Ramsahai Nathulal vs Commissioner of Income Tax

G.G. Sohani, J.—This is an application u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

The material facts giving rise to this application, briefly, are as follows :

The assessee is a firm and the assessment year in question is 1977-78, for which the accounting year ended on Diwali, 1976. The assessee-firm consisted of three partners, namely, Shri Ramsahai, Shri Nathulal and Shri Vimalchand. The firm was dissolved on August 14, 1976, and all the assets and liabilities of the partnership firm were taken over by one of the partners, Shri Ramsahai. The assessee filed two separate returns, one for the period up to August 14, 1976, in the status of a registered firm, and the other from August 15, 1976, up to the end of the accounting year in the status of an unregistered firm. On October 24, 1976, a partnership deed was executed by Shri Ramsahai, Shri Nathulal, Shri Vimalchand, Shri Prayagdatt and Smt. Thakubai. In that deed, it was stated that the firm had come into existence since August 15, 1976. The assessee filed an application for continuation of registration. The Income Tax Officer held that there was a change in the constitution of the firm and, therefore, the assessee should have applied for fresh registration in Form No. 11A. The Income Tax Officer, therefore, refused registration and made a single assessment for both the periods treating the assessee as an unregistered firm. On appeal, the order passed by the Income Tax Officer was affirmed. The appeal preferred by the assessee before the Tribunal was dismissed and the assessee sought reference ; but the application filed by the assessee in that behalf was rejected. Hence, the assessee has filed this application.

Having heard learned counsel for the parties, we have come to the conclusion that the following questions of law do arise out of the order passed by the Tribunal:

"(1) Whether, on thn facts and in the circumstances of the caae, the Tribunal was right in holding that there was a change in the constitution of the firm and theassessee was bound to make a fresh application for registration u/s 184(8) of the Act and that the firm was not entitled to renewal of registration up to August 14, 1976?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that even if some of the partners had been assessed on their respective shares of income, the assessee was rightly assessed as an unregistered firm for the whole accounting year ?"

The application is, therefore, allowed. The Tribunal is accordingly directed to state the case and to refer the aforesaid questions of law to this court for its opinion. In the circumstances of the case, parties shall bear their own costs of this application.