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2019 (7) TMI 697
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....nciples of natural justice. 2) For that the reopening of proceeding u/s. 147 by the Ld assessing officer was erroneous and unwarranted since the reason assigned for re-opening the assessment was not factually correct and thus the assessment order perverse and not sustainable in the eye of law. The Ld GST appeal has erred in law by confirming the action of assessing officer. 3) For that the Ld CIT (A) has erred in law by confirming the disallowances Rs. 1,81,023/- and Rs. 2,37,030/- towards interest on partners capital & remuneration to partners U/s 184(5). Payment of interest and salary to partner needs to allowed in full. 4) For that the disallowances confirmed by the Ld CIT (A) U/s 184(5) is neither based facts ....
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....g was challenged by the assessee. Subsequently, notices u/s.142(1) of the Act were issued on various dates. It is observed that in some dates there was partial compliance and in some cases, there was no compliance by the assessee. Therefore, the Assessing Officer passed order u/s.147 r.w.s 144 of the Act on 2.3.2015 determining the total income at Rs. 6,25,330/- 6. On appeal before the CIT(A), the assessee also partially complied the notices and in some other dates, no compliance was made. Before the CIT(A), it was the contention of the assessee that the AO should have allowed salary and interest paid to partners for determining the income of the assessee. However, the CIT(A) was of the view that u/s.184(5) of the Act, the assessee is no....
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....tial compliances and in some cases, no compliance was made. Hence, he framed assessment u/s.147/144 of the Act. Section 184 and Section 144 and 145, which are relevant for the purposes of adjudicating on this question, are reproduced below for ready reference: "Section 184- Assessment as a firm (1) ..... (2) ..... Explanation..... (3) ....... (4) ......... (5) Notwithstanding anything contained in any other provision of this Act, where, in respect of any assessment year, there is on the part of a firm any such failure as is mentioned in section 144, the firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by wh....
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....ment : Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year. Section 145 - Method ....
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.... interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income". This provision comes into play only when the assessment is framed under section 144 only as a result of the assessee's committing any such failure as is contemplated under section 144. However, in a situation in which the assessment is completed in the manner as prescribed in section 144 but such a course of action has been adopted because of "the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee", referred to in section 145(3), clearly the disabling provisions of Section 184(5) do not come into play. 11. Clause (b) of....
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....see. From para 4.3 of the assessment order, I also observe that the Assessing Officer has categorically noted that after several notices u/s.142(1) of the Act a show cause notice dated 5.2.2015 alongwith another notice u/s.142(1) of the Act was intimated/served on the assessee informing that failure to produce audit report and books of account, the case shall be disposed of by invoking the provisions of section 145(3) of the Act. The Assessing Officer has reproduced the contents of show cause notice. Thereafter, the AO in para 4 4 further noted that the assessee has also failed to comply with the terms of notice u/s.142(1) of the act i.e. dated 5.2.2015. Hence, the assessment should be framed by invoking the provisions of section 144 of the....