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Issues Involved:
1. Liability of partners to pay interest under section 245D(6A) of the Income-tax Act. 2. Validity of rectification orders under section 154 of the Income-tax Act. Detailed Analysis: 1. Liability of Partners to Pay Interest under Section 245D(6A): The central issue in all seventeen appeals is whether the partners of M/s. Meera Industries are liable to pay interest under section 245D(6A) of the Income-tax Act following the Settlement Commission's order under section 245D(4). The firm, M/s. Meera Industries, approached the Settlement Commission, which allocated the firm's total income among the partners. The Assessing Officer subsequently passed orders under section 155, enhancing the partners' share incomes and later rectified these orders under section 154 to charge interest under section 245D(6A). The assessees contended that only the firm approached the Settlement Commission, not the individual partners, and thus, the partners should not be liable for interest under section 245D(6A). The Commissioner (Appeals) agreed with the assessees, holding that the order under section 245D(4) related only to the firm and not the individual partners, and thus, the partners could not be made liable for interest under section 245D(6A). This view was contested by the Revenue, which argued that the firm is a compendium of partners, and thus, the partners are jointly and severally responsible for the firm's statutory obligations, including interest under section 245D(6A). The Tribunal upheld the Commissioner (Appeals)'s view, stating that the partners were not appellants before the Settlement Commission and that the revision of share incomes was due to section 155, not the Settlement Commission's order. The Tribunal emphasized that section 245D(6A) applies to the assessee before the Commission, which was the firm, not the individual partners. Therefore, charging interest under section 245D(6A) to the partners was not valid. 2. Validity of Rectification Orders under Section 154:The second issue concerns the validity of the rectification orders under section 154, where the Assessing Officer charged interest under section 245D(6A) in the partners' assessments. The Commissioner (Appeals) held that the issue of charging interest under section 245D(6A) is controversial and beyond the scope of section 154, which is meant for rectifying mistakes apparent from the record. The Tribunal agreed, stating that the issue is indeed controversial and thus, not within the purview of section 154. In conclusion, the Tribunal dismissed the Revenue's appeals and allowed the assessees' appeals, setting aside the orders of the Dy. CIT(A) and deleting the interest charged under section 245D(6A) in the partners' assessments. Outcome:The Revenue's appeals (ITA Nos. 1533 to 1536/H/96) were dismissed, and the assessees' appeals (ITA Nos. 521 to 533/Hyd/97) were allowed.
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