COMMISSIONER OF INCOME TAX Vs. JANATHA TEXTILES

JUDGEMENT

(1.) THIS is a reference under section 256(1) of the Income-tax Act, 1961. The Tribunal (Bangalore Bench) has referred the following question :

(2.) UNDER a deed of partnership dated January 8, 1969, five partners carried on textile business at No. 160, Chickpet, Bangalore. This firm was following the year 1971-72 to 1973-74. This firm was following the year ending Diwali as the accounting year and the accounting year for the assessment year 1974-75 ended on October 26, 1973, on Diwali day. On September 22, 1973, one of the partners left the firm. He was a lessee of the premises where the firm carried on business. The firm was evicted form that premises with effect from September 29, 1973. The firm was thus left with no business premises. It was inevitably dissolved with effect from September 30, 1973, with distribution of the assets and liabilities and closing of the books of account.

(3.) ON going through the records, the Commissioner found that there were certain discrepancies in the stand taken by the assessee as to the registration of the firm. After hearing the assessee, he made an order directing the Income-tax Officer to treat the assessee-firm as an unregistered firm for the assessment year 1974-75. He was of the opinion that having regard to the facts, the assessee could not have filed a declaration under section 184(7) in Form No. 12. He also noted the discrepancies in the new deed of partnership and held that the Income-tax Officer's action in continuing the registration was erroneous.