TMI Blog1998 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ukhraj Nahata. On November 7, 1980, the last date of the accounting year ending on Diwali, 1980, Santosh Chand retired from the firm and the petitioner firm was continued with the remaining two partners in the subsequent assessment years and was registered as a firm by respondent No. 1. According to the petitioner, although there was a deed of dissolution of the firm, it was clearly stated that the continuing two partners had taken over the running business of the partnership firm with all the assets and liabilities including the share payable to the retiring partner. The petitioners have filed the deed of dissolution, which is annexure D. A new deed of partnership was also executed by the continuing partners, of which a copy has been filed as annexure E. A letter dated February 7, 1985, was issued by respondent No. 3, the Income tax Officer, Seoni, to the effect that for the assessment year 1981-82, it was found that the stock of silver on the last date of the accounting year had been valued by the firm at the rate of Rs. 1,255.70 per kg. whereas the market rate of silver, as on that date, was Rs. 2,727 per kg. It was stated that as the firm was dissolved from the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to tax had escaped assessment. Learned counsel for the respondents has refuted the contentions of the petitioner company on the ground that all these points can be raised before the Assessing Officer and since, as per the petitioners, these grounds have already been raised by the petitioner-company before him the matter should be left to be considered by him only. Learned counsel for the petitioner has referred to a Full Bench decision of this court in Girdharilal Nannelal v. CIT [1984] 147 ITR 529, in support of his contention that if a firm is dissolved and succeeded by another firm which has, as its partners, one or more partners of the original firm, the case will be one covered by section 187 of the Income-tax Act, as it would be merely a change in the constitution of the firm. Reference has also been made to a decision of a Division Bench of this court in Vimal and Amar Talkies v. CIT [1982] 138 ITR 660, in which it was held that where a partner in the old firm was also a partner in the new firm, it was a case of change in the constitution of the firm and not a case of succession of one firm by another firm and, therefore, only a single assessment could be made by applyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d none of the partners of the old firm is a partner in the new firm, the case would be covered by section 188. The omission of the words 'or that a firm has been newly constituted' as they occurred in section 26(1) of the 1922 Act from section 187 is not indicative of any contrary intention because of the comprehensive definition enacted in the latter of the expression 'a change in the constitution of the firm' and also because of the presence of the words 'and the case is not one covered by section 187' as they occur in section 188. As the scheme of sections 187, 188 and 189 is clear and there is no ambiguity in them, recourse to the provisions of the Partnership Act cannot be taken for construing them. In this view of the matter, the Tribunal, in our opinion, was right in applying section 187 and not section 188 to the facts of the instant case for the reason that Smt. Manubai who was a partner in the old firm was also a partner in the new firm and it was thus a case of the change in the partnership and not a case of succession of one firm by another falling under section 188." The above Division Bench decision was considered by the Full Bench in Girdharilal Nannelal v. CIT [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aped assessment in the said year. Even the ground on which the assessment was proposed under section 147 of the Act, viz., that it was a case of dissolution and the dissolved firm should have valued its closing stock at the market rate and not as per the method consistently followed by the firm, was not available in view of the law settled by the Full Bench in the aforesaid decision and there were no grounds for proceeding under that section. The objection of learned counsel for the respondents is that even in such cases, it is open to the petitioner to raise objection before the Assessing Officer and to pursue the remedy provided under the Act against any fresh assessment. Learned counsel has referred to the decision of the Punjab and Haryana High Court in State Bank of Patiala v. CBDT [1994] 207 ITR 190, but, in that case, the assessee had changed the system of accounting without disclosing the change in the method of accounting and it was held that it was not a case where the assessee had disclosed all material facts truly. It was against the backdrop of these facts that the notice of reassessment was not quashed. In the present case, the notice has been issued on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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