Appealability of partner income reallocation and dismissal for incompetence supported further appellate remedies under tax law.

An Income-tax Officer's reallocation of a partner's share income under Tribunal directions was treated as an assessment order made under the general assessment power, so an appeal lay to the Appellate Assistant Commissioner because the partner could object to over-assessment, erroneous apportionment, or partial denial of liability. The right of appeal was read liberally, and the proviso dealing with apportionment among partners supported maintainability. An Appellate Assistant Commissioner's order dismissing that appeal as incompetent was itself treated as an appellate order, so a further appeal lay to the Appellate Tribunal. The appellate remedies were therefore available against both the reallocation order and the dismissal as incompetent.

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Issues: (i) Whether an appeal lay to the Appellate Assistant Commissioner against the order reallocating the assessee's share income in pursuance of the Tribunal's directions. (ii) Whether a further appeal lay to the Appellate Tribunal against the Appellate Assistant Commissioner's order dismissing the appeal as incompetent.

Issue (i): Whether an appeal lay to the Appellate Assistant Commissioner against the order reallocating the assessee's share income in pursuance of the Tribunal's directions.

Analysis: The reallocation made by the Income-tax Officer in pursuance of the Tribunal's directions was treated as an assessment order made under the general assessment power and not as a source of assessment under the Tribunal's power of amendment. The challenge by a partner to an over-assessment or to an erroneous apportionment of firm income was held to amount to an objection to the amount of income assessed and also to a denial, at least in part, of liability to be assessed. The right of appeal under the relevant provision was construed liberally, and the proviso dealing with apportionment among partners was held to support such an appeal.

Conclusion: Yes. An appeal lay to the Appellate Assistant Commissioner, in favour of the assessee.

Issue (ii): Whether a further appeal lay to the Appellate Tribunal against the Appellate Assistant Commissioner's order dismissing the appeal as incompetent.

Analysis: The order of the Appellate Assistant Commissioner rejecting the appeal as incompetent was held to be an order passed under the appellate provision itself. An order disposing of an appeal, even on a preliminary objection as to competence, was treated as falling within the scope of the appellate machinery, so that a second appeal to the Tribunal was maintainable.

Conclusion: Yes. A further appeal lay to the Appellate Tribunal, in favour of the assessee.

Final Conclusion: The reference was answered wholly in the assessee's favour, and both questions of law were decided affirmatively so as to sustain appellate remedies against the reallocation order.

Ratio Decidendi: An order passed by the Income-tax Officer giving effect to a reallocation of income among partners is appealable where it amounts to an assessment or apportionment affecting the assessee's liability, and an order dismissing such an appeal as incompetent is itself an appellate order carrying a further appeal.

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