Murugesh and Company vs Commissioner of Income Tax

C.N. Ramachandran Nair, J.—These two appeals filed by the assessee arise from the common order of the Tribunal for the asst. yr. 1993-94. The assessee though claimed the status as a registered firm in the belated return filed, such return was not accompanied by certified copy of partnership deed in terms of Section 184(2) of the IT Act. The AO first sent intimation u/s 143(1)(a) against which assessee filed Section 154 application for grant of status of registered firm. Rectification application was rejected because certified copy of the partnership deed was furnished only after receipt of initiation u/s 143(1)(a) by the assessee. However, strangely, even though assessment was completed u/s 143(3) of the Act, the assessee''s case for assigning status as registered firm was not considered by the AO based on the certified copy of the partnership deed already filed by the assessee. Since the first appellate authority concurred with the AO, the assessee filed separate appeals before the Tribunal, one against the order on application u/s 154 and the other pertaining to addition sustained in assessment Even though we do not find any question of law arising from the order of the Tribunal pertaining to modified quantum of addition, we find some force in the contention of the assessee with regard to status assigned because of the decision of this Court in Commissioner of Income Tax Vs. K.V. Mankaram and Co., wherein a Division Bench of this Court has held that intimation u/s 143(1)(a) is not an assessment. Going by this decision, we feel the assessee is entitled to claim status as registered firm in the regular assessment proceedings u/s 143(3) of the Act. Even though senior counsel appearing for the respondent Revenue contended that since return itself was time barred, certified copy of the partnership deed produced later need not be considered; we do not know why then the AO initiated and completed regular assessment u/s 143(3) after issuing notice u/s 143(2) instead of initiating proceedings u/s 147 of the Act. Since the AO has not considered the decision of this Court referred above, which has a direct bearing on the issue raised, we set aside the orders of the Tribunal and that of the lower authorities with direction to the AO to reconsider the entire matter with reference to the decision of this Court referred above.

We make it clear that proposal should be given about the fresh orders to be passed by the AO and assessee should be given an opportunity to file written reply on the proposal and a hearing before final orders are passed.

Appeals are allowed as above.