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1987 (6) TMI 74 - AT - Income Tax

Issues:
Jurisdiction of Income-tax Officer to rectify assessment order of a partner based on firm's assessed income during Settlement Commission proceedings.

Analysis:

The appeal before the Appellate Tribunal concerned the assessment year 1975-76 involving the assessee, a partner in a firm, M/s. S. P. Builders, Bombay. The Income-tax Officer rectified the assessee's original assessment order to include the share of profits from the firm, despite the firm's application pending before the Settlement Commission. The assessee contended that the Settlement Commission would have exclusive jurisdiction once the firm's case was admitted, preventing the Income-tax Officer from making such rectifications. The Commissioner of Income-tax (Appeals) rejected this argument, leading to the current appeal.

The Tribunal deliberated on the jurisdictional issue, focusing on the provisions of the Income-tax Act. Section 245 C allows an assessee to apply before the Settlement Commission. Section 245 F outlines the exclusive jurisdiction of the Settlement Commission upon allowing an application to proceed. However, the Tribunal emphasized that the right to apply is granted to the assessee, and in this case, the firm, not the individual partner, had made the application. Therefore, the Settlement Commission's jurisdiction was limited to the firm's case, not extending to the partners individually.

The Tribunal clarified that the Income-tax Officer was justified in rectifying the assessment order based on the firm's assessed income, even during the Settlement Commission proceedings. It was deemed legal for the Officer to include the partner's share in the firm's profits, with the possibility of rectification once the firm's income was finally determined by the Settlement Commission. The Tribunal dismissed the appeal, affirming the Commissioner of Income-tax (Appeals) decision.

In conclusion, the Tribunal upheld the Income-tax Officer's jurisdiction to rectify the partner's assessment order based on the firm's income, even when the firm's case was under consideration by the Settlement Commission. The Settlement Commission's exclusive jurisdiction applies to the assessee who makes the application, which in this case was the firm, not the individual partner. The Tribunal found no legal infirmity in the actions of the Income-tax Officer and upheld the dismissal of the appeal.

 

 

 

 

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