DAHI LAXMI DAL FACTORY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner is a partnership firm carrying on business at Sitapur in the name and style of M/s. Dahi Laxmi Dal Factory. THE firm was constituted under a deed of partnership dated 28th June, 1969. THEre were two partners, Yashwantlal and Deep Narain, besides three minors who were admitted to the benefits of the partnership under Section 30 of the Indian Partnership Act. Prior to the formation of the firm there existed another firm of the same name and style constituted under a partnership deed dated 21st June, 1966, with two partners, Jethalal, father of Yashwant Lal, and Deep Narain. To the benefits of that partnership also the three minors had been admitted. Jethalal died on June 21, 1969, and the present partnership took over the business of the erstwhile firm. During the assessment year 1970-71, the petitioner claimed that on the death of Jethalal the old firm stood dissolved on 21st June, 1969, and on the following day the new firm took over the business and, therefore, two assessments should be made, one against the old firm and the other against the new firm for the respective periods during which they were in existence during the relevant previous year. THE Income-tax Officer did not accept this claim of the petitioner and passed one assessment order for the whole year against the petitioner-firm. THE petitioner's revision application to the Commissioner also failed. THE petitioners have now approached this court under Article 226 of the Constitution.

(2.) THE case of the department before the income-tax authorities as also before us is that the petitioner-firm was the result merely of the reconsti-tution of the old firm and, as such, the case was covered by Section 187 of the Income-tax Act, 1961, and one assessment had to be made against the reconstituted firm. THE assessee's case is that it is a case of succession of one firm by another firm and the assessment should be made on the two firms separately under Section 188 of the Income-tax Act. When the matter came up before the Division Bench of this court, the department placed reliance upon the two decisions of this court, namely, R. B. Jessa Ram Fateh Chand v. Commissioner of Income-tax, [1971] 81 ITR 409 (All). and Civil Misc. Writ No. 5801 of 1970 (Ram Narain Laxman Prasad v. Income-tax Officer, 1972 84 ITR 233.), decided on 20th May, 1971. THE Bench doubted the correctness of those decisions and referred the case to a larger Bench. That is how this matter has now come up before us.

(3.) THEREFORE, we will have to refer to the Indian Partnership Act to find out as to what is understood of the expression " reconstitution of a firm " and how it is different from a firm which is newly constituted to determine the scope of Sections 187 and 188 of the Act.