1994 (3) TMI 57

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.... agreement, however, provided that the amount credited to the petitioners will be paid and allowed to be withdrawn only if the Income-tax Department allowed the same as an admissible deduction in the assessment of the firm. The petitioners filed returns for the years 1980-81 to 1983-84 returning the various amounts received by them as salary from the firm. These returns were accepted in toto as they were and the assessments completed on the petitioners for these years, copies of which are exhibits P-1 to P-14. When the firm's assessments were taken up for these years, the Income-tax Officer disallowed a part of the salary paid to the petitioners as excessive and unreasonable. The firm went up in appeal and the appeal was allowed in pa....

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....etitioners thereafter received letters of which exhibit P-35 dated February 28, 1989, is a specimen, written in pursuance of exhibit P-33, that the fourth respondent did not find its way to condoning the delay in filing the applications for rectification under section 119(2). The petitioners retorted by exhibit P-36 dated March 28, 1989, telling the fourth respondent-Board that they had become functus officio in the matter after the files were transferred to the second respondent. In the meanwhile, the jurisdiction of the second respondent over Kerala ceased and the new Chief Commissionerate was established at Ernakulam so that the petitioners wrote exhibit P-37 on December 2, 1989, to the Chief Commissioner at Ernakulam (third respondent) ....

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....ners have no cause thereafter to apply for rectification before the Income-tax Officer. Having heard counsel on both sides, I do not find any reason to interfere with the order, exhibit P-35. As pointed out in the counter-affidavit, this is a case where the returns filed by the petitioners were all accepted and the assessments completed only on that basis. It is true that in the firm's assessment part of the salary paid to the petitioners was disallowed as excessive and unreasonable. But the petitioners challenged their assessments on the very same ground as in the rectification applications before the Commissioner of Income-tax and lost by the order, exhibit P-39, dated November 27, 1986. They did not challenge exhibit P-39. They accept....