The Hindu : Business : PAN card not relevant for income computation

Online edition of India's National Newspaper
Monday, Feb 25, 2008
ePaper | Mobile/PDA Version

Business

Business

PAN card not relevant for income computation

My client, Sri Maruthi Transport, a partnership firm and a goods transport operator, applied and got Permanent Account Number (PAN) in the status of a firm. For 2003-04 assessment, the firm had only one trailer. The assessee filed IT return under Presumptive Income as per Sec. 44 AE in the status of unregistered firm (URF). Income returned was Rs. 47,000 (below the taxable limit for URF). There was a TDS certificate for Rs. 5,251. It was claimed as refund. As per the intimation served on the assessee, the firm was assessed as a firm and a demand for Rs. 14,441 was raised against the assessee. Rectification petition was filed on July 23, 2004 for assessing the assessee in URF (Association of Persons (AOP)) status. No rectification order was passed so far. Now, the IT Department is sending default notice to the assessee. When I met the learned Income Tax Officer, he told me that the status as per PAN was firm; so the computer would automatically generate the assessment order (intimation) for a firm only; he could not process the intimation manually and hence he asked my assessee to file a new application in Form 49A (for new PAN) in the status of URF (AOP). The firm was already dissolved. How to proceed further?

Description of status is an application for PAN card could have only a status listed in the definition of person under Sec. 2(31) of the Income-tax Act, 1961. Firm is the correct description, whether it is registered or unregistered. Description of status as Firm both in PAN Card and the return are correct.

But that should make no difference to the levy of tax, which has to follow the law by assessing it as Firm, if certified copy of ruling partnership deed is filed and, if not, assess the income as that of AOP.

Apparently, the assessee had not filed the certified copy, so that correct status is still that of Firm, though taxed as AOP. The argument that what cannot be corrected by computer cannot be done manually is untenable. The order, therefore, required rectification.

The classification between registered and unregistered firm has long since been removed with effect from April 1, 1993 by Finance Act, 1992. There can, therefore, be no fresh issue of PAN Card in the status of “Unregistered Firm”. A firm, which is treated as AOP for lack of enclosure of certified copy of partnership still continues as firm, though for purposes of tax computation, it is treated as AOP.

The assessee should file an appeal with a petition for condonation. It may press for response to rectification petition already filed and file an appeal once such an order, if negative.

Incidentally, there is no bar for a dissolved firm to file an application for PAN as Association of Persons, to satisfy the authorities, since Sec. 47 of the Partnership Act, 1932, enables the dissolved firm to do all acts relating to its affairs till it is finally wound up.

S. RAJARATNAM

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section

Budget: focus is on inclusive growth

PAN card not relevant for income computation

Making of a people-friendly budget

Personal file sharing tools revisited

Doing business successfully in China, Sagnik Roy's way

More takers for plastic-wood partition boards

Land of surplus water resources