TMI Blog1977 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... g November 4, 1945, and March 31, 1946, made on M/s. Nagarmal Baijnath, a firm which was dissolved and whose business was discontinued at the time of the assessments, were validly made ? " The assessee before us is Messrs. Nagarmal Baijnath, which firm consisted of four partners, viz., Nagarmal, Banarsilal, Baijnath and Brijmohan. Nagarmal died in 1961, and his representative was his son, Banarsilal, who was also a partner in the firm. Nagarmal and Banarsilal were the financing partners, whereas Baijnath and Brijmohan were working partners. The firm did business in cloth and commission agency. The firm was dissolved by a deed of dissolution dated 2nd December, 1946, and according to that deed the partnership was treated as closed from 25t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansukhlal. Notice for the chargeable accounting period ending 31st March, 1946, was also issued to M/s. Nagarmal Baijnath and served on 30th April, 1949. The excess profits tax assessments were completed on 20th October, 1962, for both the chargeable accounting periods. It may be mentioned that the income-tax returns for these two assessment years, viz., 1946-47 and 1947-48, were submitted on 9th October, 1947, and 3rd January, 1949, respectively, and both were signed by Baijnath Gajanand for Messrs. Nagarmal Baijnath. The excess profits tax returns for both the chargeable accounting periods were filed on 7th June, 1950, and were both signed in the name of Messrs. Nagarmal Baijnath. The income-tax assessment for 1946-47 was completed on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring of the appeals before the Tribunal several grounds on merits were considered, but these are not relevant for the reference before us. We are only concerned with the additional grounds which were sought to be raised by the said letter, the portion of which is extracted above. It was contended on behalf of the assessee that the additional grounds should be allowed to be raised as they raised a pure question of law. On behalf of the department, however, it was contended that the grounds involved ascertainment of basic facts and, therefore, should not be allowed to be raised at that stage. The Tribunal overruled these objections of the departmental representative and gave the following reasons for overruling the objections : " The basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had sought to be raised clearly was restricted to the assessment order and based on the grievance that such assessment order on the firm could not have been validly made at the time when the firm stood dissolved and had discontinued its business. The question sought to be raised by the assessee is to be found in paragraph 14 of the statement of case. The Tribunal, however, submitted the question in its own words and the question referred to us has been set out earlier. The question clearly indicates the view of the Tribunal and a clear finding that at the time when the assessments were made on the firm, the firm stood dissolved and its business discontinued. It is on the basis of this clear finding that we have to decide whether the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Special Civil Application No. 429 of 1960-F. Y. Khambaty v. L. D. Bhatt, Income-tax Officer (judgment delivered on 11 / 12-11-1965). The very distinguished Beach of the Gujarat High Court (Shelat C.J. and Bhagwati J.) was considering the position under section 44 of the Indian Income-tax Act, 1922, as it stood prior to the amendment (namely, with the very section with which we are concerned) and it was held that if the firm stood dissolved prior to the date of the amendment, assessment on such firm could not be made. The Beach specifically disagreed with the decision of the Bombay High Court in [1961] 43 ITR 152 (Ramniwas Hanumanbux Somani v. S. Venkatraman, Income tax Officer) on which reliance was placed by the Income-tax Tribunal in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddar v. Income-tax Officer [1964] 51 ITR 823 and derived their conclusion from the observations to be found in the aforesaid two decisions of the Supreme Court. It is observed at page 434 of the report in Devidayal's case [1968] 68 ITR 425 as follows : " The result of the Supreme Court decision referred to above is that even after the discontinuance of the business of the firm either by dissolution or otherwise, the firm can be treated as continuing so far as the assessment of its pre-dissolution income is concerned and the assessment or reassessment of such a firm after dissolution under section 44 of the Act could be made in the same manner under Chapter IV as if it had not discontinued its business. " The aforesaid decisions of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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