest under s. 217 of the Act on the same reasoning was also to be waived in respect of the income derived by the assessee on sale of import entitlement which was made taxable because of retrospective amendment by the Finance Act, 1990." 9.9. In view of the above, it is clear that no interest under ss. 139(8) and 215/217 of the Act ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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