P ABIMANYU Vs. T K SURIYA PRAKASH

JUDGEMENT

(1.) THE Order of the Court was as follows : THE petitioners were partners in a partnership firm which they claim was dissolved under a deed dated December 31, 1991, with effect from an anterior date. Notice of that dissolution was not given to the assessing authority. At the time of dissolution, there were three partners. It is the case of the petitioners that the first respondent Suriya Prakash, who was the other partner, despite the dissolution deed, carried on business in the name of the firm in association with one Pandurangan with whom he had already entered into a partnership on January 18, 1991 and had filed monthly returns with the department, till the end of the assessment year 1992-93.

(2.) IN the assessment for the assessment year 1992-93 which was completed on October 15, 1993, a demand was raised by the authorities against the petitioners for the payment of the tax arrears of the firm. At that point, the petitioners rushed to the Civil Court and sought a declaration that the firm had already been dissolved and that such dissolution had been effected on and from October 24, 1990. The assessing authority was made a party to that suit. The court ultimately declined to restrain the assessing officer from proceeding with the statutory functions under the Act, but held that the dissolution of partnership was acceptable to the court, but in view of section 51 of the Act, the declaration given by it would not come in the way of the statutory authorities exercising their functions under the Act.

(3.) RULE 40 of the RULEs framed under the Act requires a firm seeking registration, to furnish a declaration in form No. IX, signed by all the partners stating the names and addresses of all the partners and their respective shares in the business. RULE 42 provides that if a partnership is dissolved, every person who was a partner at the time of dissolution shall send within 30 days of such dissolution, a report of the dissolution to the registering authority and to the assessing authority.