TMI Blog2001 (1) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... agdish Lal, Sohan Lal S/o Mohan Lal and Kamal Chand. Before commencement of asst. yr. 1972-73 w.e.f. from 1st April, 1972, the assessee filed an application in Form No. 11 on 30th March, 1972, for registration of the firm along with partnership deed dt. 27th March, 1972. The ITO was satisfied about genuineness of details furnished in the Form and therefore, by order, dt. 30th Nov., 1974, granted certificate of registration to the firm. In the partnership deed, dt. 27th March, 1972, it was stated that the firm has commenced its business w.e.f. 1st April, 1971, with aforesaid 9 partners. Out of 9 partners, Kamal Chand died on 25th Sept., 1971, and in his place, his wife and legal heir Smt. Tulsi Bai was inducted as partner to the firm. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would certainly have been open for him to remand the matter to the ITO for such other investigation or enquiry as might be necessary. Instead of giving such finding or basis, learned CIT set aside the order of ITO with the direction to make further enquiry. It was thus opined that unless there is such a finding, the order passed by the learned CIT under s. 263 of the Act cannot be sustained. It is in aforesaid circumstances that an application came to be made by the Department of Revenue whereupon following question of law has been referred for opinion of this Court: "Whether, on the facts, and in the circumstances of the case, the Tribunal was justified in setting aside the order under s. 263 of the IT Act, 1961, passed by the CIT?" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teration in the terms of partnership shall be by majority and shall be binding on other partners. Thus, the partnership deed consisted an agreement contrary to s. 42 of the Partnership Act. The relevant portion of partnership deed, Annexure A to the statement of case, is reproduced hereinbelow: 6. The requirement for registration of a firm, as per s. 184 of the IT Act, is that the partnership is evidenced by an instrument and exact shares of the partners are specified in the said instrument. The application for registration under the Act may be made after constitution of the firm or after its dissolution and that, the application shall be made before end of previous year for the assessment year in respect of which registration is sought. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely, such power is exercisable only on his being satisfied firstly, that the order sought to be revised is erronous and secondly, that because of such erroneousness, order is prejudicial to the interests of the Revenue. 8. The very fact that CIT is required to make an order after affording an opportunity of hearing to the assessee ingrains in the process the requirement of recording reasons for its conclusion, as is necessary for any quasi judicial order required to be made by a quasi judicial authority. It cannot be doubted nor it has been questioned that orders under s. 263 bears stamps of quasi judicial nature and require to be supported by reasons for its conclusion. Necessary consequence is that while passing the order revising an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made. 10. On the other hand, the Tribunal from the conduct of the partners of the firm and a wholesome reading of the documents inferred as a fact that there was such a contract to contrary. So far as position of law concerning dissolution of partnership in the context of s. 42 of the Partnership Act is well settled. It is not the issue that arise out of the Tribunal whether on the death of a partner the firm dissolved or not. The common premises is that unless there is a 'contract to the contrary' a partnership stands dissolved on death of any partner as per s. 42 of the Act. Thus, the only question that remained for consideration is whether there was a contract to contrary or not or, whether there was any evidence of terms to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the death of one of them and, therefore, it is a contradiction in terms to say that there can be a contract between two partners, to the effect that on the death of one of them the partnership will not be dissolved but will continue....... partnership is not a matter of status, it is a matter of contract. No heir can be said to be a partner with another person without his own consent, express or implied". Subha Rao, J said: "Sec. 42(c) of the Partnership Act can appropriately be applied to a partnership, where there are more than two partners. If one of them dies, the firm is dissolved; but if there is a contract to the contrary, the surviving partners will continue the firm". 12. We are afraid, in his order, learned CIT has not at a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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