A.P Associates, Basti vs Assessee on 15 March, 2016
8. Regarding the deduction on account of interest and remuneration
paid to partners, we find that it is held by Ld. CIT(A) that since the
assessment was completed by the Assessing Officer u/s 144, in view of the
provisions of Section 184(5) and section 185, such deduction on account of
interest and remuneration to the partners is not allowable. Now, we deal
with the Tribunal's order cited by Ld. AR of the assessee having been
rendered in the case of Surendra Prasad Mishra Vs. ITO (Supra). In this
case, it was held by the Tribunal that for the purpose of applying section
184(5) of the Act there has to be complete failure as envisaged u/s 144
and mere non cooperation of the assessee making it difficult to determine
the correct income may justify an assessment u/s 144 of the Act but that
by itself is not sufficient to assess the firm as an AOP u/s 184(5). In the
present case, we find that initially the Assessing Officer issued notice u/s
142(1) of the Act but the same was not complied with and thereafter, the
Assessing Officer issued notice u/s 142(1) again for which part compliance
was made by the assessee by appearing before the Assessing Officer along
7
with the copy of cash book and audit report of the assessee firm but the
assessee firm did not comply fully to the questionnaire annexed to the
notice u/s 142(1) of the Act. The assessee has not produced the copy of
such questionnaire attached by the Assessing Officer along with notice
issued u/s 142(1) and the letter submitted by the assessee before the
Assessing Officer in compliance thereof. Hence, in the present case, it
cannot be said that there is some non cooperation of the assessee making
a difficult to determine the correct income but in the present case, there is
substantial non compliance if not full non compliance by the assessee and
therefore, in the facts of present case, this Tribunal's order cited by Ld. AR
of the assessee is not applicable. There is no other argument of the Ld. AR
of the assessee as to why and how deduction should be allowed to the
assessee in respect of interest and remuneration to the partners. Hence, on
this issue, we find no reason to interfere in the order of Ld. CIT(A).