Assessment procedure introduced by section 144A and 144B of the Income tax Act 1961. - Income Tax - 948/CBDT

INSTRUCTION NO. 948/CBDT Dated : April 26, 1976 Section(s) Referred: 144B Statute: Income - Tax Act, 1961 Reference is invited to Board's Instruction No.907 dated the 24th December 1975 (F.No.201/121/75-ITAII) outlining the new assessment procedure as introduced by section 144A and 144B of the Income tax Act 1961. A copy of Board's order of even number dated the 23rd December 1975 fixing the variation limit at Rs. 1 lakh for purposes of section 144B was also forwarded alongwith this Instruction. 2. A question has been raised where in completing the assessment of a firm under section 143(3), the Income-tax Officer proposes to make an addition to the returned income exceeding Rs. 1 lakh and as a result of the proposed addition in the firm's assessment, the share of income of any partner or partners is enhanced by an amount exceeding Rs. 1 lakh, whether the draft assessment order in the case of such a partner will be required to be forwarded under the provisions of section 144B of the Act. The Board is of the view that the provisions of section 144B of the Act would be applicable to the case of partners as well, if the share of income stand enhanced by Rs. 1 lakh on the basis of the determined share of income in the case of the firm. 3. In view of this legal position, the Board have decided that time baring assessments of the firms must be completed by the 30th September 1976 so that reasonable time is available for completing assessments of the partners after complying with the provisions of section 144B of the Act. You may kindly issue necessary instructions to the Income-tax Officers to adhere to this time limit scrupulously. The Inspecting Assistant Commissioners may take steps for completing the assessments of the firms for the assessment year 1974-75 by 30th September 1976 and to keep a constant watch over the progress of such assessments. 4. If for any unavoidable reason, it is not possible to complete the assessments of the firm early enough to give the Income-tax Officer the time necessary for complying with the requirements of the section 144B in the case of these partners, the partners assessments may be completed on the basis of the returned income in respect of their share in the firm subject to rectification under section 155(1) when the firm's assessment is finalised. This procedure should be resorted to only in exceptional cases and not as a matter of course. 5. You are also requested to furnish details of the cases of the partners completed before 1-4-1976 where provisions of section 144B were applicable because the determined share of income from the registered firm was more than Rs. 1 lakh in comparison to the disclosed share of income, but the procedure laid down in the said section was not followed. You may kindly indicate the number of such cases along with the tax effect involved on account of variation in the disclosed share of income and/or loss in comparison to the determined share of income/or loss. This information may kindly be furnished by 1st June 1976.