COMMISSIONER OF INCOME TAX Vs. SESHAGIRI RAO D

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal. Hyderabad, has referred the following two questions to this court under section 256(1) of the Income-tax Act, 1961 :

(2.) INDEED, the facts of this case are identical with the facts in CIT v. Friends Enterprises . The Tribunal disposed of the appeal following the principle of its decision in the said case. On reference, however, this court did not agree with the reasoning and conclusion of the Appellate Tribunal, and answered two identical questions against the assessee and in favour of the Revenue. That decision should conclude the questions in this case. But, Mr. Y. Ratnakar, learned counsel for the assessee, raised a contention which was not raised or considered by this court in CIT v. Friends Enterprises . The contention is that before making the assessment in the status of an association of persons, a notice under section 139(2) of the Act ought to have been issued calling upon the assessee to submit a return in that status. Since that has not been done, it is argued, the assessment made is illegal. Though this question has not been specifically referred to by the Tribunal for our opinion, the Tribunal was of the opinion, when the assessee asked for referring the same, that the said question is implicit in the two questions referred by it and that it is open to the assessee to argue the said question before this court. Though learned standing counsel for the Revenue contends that the assessee could not have asked for referring a question in a reference application filed by the Revenue and that the Tribunal was not competent to make the said observation, we prefer not to go into that aspect. We would rather deal with the contention urged on merits.

(3.) THE only question we have have to consider now is whether the assessment made on the assessee in the status of an association of persons is illegal and invalid for the reason that, before doing so, no notice under section 139(2) was issued to the assessee. It must be remembered that the return was filed in the status of a firm along with an application for registration of the firm. In its letter dated March 20, 1979, however, the assessee contended that the return field by it must be ignored because it was filed under a misconception of law and that it could not be assessed either in the status of a firm or in the status of an association of persons. THE Income-tax Officer passed orders on February, 1, 1980, refusing registration under section 185. No appeal was preferred against the said order and that has become final. THEreafter, he made an assessment order on August 19, 1980, ascribing the status of an association of persons to the assessee. No notice was, however, issued by him either under section 139(2) or section 148 calling upon the assessee to file a return in the status of an association of persons.