COMMISSIONER OF INCOME TAX Vs. PARANJOTHI NADAR

JUDGEMENT

(1.) THE assessee-firm filed returns of income for the year 1982-83. During the lifetime of one Shri Paranjothi Nadar, he was one of the five partners of the assessee-firm. He died on October 31, 1981. On the death of Paranjothi Nadar, the assessee claimed that the firm stood dissolved, and the assessee furnished returns of income disclosing an income of Rs. 22,940 for the period from April 1, 1981 to October 31, 1981, stating that closing stocks had to be valued at market price. THE Assessing Officer brought to charge an aggregate sum of Rs. 71,140 being the differential arising out of the valuation of the closing stock at market price and he made assessment one from April 1, 1981 to October 31, 1981, and the other from November 1, 1981, to March 31, 1982. THE first appellate authority confirmed the view taken by the Assessing Officer. THE Tribunal found that on the death of Paranjothi Nadar, the remaining four partners took one Ravi Gunapandian as partner and continued the business as before and the Tribunal also found that the business of the firm having been continued, there was no necessity for valuing the closing stock as on October 31, 1981, at market price. On that, the reference has arisen and at the instance of the Revenue, the following question has been referred to this court for our opinion :

(2.) THE claim of the assessee is that on the death of Paranjothi Nadar, the firm stood dissolved and, hence, the assessee is liable to furnish returns of income only for the period from April 1, 1981 to October 31, 1981, i.e., till the date of death of the partner, one Paranjothi Nadar. THE Tribunal had found that since one partner was added on the death of the said Paranjothi Nadar and the business was continued, there is no necessity to value the closing stock as on October 31, 1981, at the market price.