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TMI Blog2005 (4) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... l Mills, and Sh. D.D. Sehgal was holding shares in his representative capacity as a partner. The next grievance of the assessee is that the learned CIT(A) was not justified in sustaining the order of AO for calculating the tax and interest without allowing credit for TDS. 3. The facts of the case are that late Sh. D.D. Sehgal was a partner in a firm, M/s Sehgal Oil General Mills, Mandi Road, Jalandhar (engaged in the business of oil cakes etc.), vide partnership deed dt. 29th July, 1961. The said partnership firm was a partner in another firm, M/s Leader Engg. Works, Jalandhar, through one of its partner, Sh. D.D. Sehgal. The said firm, M/s Sehgal Oil General Mills, was regularly assessed with IT Department, Jalandhar, wherein it duly reflected its income from the business of oil cakes etc. and share of profits from M/s Leader Engg. Works, Jalandhar. The said firm, M/s Leader Engg. Works, was converted into a private limited company, namely, M/s Leader Valves (P) Ltd., on 31st Dec., 1978, and thereupon the share of M/s Sehgal Oil General Mills, as a partner, represented through Sh. D.D. Sehgal (partner), in M/s Leader Engg. Works was converted into equity share capital. Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made in the hands of legal heirs. However, the AO observed that the remaining partners of the firm, M/s Sehgal Oil General Mills, failed to perform their statutory obligation to settle the accounts of the dissolved sub-partnership. The AO also observed that some of the partners were also the legal heirs of late Sh. D.D. Sehgal. Thus, they should have taken the steps for distribution of the assets and accounted for interest and dividend income arising from the assets of the partnership firm. Thus, the AO completed the assessments under s. 147 r/w s. 143(3) on protective basis for the abovementioned assessment years. 4. Being aggrieved, the assessee filed appeals against the orders of the AO for protective assessments for the abovementioned assessment years. As per grounds of appeals taken before the CIT(A), the assessee had raised grounds regarding legality and validity of the proceedings initiated under s. 147 on the ground that 'reasons to believe' did not exist. Ground was also taken for completing the protective assessments in the hands of the legal heirs of late Sh. D.D. Sehgal. During the course of hearing of the appeal, submissions were also made in support of the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reason to believe that this was income of the legal heirs of late Sh. D.D. Sehgal. He further submitted that substantive assessments have been made in the hands of AOP of M/s Sehgal Oil General Mills, where action of the AO was quashed and the matter is now pending with the High Court. He submitted that the AO was fully aware that such income belonged to the erstwhile partnership firm. He submitted that even in the affidavit filed before the Hon'ble High Court, the Revenue conceded that it, was partnership firm to whom the income, interest and dividend income from shares belonged. Thus, he submitted that the action taken BY the AO for initiating proceedings under s. 147 with a view to make protective assessments was illegal and bad in law. He further submitted that the learned CIT(A) has not addressed to such grounds and has not recorded any finding thereon. 6. The learned Departmental Representative, on the other hand, relied on the orders of the authorities below. 7. I have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. From the facts discussed above, it is obvious that the assessee had rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional ground now being raised is purely a legal ground which does not call for any investigation into the facts. Therefore, relying on the judgment of Hon'ble Supreme Court in the case of National Thermal Power Co. vs. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC), the additional ground raised by the assessee is admitted for all the assessment years. 11. The learned counsel for the assessee submitted that despite the fact that the assessments have been made on protective basis, the AO is vigorously pursuing the recovery of the demand in these. cases. He submitted that when protective assessments have been made, no recovery of the demand could be enforced. Reliance has been placed on the judgments of the various High Courts: (1) Jagannath Hanumanbux vs. ITO (1957) 31 ITR 603 (Cal) (2) P.K. Trading Co. vs. ITO (1970) 78 ITR 427 (Cal) (3) CIT vs. Cochin Co. (P) Ltd. 1975 CTR (Ker) 78: (1976) 104 ITR 655 (Ker) (4) Jagannath Bawri Ors. vs. CIT (1999) 153 CTR (Gau) 590 : (1998) 234 ITR 464, 471 (Gau) (5) Sunil Kumar vs. CIT (1983) 139 ITR 880 (Bom). 11.1 The learned Departmental Representative, on the other hand, relied on the orders of the authorities below. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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