2011 (3) TMI 1365 - HC - Income Tax

Whether the assessee was duty bound to file a certified copy of the partnership deed when there was no change in the constitution of the firm may thus, not be relevant, even though there was a change in constitution of the firm, with effect from April 1, 1992, in so far as two new partners joined the firm in place of three outgoing partners - During the course of assessment proceedings under section 143(3), it is also not disputed that the assessee has filed a copy of the partnership deed duly signed by the partners - Commissioner of Income-tax (Appeals) and the Tribunal concurrently came to the conclusion that there was no change in the constitution of the firm and the assessee had filed a copy of the partnership deed which was signed by all the partners. It was further recorded that the procedural requirement of the Act had been complied with and, therefore, the assessee was liable to be assessed in the capacity of a partnership firm, But the counsel has not been able to show any perversity in the said findings except trying to persuade this court to re-appraise the evidence. Finding no ground to interfere with the findings aforesaid, the substantial questions of law are answered against the Revenue. The appeals are accordingly dismissed

Issues:
1. Reconstruction of paper-book due to fire incident.
2. Disposal of two appeals with identical questions.
3. Appeal under section 260A of the Income-tax Act, 1961.
4. Determination of substantial questions of law.
5. Assessment proceedings and status of the assessee.
6. Disallowance and additions made by the Assessing Officer.
7. Order of the Commissioner of Income-tax (Appeals).
8. Tribunal's decision and affirmation of the Commissioner's order.
9. Assessment of the assessee as a partnership firm or an association of persons.

Analysis:

1. The paper-book of the case was burnt in a fire incident, leading to reconstruction with two copies provided by the appellant's counsel. The reconstructed paper-book was treated as valid.

2. Two appeals were disposed of together as they involved identical questions. The facts were taken from one of the appeals for reference.

3. An appeal was filed by the Revenue against the Tribunal's order related to the assessment year 1993-94 under section 260A of the Income-tax Act, 1961.

4. The substantial questions of law included issues regarding the partnership deed, change in the firm's constitution, and compliance with income tax provisions.

5. During assessment proceedings, the Assessing Officer found discrepancies in the partnership deed filing by the assessee, leading to disallowances and additions to the income returned.

6. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal, holding that the status as PFAS was valid, and deductions were permissible.

7. The Tribunal affirmed the Commissioner's order, dismissing the Revenue's appeal and upholding the assessee's status as a partnership firm.

8. After hearing both parties and reviewing the record, the court considered whether the assessee should be assessed as a partnership firm or an association of persons.

9. The Tribunal found that the assessee had complied with procedural requirements, filed the partnership deed, and was entitled to be treated as a partnership firm, rejecting the Revenue's contentions.

10. The Commissioner's and Tribunal's findings were upheld, concluding that there was no change in the firm's constitution, and the assessee was liable to be assessed as a partnership firm. The appeals were dismissed based on these findings.

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