TMI Blog2008 (4) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... ein having been paid, consequent to the relief granted by the Tribunal in respect of asst. yr. 1985-86 the assessee became entitled to receive interest of Rs. 2,60,134 under s. 244(1A) of the IT Act. The said refund was sent to the assessee firm on 14th Sept., 2000 by registered post and the same was encashed by the firm. Since the refund was granted during the previous year relevant to asst. yr. 2001-02, the AO was of the opinion that the interest received by the assessee is assessable to tax under the head "Other sources" and accordingly, issued a notice under s. 148 of the Act, which was duly served on the assessee firm on 9th May, 2005. In response to the notice, the assessee firm filed a letter on 3rd June, 2005 requesting for grant of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 27th April, 1994 to 2nd March, 2000, which was refunded along with interest and such interest having accrued only in this year-on account of modification order dt. 28th Aug., 2000-the same was rightly assessed to tax in the year under consideration. The order of the Tribunal was passed on 17th Feb., 2000 and assessee paid instalments upto 2nd March, 2000 and thus it cannot be said that the interest accrued prior to the said dates. Since the assessee did not file the return of income declaring the interest income, the AO was justified in invoking the provisions of s. 147 of the Act. 5. With regard to the contention that the firm has become defunct on account of death of two of its partners, the first appellate authority observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any evidence to show that the other partners intended to dissolve the firm, upon a conjoint reading of ss. 40 and 42 of the Partnership Act, the partnership shall be deemed to be continuing. In fact, the refund granted by the AO under s. 244(1A) of the IT Act was in the name of the firm, which was encashed by the partners, which in itself indicates that the firm continued its existence despite the death of two partners. It was, therefore, contended that reopening of assessment is valid and the assessment of the interest income in the hands of the firm is in accordance with law. 8. I have carefully considered the rival submissions and perused the record. At the outset, it may be noticed that the grounds of appeal annexed to Form 36 are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank account standing in the name of the firm. There is nothing on record to indicate that the bank account of the firm was closed consequent to the death of managing partner. Shri Radhe Shyam Modi, who was merely representing his HUF and not in his individual capacity. There is no other evidence on record to suggest that the firm closed its business subsequent to the death of either Radhe Shyam Modi or Pawan Kumar Modi. In fact, the cheque issued by the IT Department was encashed by the partner, which in itself indicates that the firm continued to be in existence as otherwise, the cheque could not have been encashed by depositing in any account other than the account in the name of the firm. The letter addressed by the assessee to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even after death of one of the partners, who was representing his HUF. Therefore, the issuance of notice by the AO under s. 148 of the Act in the name of the firm and consequent assessment made under s. 144 r/w s. 147 of the Act is in accordance with law. The case law relied upon by the assessee are distinguishable on facts inasmuch as in those cases. the factual matrix as to whether there was dissolution or not was not the issue under consideration whereas, in the instant case, the clauses in the partnership deed and the conduct of the assessee clearly indicate that the firm continued its existence despite the death of the partners. Since the firm is treated as continued after the death of the partners, even if no business is carried on i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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