1984 (2) TMI 135 - AT - Income Tax

Summary

Issues:
1. Assessment made by the ITO in the status of an unregistered firm.
2. Default of statutory notices under section 143(2) of the Act.
3. Treatment of cash deposits as income from undisclosed sources.
4. Registration of the assessee-firm under Form No. 11.
5. Jurisdiction of the AAC to decide on matters under section 146.
6. Time limit for the ITO to pass an order under section 146.
7. Applicability of the order under section 146 on the assessment appeal.
8. Duty of the ITO to pass an order on the assessee's application under section 146.
9. Scope of the AAC's authority in an appeal against an assessment order.

Analysis:
1. The appeal was filed against the assessment order made by the ITO in the status of an unregistered firm. The assessment included an estimation of business income and additional income from undisclosed sources due to unexplained cash deposits.

2. The AAC determined that the default of statutory notices under section 143(2) was without reasonable cause, justifying the ex parte assessment under section 144. However, the treatment of cash deposits as undisclosed income was upheld.

3. Regarding the registration of the assessee-firm, the AAC directed the ITO to examine the genuineness of the firm and decide the assessment status in accordance with section 185(5) of the Act.

4. The assessee's counsel argued that the AAC exceeded jurisdiction by deciding on matters that should be addressed in an appeal under section 146. It was contended that the AAC should have awaited the ITO's decision on the application under section 146 before proceeding with the assessment appeal.

5. The departmental representative highlighted the time limit of 90 days for the ITO to pass an order under section 146. Since no order was issued within this period, it was presumed that the application was rejected, justifying the AAC's decision.

6. The Tribunal referenced past judgments regarding time limits for decisions by tax authorities, emphasizing that the failure to meet statutory deadlines does not extinguish the right of the assessee to have the matter adjudicated.

7. It was emphasized that the AAC's role in an assessment appeal is limited to disputes regarding the total income assessed, tax amount, or assessment status. Matters related to the validity of the assessment under section 144 should be addressed in an order under section 146.

8. Considering the arguments presented, the Tribunal set aside the AAC's order and restored the appeal for a fresh decision, emphasizing the need for proper sequencing of appeals related to assessment and section 146 orders.

9. The appeal was partially allowed, indicating a need for a reevaluation of the issues raised in light of the proper procedural requirements and legal considerations.