9911796707
TMI Blog2003 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... g of section 170(1) and the firm will be assessed up to the date of succession - plea of the petitioner to allow rectification of the defect if permissible; that has to be considered by the Additional Commissioner at the first instance not directly by this court in exercise of writ jurisdiction under article 226 of the Constitution of India - impugned order passed by the Additional Commissioner is quashed. Writ petitions are partly allowed. The Additional Commissioner is directed to reconsider the matter under section 144A, - - - - - Dated:- 25-2-2003 - Judge(s) : ARUN MISHRA. JUDGMENT Arun Mishra J.- In these two writ petitions the question posed for consideration is whether the order passed by the Assessing Officer and the directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 20, 1997 in which it was mentioned that the old firm was dissolved due to the death of Shri Gulabchand and that there was no business transaction from August 17, 1997 to August 19, 1997. The directions of the Additional Commissioner were sought. The learned Additional Commissioner has agreed with the findings of the Assessing Officer as the accounts were made for the period April 1, 1997, to March 31,1998, and although two income-tax returns were filed for two periods, copy of common trading account, profit and loss account and balance-sheet has been filed which ought to have been separately maintained. However, in the profit and loss account, profits have been distributed amongst the partners for the two periods taking the proportionat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment as an association of persons, is bad in law. The stand of the respondents in the return is that on dissolution the petitioner-firm was required to value the closing stock at market rate. The firm was also required to value all assets at market rate. The petitioner was required to offer the appreciation for capital gain as provided under section 45(4) of the Act. The petitioner was also required to disclose that tax was deducted at source and as on the date of dissolution there was no violation. The petitioner was also required to file a balance-sheet as on the date of dissolution to verify that there was no violation of sections 43B, 269SS or 269T. The other transactions as on the date of dissolution also required cross verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to maintain the separate account. There was failure to close the accounts of the previous firm on the date of dissolution. This defect could be allowed to be rectified under subsection (9) of section 139 of the Income-tax Act. Thus, the decision and the direction to make assessment under section 185 of the Act in the capacity of association of persons is uncalled for and not warranted in the facts and circumstances of the case. Shri Rohit Arya, learned counsel appearing for the respondents, raised the preliminary objections and submitted that the petitioner has remedy of raising the question against the final assessment before the Commissioner of Income-tax (Appeals); since there was no closure of the accounts of the dissolved firm which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued under sub-section (2) of section 143. It is contended by learned counsel for the respondents that exigencies for applicability of section 144 are available, thus, the provision of section 185 of the Act is attracted as provided in sub-section (5) of section 184 of the Act. True it is that if there is failure to file the return as mandated under sub-section (1) of section 139 or revised return has not been filed under sub-sections (4) and (5) of section 139 of the Act and notice issued under sub-section (2) of section 143 of the Act has not been complied with or a notice under sub-section (1) of section 142 or direction under sub-section (2A) of section 142 has not been complied with, the firm can be assessed as an associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er from whom directions under section 144A had been sought to consider whether the petitioner can be allowed to remove the defect in terms of sub-section (9) of section 139. It is also submitted by learned counsel appearing for the petitioner that it is possible to ascertain the profit. He has placed reliance on a decision of the Allahabad High Court in Motor Sales v. CIT [1998] 230 ITR 44 to contend that still there is possibility to ascertain the profit in case a firm is converted into a company then the business of the firm is succeeded by the company within the meaning of section 170(1) and the firm will be assessed up to the date of succession. Though the facts in Motor Sales v. CIT [1998] 230 ITR 44 (All) are different, the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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