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1964 (7) TMI 53

..... nder section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act), by the Income-tax Appellate Tribunal for decision of the following question of law: "Having regard to the fact that notice under section 22(2) was served and the return was filed when the firm was in existence, was the assessment for 1953-54 on the firm Messrs. Chheharta Button Factory, Chheharta, validly made on January 20, 1958, when the firm was dissolved on April 30, 1957?" The brief facts of the case are that the assessee-firm, Chheharta Button Factory, is an unregistered firm. A notice under section 22(2) of the Act was issued and served on the assessee on the 28th May, 1963, in respect of the assessment year 1953-54. During the cours .....

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..... firm or association.-Where any business, profession or vocation carried on by a firm or association of persons has been discontinued, or where an association of persons is dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such association shall in respect of the income, profits and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment." Dealing with the object of the above provision of law their Lordships of the Supreme Court observed in Shivram Poddar v. Income-tax Officer, Central Circle II, Calcutta .....

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..... the case of discontinuance of business of a firm or of an association or dissolution of an association, liability to assessment is under Chapter IV and all the provisions of Chapter IV, so far as may be, apply to such assessment." Their Lordships accordingly concluded [1964] 51 ITR 823 : "Balmukand Radheshyam was an unregistered firm and by the discontinuance of the business it neither ceased to be liable to pay tax on the income earned by it, nor could a procedure different from the one prescribed under Chapter IV apply for the assessment of the income of that firm". C.A. Abraham v. Income-tax Officer, Kottayam [1961] 41 ITR425 (SC) is another case decided by the Supreme Court in which the effect of section 44 of the Act wa .....

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..... ate Tribunal in arriving at the conclusion, that no assessment order could be made against the firm after its dissolution, relied upon a Division Bench decision of the Calcutta High Court in R.N. Bose v. Manindra Lal Goswami [1958] 33 ITR 435 . In that case the court found that the notice under section 34 of the Act, which was served on a partner of the firm, was not valid and no proper assessment could be made on the basis of the aforesaid notice. The assessment was, accordingly, held to be invalid on that ground. It was also observed that no assessment order could be made against a dissolved firm with regard to its pre-dissolution income. It would thus appear that the observations about the assessment order being made against a dissolved .....

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