TaxTMI 
TaxTMI 
2002 (7) TMI 71
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....come from the firms on the basis of the returns of income filed by the firms, and as per the allocation of his share of profits according to the said returns of income of the firm. The said partnership firms had approached the Settlement Commission for the settlement of their cases under section 245C of the Act for the assessment years 1982-83 to 1988-89. The Settlement Commission had passed the order under section 245D(4) of the Act on March 28, 1995, computing the income of the firms and allocating the same in the hands of the partners. As a result of the share income so allocated towards the petitioner from the partnership firms, the income had increased. The Assessing Officer thereafter passed order under section 155 of the Act on December 24, 1998, rectifying the assessment orders made earlier for different assessment years and as a result of these orders passed under section 155 of the Act, the petitioner was liable to pay taxes for the assessment years 1982-83 to 1988-89. Being aggrieved by these orders, the petitioner preferred appeals under section 246A of the Act on January 29, 1999, for the respective years and the said appeals were pending before the first appellate ....
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....ot a valid appeal under section 246A. Similarly, in another petition, the declaration was rejected on the ground that in view of the provisions of section 95(i)(b) of the Finance (No. 2) Act, 1998, the petitioner's case cannot be covered under the KVSS 1998. The main argument canvassed by Mr. Soparkar is that the order under section 245D(4) was passed in the case of the firm and there was no order passed by the Settlement Commission in the case of the petitioner who was a partner in the said three firms. He has, therefore, submitted that the embargo which is contained in section 95(i)(b) is not applicable to the facts of the petitioner's case. In support of his contentions, he submitted that the firm and partner, both are different entities under the Income-tax Act. Section 2(31) of the Act defines "Person" which, inter alia, includes "individual" as well as "firm". In support of his contention, he has relied on the decisions of the Supreme Court in CIT v. A. W. Figgies and Co. [1953] 24 ITR 405; Bist and Sons v. CIT [1979] 116 ITR 131 and State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 STC 326, wherein it is held that the "firm" and the "partner" are separate legal ....
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....ed to curtail the right of any aggrieved party to prosecute his remedies under law. The facts clearly showed the existence of an issue as to the jurisdiction of the Assessing Officer to make an order under section 154 in respect of a claim to deduction that had been the subject-matter of appeal before the Commissioner of Income-tax (Appeals) and which already stood disposed of, and a bona fide dispute as to the levy of additional tax as a part of the demand created as a result of the order under section 154. The assessee by agreeing to withdraw the deduction under section 80-I could not be deemed to have agreed to the charge of additional tax under section 143(1A). It was also not the case that the revision had not come into existence within the period of limitation, so as to suggest that the assessee had waived his right to challenge that order. The mere fact that the assessee had not filed a revision prior to the coming into force of the Kar Vivad Samadhan Scheme, in the facts of the case, could not be held against the assessee. If he can legitimately act within the precincts of the statute for pursuing a bona fide dispute, he can also claim the benefit of the scheme promulgated ....
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....y with full force to the case of the partners. If the scheme is not applied to the firm in whose case the order is passed under section 245D(4) of the Act, and similarly when effect is given in the case of the partner pursuant to that order, the assessee cannot avail of the benefit of the KVS Scheme. In support of his argument, he has relied on the decision of this court in the case of Prabhat Solvent Extraction Industries Ltd. v. S. S. Khan [1999] 238 ITR 510, wherein it is held that for the purpose of the Kar Vivad Samadhan Scheme the requirement is not that the assessment should be made directly as a consequence of search relating to the assessment year in question. It is sufficient if the determination of Assessment for the relevant assessment year is on the basis of material information and opinions formed relating to the practice followed by the assessee in the matter of maintaining accounts that provide nexus between the search and the determination of tax. He submitted that here in the petitioner's case there is direct nexus between the order passed by the Settlement Commission under section 245D(4) of the Act in the case of the firm, and the consequential order giving effe....
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....ed before the Bombay High Court, wherein the court has taken the view that if, in a given case, the income is determined by taking into account all the heads then the determination of the assessed income would cover all the heads, but if the Assessing Officer has not adjudicated by the cut-off date on all the heads of income and tax has been demanded only on part determination, then the Kar Vivad Samadhan Scheme contemplates payment of tax on the part of the total assessed income. In these circumstances, the court has taken the view that the Assessing Officer was authorised and empowered to proceed under section 142(1) of the Income-tax Act in respect of the assessment year 1992-93 after the designated authority passed an order on January 19, 1999, under the Kar Vivad Samadhan Scheme determining the total income of the assessee-petitioner. Mr. Naik, thereafter, drew our attention to section 182 of the Act, as it was in force at the relevant time, which reads as under: "182. Assessment of registered firms.-(1) Notwithstanding anything contained in sections 143 and 144 and subject to the provisions of sub-section (3), in the case of a registered firm, after assessing the total ....
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....ase, the order was passed by the Settlement Commission in the case of the partnership firms and consequential effect was given to the petitioners' case and the petitioners were partners in the said firm. The said proceedings, therefore, flow from the proceedings of the firm. In our view, there is an in-built mechanism in the Act, looking to the entire scheme of the Act as well as the KVS Scheme, we are of our considered opinion that section 155(1) is required to be read with section 95(i)(d) of the Act, if the firm is prohibited from approaching the designated authority for settlement of its tax disputes as those disputes were already resolved by the Settlement Commission, the partners are equally prohibited from approaching the designated authority qua the share income from the said firm is concerned. We make it clear that simply because the share income is included in the case of the petitioners, it cannot be said that the petitioners cannot approach the designated authority qua the other income is concerned. The embargo is only with regard to the share income from the firm, in which case the order under section 245D(4) is passed and it does not preclude the petitioners from appr....