1979 (1) TMI 162 - AT - Income Tax

Summary

Issues:
1. Assessment cancellation under provisions of s. 143 (3) r/w s. 147 for asst. yr. 1967-68.
2. Jurisdiction of ITO under s. 171 in the case of HUF partition for asst. yr. 1973-74.
3. Cancellation of assessments on an unregistered firm as a protective measure.

Analysis:

Issue 1: Assessment cancellation under provisions of s. 143 (3) r/w s. 147 for asst. yr. 1967-68:
The appeal by the Revenue in ITA No. 2127/Mds/77-78 was against the AAC's decision canceling an assessment made under provisions of s. 143 (3) r/w s. 147 on the assessee-HUF for the asst. yr. 1967-68. The dispute arose from the partial partition of movables in the HUF on 31st March, 1971, and subsequent partition of immovables on 31st March, 1973. The ITO recognized the partition under s. 171(3) and initiated proceedings under s. 148 for escaped income assessment. However, the AAC upheld the contention that since the HUF ceased to exist by 31st March, 1973, the ITO lacked jurisdiction to initiate action under s. 148 on 6th March, 1975, leading to the assessment cancellation.

Issue 2: Jurisdiction of ITO under s. 171 in the case of HUF partition for asst. yr. 1973-74:
In ITA No. 2133/Mds/77-78, the appeal by the Revenue related to the asst. yr. 1973-74 concerning the jurisdiction of the ITO under s. 171 after a complete partition of the HUF on 31st March, 1973. The AAC held that since there was no undivided HUF assessed prior to the partition, the provisions of s. 171 did not apply, justifying the annulment of the order passed under s. 171.

Issue 3: Cancellation of assessments on an unregistered firm as a protective measure:
The appeals in ITA Nos. 503 and 504/Mds/78-79 were against the assessments made on an unregistered firm as a protective measure due to a partial partition of the HUF. The Revenue contended that there was no genuine partial partition on 31st March, 1971, leading to the firm's existence being questioned for the asst. yrs. 1972-73 and 1973-74. The AAC's decision to cancel the assessments on the firm was upheld due to the lack of evidence supporting the existence of a genuine firm.

In conclusion, all the appeals by the Revenue were dismissed based on the findings related to the cancellation of assessments under various provisions and the jurisdiction of the ITO in the context of HUF partitions and firm assessments.