9911796707
TMI Blog1980 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ukumchand Mills Ltd., Indore, which had been granted by the Hukumchand Mills Ltd. to the said firm for a period of five years. Under the terms of the agreement granting the sole selling agency to the firm, the firm had deposited a sum of Rs. 26 lakhs with the mills-company at the interest of 41% per annum. This amount was contributed by the partners of the firm. The mills-company, however, prematurely terminated the sole selling agency agreement on January 11, 1958, and as a consequence thereof the aforesaid partnership firm stood dissolved with effect from January 11, 1958, in accordance with the terms of the partnership agreement. The firm was assessed to income-tax in the status of a registered firm for the assessment years 1957-58 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 5,75,000 was payable to respondent No. 5. During the pendency of the litigation, respondent No. 4 had offered the income from interest OD deposits in their assessments to income-tax on the basis of accrual from year to year. The petitioner, on the other hand, appended a note to their returns filed in the relevant years, stating that the claims were in dispute and, as such, there was not even an accrued income. For the assessment year, 1973-74, relevant to the previous year in which the consent decree was passed as aforesaid, the petitioner filed its return on August 15, 1973, wherein it offered the entire income of its share. In the course of the assessment proceedings, enquiries were made by the ITO regarding the circumstances l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO held that out of the total amount Rs. 17,25,000 received by the petitioner under the consent decree passed by the High Court, whatever amount was received by the petitioner over and above its capital contribution was in the nature of interest and as the said interest had become payable to the petitioner in the year of assessment by virtue of the consent decree, it was rightly offered to tax. The petitioner was, accordingly, assessed to tax. In the proceedings commenced against the dissolved firm under s. 148 of the Act, respondent No. 1, by his order dated March 26, 1976, held that the firm automatically stood dissolved the moment the selling agency agreement was terminated, as provided by the terms of the partnership deed, and the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name Share Amount (Rs.) 1) M/s. Swarupchand Hukumchand Pvt. Ltd. 8 annas 23,00,000 2) M/s. Chunnilal Onkarmal Pvt. Ltd. 6 annas 17,25,000 3) Shri Ratanlal Ramkumar Morarka 2 annas 5,75,000 --------- Total 46,00,000 --------- The abovesaid compensation falls in the A.Y. 73-74. The same has escaped assessment. Issue notices under s. 148, read with section 147(a) in the status of AOP (as per CIT's letter No. 263(120)/77/78 dt. 4-3-78) to above-mentioned 3 partners." Shri Chaphekar, learned counsel for the petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment beyond the period of four years, but within a period of eight years, from the end of the relevant year, if two conditions exist-(1) that the Income-tax Officer has reason to believe that income, profits or gains chargeable to income-tax had been under-assessed ; and (2) that he has also reason to believe that such under-assessment had occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. These conditions are cumulative and precedent to the exercise of jurisdiction to issue a notice of reassessment: Calcutta Discount Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action under section 263 by the CIT and the proposals have been filed. However, immediate action should be taken under section 147 for the assessment year 1973-74, treating the three parties (who have received the sum of Rs. 46 lakhs) in the status of 'AOP or body of individuals whether incorporated or not'. There is thus no material whatsoever for holding that there was any failure or omission on the part Of the petitioner to disclose fully and truly all material facts necessary for its assessment as a result of which income chargeable to tax had escaped assessment and that the ITO had formed any belief in that behalf. It is well settled that unless the requirements of cl. (a) or cl.(b) of s. 147 are satisfied, the ITO has no jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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