COMMISSIONER OF INCOME-TAX VS J.P. SHRIVASTAVA & SONS
1991 P T D 234
[Madhya Pradesh High Court (India)]
Before N.D. Ojha, C.J. and R.C. Shrivastava, J
COMMISSIONER OF INCOME-TAX
versus
J.P. SHRIVASTAVA & SONS
Miscellaneous Civil Case No. 30 of 1985, decided on 29/09/1987.
Income-tax---
----Reference---Firm---Rectification of mistakes---Return submitted and assessment made in the status of unregistered firm as shown by assessee--ITO passing order under S. 154, Indian Income-tax Act, 1961 and assessing firm as a registered firm under the provisions of S. 183(b) Indian Income.-tax Act, 1961-- Questions whether provisions of S. 183(b) are discretionary or mandatory and whether order of rectification was valid are questions of law fit to be referred.
The Income-tax Officer completed the assessment of the assessee-firm taking its status as unregistered firm as shown by the assessee. Subsequently, the Income-tax Officer passed an order under S. 154 of the Indian Income-tax Act. 1961, treating the firm as a registered firm under the provisions of S. 183(b) of the Act. The, assessee filed an appeal against the order under S. 154 which Was allowed by the Tribunal. On a reference application under S. 256(2):
Held. that the two questions (i) whether the provisions contained in S. 183(b) of the Indian Income-tax Act are discretionary or mandatory, and (ii) whether the Tribunal was justified in holding that the original order of assessment could not be rectified under S. 154 on the view that it was a case covered by S.183(b) of the Indian Income-tax Act, 1961, were questions of law which arose from the Tribunal's order and were fit to be referred.
R.C. Lahoti for the Commissioner.
N.P. Mittal for the Assessee.
JUDGMENT
OJHA, C.J.---This is an application under section 256(2) of the Income tax Act, 1961("the Act").
The facts, in a nutshell, necessary to find out whether any question of law arises so as to justify this Court in directing the Tribunal to refer the said question to this Court, are that the assessee filed returns of income for the assessment years 1974-75 and 1975-76 in the status of an unregistered firm. Orders of assessment were passed by the Income-tax officer under section 143(3) of the Act, taking the status of the firm as an unregistered firm. subsequently, on the view that the aggregate amount of tax payable by tire assessee-firm if it were assessed as a registered firm and the tax payable by the partners individually if the status of the firm was taken as that of a registered firm was larger than the aggregate amount of tax payable by the firm in its status as that of an unregistered firm, the Income-tax Officer initiated fresh proceedings for assessment under section 154 of the Act. He was of the view that it was a clear case which was covered by section 183(b) of the Act. The assessee objected to the. procedure adopted by the Income-tax Officer. The objection, however, was overruled and a fresh order of assessment was passed by the Income-tax Officer. The assessee went up in appeal which was allowed by the Appellate Assistant Commissioner on the ground that the Income-tax Officer had no jurisdiction to proceed under section 154 on the facts of the instant case. This order was upheld on appeal by the Tribunal. Aggrieved, the Commissioner made an application before the Tribunal with the prayer that the three questions of law mentioned in the said application may be referred to this Court for its opinion. The application having been dismissed, the Commissioner filed the present application.
Having heard learned counsel for the parties, we are of the opinion that the following two questions of law do arise in the instant case:
"(1) Whether, on the facts and in the circumstances of the case, the provisions contained in section 183(b) of the Income-tax Act., 1961, are discretionary or mandatory?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the original order of assessment could not be rectified under section 154 on the view that it was a case covered by section 183(b) of the Income-tax Act, 1961?"
We, accordingly, direct tire Tribunal to draw up a statement of the case and refer the aforesaid two questions to this Court for its opinion. Ira the circumstances of the case, however, there shall be no order as to costs.
Z.S./757/TOrder accordingly.