9911796707
TMI Blog1983 (6) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... these persons were carrying on business in the status of a firm. From the asst. years 1962-63 to 1966-67 these five persons filed return in the status of a firm and assessed as such. It is seen that from the asst. yrs. 1967-68 the activity of these five persons was that of deriving income from property in which the individual shares were definite and ascertainable. Accordingly from the asst. yrs. 1967-68 on behalf of these five persons the return was not filed in the status of the firm but the return was filed in the status of association of persons. The records further disclosed that in such returns being filed, the ITO would compute the property income but would not make a demand in the case of the association of persons but distribute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l taxes for the purposes of ascertainment of gross annual letting value. On that basis the ITO computed the associations property income at Rs. 1,05,296 against the similar returned income of Rs. 61,466. It appears that in similar manner the ITO made the assessment for the year 1976-77. As we were given to understand, these two assessments were accepted by the assessee. 3. Now on being required to file the reply to the show cause notice for each of the two years, the assessee filed a reply in terms of a letter dt. 27th December, 1978. Substantially all that the assessee stated was, as observed by the ITO in the penalty order 'that the extra taxes collected were not included in the amount of rent receivable but were kept sparate on the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome which was assessable under the provisions of law and hence penalty could not be levied in law u/s 271(1) (c) of the IT Act, 1961". 5. After bringing to our notice the facts, Smt. Gopal Krishnan submitted that is a fact that the association of persons was not required to pay the tax. It is urged that was the position which of necessity had to follow in view of the specific provisions of s. 26 of the Act. It is submitted that fact could not above the association from the penal provisions if the return which the association had filed attracted the provisions, of s. 271 (1) (c) of the Act. Smt. Gopal Krishnan stated that manifestly the CIT (Appeals) did not consider, as prima facie disclosed by his order, in detail the assessee's submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d merit in Shri Patil's submission that since the association of persons was not taxable as such the association of persons did not incur any liability to file a return of income. We further find that if in law the association had not to file a return and on the return so filed an assessment could not be made in that the association could not be required to pay tax, any mis-statement in the return which if made by any other assessee might have attracted a penalty u/s 271 (1) (c) of the Act, has to be totally ignored. As we understand, the provision of s. 139 (1) of the Act, a return of income is required to be filed by a person if his total income or the total income of any other person in respect of which he is assessable under this Act du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure to comply with the requisition u/s 22 (4) was not constituted an offence by the legislature at all, and a new offence cannot be retrospectively constituted by the amendment passed on 3rd December, 1940. Mr. Joshi says that within the meaning of s. 28, even a registered firm could commit default by not complying with the requisition u/s 22, sub-s. (4); but the default has no significance because no consequence was attached to the commission of that default by a registered firm. It is only when a default carried a certain consequence with it, namely, the possibility of a penalty being imposed for the commission of that default that the default can be considered to be an offence." 8. Now we find merit in Shri Patil's submission that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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