Share income from the partnership firm - liability of partner - initiation of penalty - Income Tax - 507/CBDT

INSTRUCTION NO. 507/CBDT Dated : Feburary 16, 1973 Section(s) Referred: 271(1)(c) Statute: Income - Tax Act, 1961 A case has come to the notice of the P.A.C. wherein the Income-tax Officer while assessing a partner of a firm did not notice the failure on the part of the assessee to return the share income from the firm in his return of income. The assessment of the partner had to be re-opened u/s. 147(a), and consequently penalty proceedings u/s. 271(1)(c) were initiated, after the Commission was pointed out by Revenue Audit. The P.A.C. has desired that suitable instructions should be issued to the assessing officers so as to avoid recurrence of such omissions. 2. In the instant case, the omission on the part of the partner could have been easily noticed at the assessment stage itself, had the Income-tax Officer looked into in detail the previous years' assessment orders of the assessee, since the share income was being assessed regularly in the previous years. The assessing officers should be carefull and vigilant to ensure that such mistakes are avoided, by making proper reference to previous years' records before completing assessments. 3. It is needless to say that the failure to return any portion of income of an assessee attracts penal liability under section 271(1)(c). The Board, therefore, desire that if such failure is noticed in the partners' cases, penalty proceedings u/s. 271(1)(c) should be initiated. 4. The above instructions may please be brought to the notice of all the Income-tax Officers under your jurisdiction.