ISSUE OF NOTICE UNDER SECTION 154

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 March 2010 An assessee firm filed it’s Return of income in electronic form for the assessment year 2007-08. The firm is contractors. The case was selected for scrutiny assessment in CASS.

In response to notice u/s.143(2), the representative of firm had appeared before the AO, and submitted a letter along with paper return (ITR-5), Audited balance sheet, profit and loss account, duly signed Form 3CB and 3CD and stated in that letter that due to the pressure of work of partners of firm, the partner are not able to produce the books of accounts called, and in order to early completion of assessment, we offer higher income at 8% on Gross contract receipts.

The AO accepted the offer of firm, and completed the assessment u/s.144. The AO allowed the interest and salary payments to partners from the income determined at 8% of Gross Contract receipts.

After four months, the AO issued a notice U/s.154 to the assessee firm, and stated that the assessment was completed u/s.144, the assessee was not entitled to deduction by way of any payment of interest and salary to partner in view of provisions of section 185(5) of IT Act. Hence it is proposed to rectify the said mistake which is apparent from the record by disallowing the assessee claim for payment towards partner’s interest and salary.

Please state whether the action of AO is correct with regards to Assessment completed u/s.144 and issue of notice u/s154?

Please state relevant case law if any.

taxindiaconnect

taxindiaconnect (Expert)
Follow

06 March 2010 Yes,

The provsions are very clear and there is not need for any case law.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

Krishnaveni karur

Shameem ahmed

hitesh chandwani

Shubham Jain

MEHUL M. KEVAT

Subscribe Now

ISSUE OF NOTICE UNDER SECTION 154

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Accountant

CA Final

Article Assistant

GST CONSULTANT

Manager- Finance and Compliance

GST CONSULTANCY