TaxTMI 
TaxTMI 
2005 (9) TMI 214
X X X X Extracts X X X X
X X X X Extracts X X X X
....he learned Dy. CIT(A) has erred in law and on facts in upholding the action of the learned AO that remuneration cannot be allowed to the partners in accordance with the supplementary deed filed with the revised return of income under s. 139(5). (3) That the Dy. CIT(A) is not justified in sustaining the order of the learned AO without properly appreciating that the assessee has filed revised return under s. 139(5) before expiry of one year from the end of relevant assessment year and prior to completion of assessment. (4) That in any view of the case, the order of learned Dy. CIT(A) is highly unjust, improper, arbitrary, illegal and bad in law. (5) That the appellant craves leave to add, alter, amend or withdraw any grounds of appeal." 3. The relevant facts of the case are that the assessee returned an income of Rs. 32,071. The AO made certain adjustments by way of which the total income was computed as Rs. 80,540. Out of the adjustments made, the assessee was aggrieved by the adjustments made on account of salaries of the partners. Accordingly, application under s. 154 was moved contending that according to partnership deed dt. 1st April, 1992, the two working partners ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... with reference to the grounds of appeal available on file. The main ground of appeal is regarding rejection of application under s. 154 of the IT Act by the ITO, Kannauj, at Farrukhabad. The learned AO has rejected the application under s. 154 as the appellant did not file partnership deed along with return of income as the original return of income did not contain supplementary deed. The original partnership deed filed authorized two partners namely, S/Shri Ganesh Dutt Misra and Dalip Kumar Misra only and the subsequent deed alleged to have been filed by the partners were not filed along with the original return and it was filed afterwards along with the revised return of income. Considering the above facts the AO rejected the application under s. 154 as there was no mistake apparent from record. The learned counsel argued that the revised return filed should be considered which contains supplementary deed and the salary paid to the partners should be allowed as per the provisions of the supplementary deed. I agree with the findings of the learned AO that the salary to the partners cannot be allowed as per supplementary deed filed afterwards. The order passed under s. 154 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he fact of supplementary partnership deed had not been taken into consideration, it is a rectifiable error. It was also contended that the revised return was filed within the time, as such, cognizance thereof should have been taken into consideration in the s. 154 proceedings. Murali Export House & Ors. Vs. CIT (2000) 159 CTR (Cal) 427 was relied upon for the proposition that the AO should have exercised the power conferred on him vide s. 139(9) and the AO should not have proceeded unilaterally under s. 143(1)(a). CIT Vs. Arun Textile "C" (1991) 98 CTR (Guj) 117 : (1991) 192 ITR 700 (Guj) at 708 and Chief CIT Vs. Machine Tool Corporation of India (1992) 108 CTR (Kar) 110 : (1993) 201 ITR 101 (Kar) were also relied upon so as to contend that once revised return is filed under s. 139(5) the original return is substituted by the revised return. Dhampur Sugar Mills Ltd. Vs. CIT (1973) 90 ITR 236 (All) was also relied upon for the proposition that the assessment can be completed only on the basis of the correct return. Niranjan Lal Ram Chandra Vs. CIT (1982) 134 ITR 352 (All), CIT Vs. Chitranjali (1986) 50 CTR (Cal) 226 : (1986) 159 ITR 801 (Cal), CIT Vs. Banshidhar Jalan & Ors. (1994) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nto consideration the various judgments relied upon by either side, I am of the view that in the facts as they stand the learned CIT(A) was not justified in upholding the order under s. 154 passed by the AO. No doubt the AO in s. 143(1)(a) proceedings made adjustments on the basis of the old partnership deed disregarding the new partnership deed, however, once the assessee filed the revised return within the time specified in the Act which was still available to the assessee, the AO in s. 154 proceedings was, bound to take the information in consideration and make a correct assessment. On the aspect that the revised return was filed within one year from the end of the relevant assessment year there is no dispute. However, the arguments advanced on behalf of the Revenue have been that since the s. 143(1)(a) adjustment has been made this would amount to completion of the assessment and as such the revised return under s. 139(5) could not have been filed. The emphasis by the learned Departmental Representative has been laid on the fact that the timelimit for s. 139(5) would be either of the two situations, i.e., one year from the end of the relevant assessment year or the completion o....