DCIT, Ludhiana V. M/s Laljit Hosiery, Ludhiana

ITA 149/CHANDI/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4973 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Non compliance; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 149/CHD/2010 ASSESSMENT YEAR: 2005-06 DCIT, CIRCLE-II, VS. M/S LALJIT HOSIERY, LUDHIANA. 4534-SUNDER NAGAR, LUDHIANA. PAN NO.AAAFL9207C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.JAISHREE SHARMA RESPONDENT BY: SHRI SUDHIR SEHGAL ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A)-I, LUDHIANA DATED 16.11.2009 RELATING TO ASSESSMENT YE AR 2005-06 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. A CT. 2. THE ONLY ISSUE ARISING IN THE PRESENT CASE IS AG AINST THE STATUS OF FIRM OR AOP TO BE ASSESSED IN THE CASE OF THE ASSE SSEE. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDER ATION THERE WAS CHANGE IN CONSTITUTION OF THE FIRM. ONE SHRI ROBIN BAMBI WAS INTRODUCED AS A NEW PARTNER. THE COPY OR CERTIFIED COPY OF THE PAR TNERSHIP DEED WAS NOT FURNISHED ALONGWITH THE RETURN OF INCOME. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUI SITIONED THE ASSESSEE WHY THE FIRM BE NOT ASSESSED AS AOP AS IT HAD NOT C OMPLIED WITH THE PROVISIONS OF SECTION 184(4) OF THE ACT. THE CERTI FIED COPY OF THE PARTNERSHIP DEED WAS FILED ALONGWITH REPLY DATED 29 .9.2007. IT WAS 2 FURTHER SUBMITTED THE REQUIREMENT OF FILING THE CER TIFIED COPY OF THE PARTNERSHIP DEEP WAS DIRECTORY AND NOT MANDATORY AN D RELIANCE WAS PLACED ON VARIOUS JUDGMENTS/DECISIONS BY THE ASSESSEE. T HE ASSESSING OFFICER DISTINGUISHING THE FACTS OF THE CASES RELIED UPON B Y THE ASSESSEE REJECTED THE CLAIM OF THE ASSESSEE AND ASSESSED THE ASSESSEE AS AN AOP. 3. THE CIT(A) HELD THAT THE PROVISIONS OF SECTION 1 84(4) WERE DIRECTORY IN NATURE AND NOT MANDATORY. IT WAS FURT HER OBSERVED BY CIT(A) THAT THE PARTNERSHIP DEED WAS FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND NO OTHER DEFECT WAS POINTED OUT BY THE ASSESSING OFFICER. ACCORDINGLY THE CIT(A) HELD THAT THE ASSESSEE IS TO BE ASSESSED IN THE STATUS OF FIRM AND NOT THAT OF AOP. ACCORDINGLY, THE ASSESSING OFFICER WAS DIRECTED TO ALLOW THE DEDUCTION ON ACCOUNT OF S ALARY AND INTEREST PAID TO THE PARTNERS. REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 4. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ASSESSEE IN THE PRESENT CASE HAD NOT FURNISHED EVEN AN UNCERTIFIED COPY OF THE PARTNERSHIP DEED ALONGWITH THE RETURN OF INCOME AND WHEREAS IN THE CASE LAWS RATIO RELIED UPON BEFORE THE CIT(A) THE CERTIFIED COPY OF THE PARTNERSHIP DEED WAS NOT FILED. THE LD. DR FOR THE REVENUE FURTHER POINTED OUT THAT U/S 184(4) OF THE ACT, THE CERTIFIED COPY OF PARTNERSHI P DEED IS TO BE FURNISHED ALONGWITH THE RETURN OF INCOME AND IN THE ABSENCE O F THE SAME NO DEDUCTION IS ALLOWABLE ON ACCOUNT OF INTEREST AND S ALARY PAID TO THE PARTNERS. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE GENUINENESS OF THE FIRM STANDS ESTABLISHED FROM YEAR TO YEAR AND D URING THE YEAR THERE WAS CHANGE IN CONSTITUTION OF THE FIRM. THE CERTIF IED COPY OF THE PARTNERSHIP DEED WAS NOT ATTACHED WITH THE RETURN O F INCOME BUT WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. RELIA NCE WAS PLACED ON THE RATIO LAID DOWN IN ISHWAR SAHNI & SONS VS. DCIT,[ 7 7 ITD 256 (DEL.)] AND CIT VS. PUNJAB FINANCIAL CORPORATION, [254 ITR 6 (P&H) (FULL BENCH)] AND ADITI BUILDERS VS. CIT,[ 72 TTJ (INDORE ) 198]. THE LD. AR 3 FOR THE ASSESSEE ALSO PLACED RELIANCE ON BASKAR & C O. VS. CIT, 230 CTR (KER) 99. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS BEING ASSESSED TO TAX AS A REGISTERED FIRM FOR THE PAST MANY YEARS. DURING YEAR UNDER CONSIDERATION, A NEW PART NER WAS INTRODUCED AND AMENDED PARTNERSHIP DEED WAS ACCORDINGLY EXECUTED. HOWEVER, THE COPY OF THE PARTNERSHIP DEED WAS NOT FURNISHED ALONGWITH THE RETURN OF INCOME. THE ASSESSEE FURNISHED THE CERTIFIED COPY OF THE PA RTNERSHIP DEED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE REQUIRE MENTS OF THE SECTION 184(4) OF THE ACT ARE THAT IN CASE THERE IS A CHANG E IN THE CONSTITUTION OF THE FIRM OR THE SHARES OF THE PARTNERS, DURING THE PREVIOUS YEAR, THE FIRM SHALL FURNISH THE CERTIFIED COPY OF THE REVISED INS TRUMENT OF PARTNERSHIP DEED ALONGWITH THE RETURN OF INCOME. IN CASE OF NON COMPLIANCE TO THE SAID PROVISIONS, THE STATUS OF AOP IS TO BE ADOPTED AND FURTHER CONSEQUENCES ARE TO FOLLOW. 6. THE REQUIREMENT OF FURNISHING OF CERTIFIED COPY OF PARTNERSHIP DEED ALONGWITH THE RETURN OF INCOME IS HELD TO BE DIRECT ORY AND NOT MANDATORY BY THE DELHI BENCH OF TRIBUNAL IN ISHWAR SAHNI & SO NS VS. DCIT(SUPRA). IT WAS HELD BY THE TRIBUNAL THAT THE OBJECT F FILING A CERTIFIED COPY APPEARS TO BE TO VERIFY THE EXISTENCE OF THE PARTNE RSHIP WITH THE PARTNERS SHARES SPECIFIED THEREIN. THIS DOCUMENT IS RELEVAN T FOR THE PURPOSES OF ASSESSMENT AS A FIRM. THEREFORE, IF THE CERTIFIED COPY OF THE INSTRUMENT IS AVAILABLE BEFORE THE AO WHEN HE SITS DOWN FOR FRAM ING THE ASSESSMENT ON MERITS, THE OBJECT OF THE LEGISLATURE IS ACHIEVED B ECAUSE IT IS AT THAT STAGE THAT THE COMPLIANCE OF THE REQUIREMENTS OF S.184(2) IS TO BE ASCERTAINED. IF THAT WAS SO, THE REQUIREMENT OF THE CERTIFIED CO PY ACCOMPANYING THE RETURN DOES NOT SEEM TO BE OF SUCH A COMPELLING NAT URE THAT IT MAY LEAD TO DENIAL OF THE STATUS OF A FIRM IN CASES WHERE COMPL IANCE OF THE REQUIREMENT OF THE PROVISION IS MADE BEFORE THE COM PLETION OF THE 4 ASSESSMENT AND THE UNCERTIFIED AND CERTIFIED CO PIES ARE FOUND TO BE IDENTICAL. 7. IT WAS FURTHER HELD THAT THE MATTER CAN BE CONSIDERED FROM ANOTHER ANGLE ALSO. SEC.182 MERELY PROVIDES FOR FILING THE CERTIFIED COPY ALONG WITH THE RETURN. THE TIME FOR FILING THE RETURN IS NOT, THEREFORE, MUCH SIGNIFICANT AS WAS THE CASE IN RESPECT OF FORM NO.1 2, WHICH AS PER PROVISIONS OF S.184(7)(AS THEY EXISTED BEFORE THE A MENDMENT BY FINANCE ACT, 1992) WAS REQUIRED TO BE FURNISHED BEFORE THE EXPIRY OF THE TIME ALLOWED UNDER S.139(1) FOR FURNISHING THE RETURN OF INCOME. THERE EXIST IN THE IT ACT CERTAIN OTHER PROVISIONS ALSO FOR WHICH DATE OF FILING THE RETURN UNDER S. 139(1) IS RELEVANT. IN SUCH CASES A DEFIN ITE TIME IS PRESCRIBED, WHICH IS NOT SO UNDER THE PROVISIONS OF S.184(2). IT FOLLOWS THAT AN ASSESSEE CAN FILE A CERTIFIED COPY OF THE PARTNERSH IP DEED EVEN ALONG WITH THE REVISED RETURN OF INCOME UNDER S. 139(5), BECAU SE S.184 DOES NOT PLACE ANY RESTRICTION ON SUBMISSION OF THE SAID CERTIFIED COPY ALONG WITH A RETURN OF INCOME UNDER S.139(4) OR S.139(5). IF AN ASSESSEE DOES SO, IT CAN BE SAID TO HAVE COMPLIED WITH THE PROVISIONS OF S.184(2). IN VIEW OF THE FOREGOING DISCUSSION THE PROVISION ABOUT THE CE RTIFIED COPY OF THE INSTRUMENT ACCOMPANYING THE RETURN OF INCOME IS DIR ECTORY IN NATURE AND ITS SUBSTANTIAL COMPLIANCE, AS IS THERE IN ASSESSEE S CASE, WOULD SUFFICE FOR ASSESSMENT OF THE ASSESSEE AS FIRM. ACCORDINGL Y, THE AO IS DIRECTED TO ASSESS THE ASSESSEE AS A FIRM. ITO VS. D.M. ENTERPRISES (1998) 61 TTJ (DEL)) 427 : (1998) 67 ITD 123 (DEL) FOLLOWED. 8. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT V S. PUNJAB FINANCIAL CORPORATION (SUPRA) HAS HELD THAT THE FIL ING OF AUDIT REPORT ALONGWITH THE RETURN OF INCOME CANNOT BE TREATED AS MANDATORY AND THE ASSESSEE CANNOT BE DEPRIVED OF THE BENEFIT OF DEDUC TION IF THE SAME IS FILED BEFORE THE FINALIZATION OF THE ASSESSMENT. 5 9. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE H AD FURNISHED THE CERTIFIED COPY OF THE PARTNERSHIP DEED DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. THE STATUS OF BEING ASSESSED AS FIRM IS BEING ALLOWED TO THE ASSESSEE IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2004-05 AND THE SAME IS ALSO ALLOWED TO THE ASSESSEE IN THE SUCCEEDING Y EARS I.E. ASSESSMENT YEARS 2006-07 AND 2007-08 VIDE ORDER PASSED U/S 14 3(3) OF THE ACT. THE ASSESSEE FURTHER EXPLAINED THAT THE STATUS OF FIRM IN THE SUCCEEDING YEAR IS CLAIMED ON THE BASIS OF THE AMENDED INSTRUMENT OF P ARTNERSHIP FILED BEFORE THE ASSESSING OFFICER IN THE YEAR UNDER APPEAL. IN THE FACTS AND THE CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VI EW THAT ONCE THE CERTIFIED COPY OF AMENDED PARTNERSHIP DEED IS AVAIL ABLE WITH THE AO BEFORE COMPLETION OF THE ASSESSMENT PROCEEDINGS, TH E BENEFIT OF BEING ASSESSED IN THE STATUS OF THE FIRM IS TO BE ALLOWED . RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE COORDINATE BENCH OF THE TRIBUNAL, WE UPHOLD THE ORDER OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE ASSESSEE IN THE STATUS OF FIRM. CONSEQUENTLY, THE D EDUCTION CLAIMED ON ACCOUNT OF INTEREST AND SALARY PAID TO PARTNERS IS TO BE ALLOWED. THE GROUNDS RAISED BY THE REVENUE, ARE THUS DISMISSED. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JULY,2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH JULY, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR