RAM NIRANJAN SATYANARAIN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Allahabad Bench (hereinafter referred to as the Tribunal), has submitted a statement of case and has referred, in accordance with the directions of this court under section 66(2) of the Income-tax Act, 1922 (hereinafter referred to as the Act), the following question of law for the opinion of this court :

(2.) THE assessment year to which this case relates is 1950-51, the previous year being October 17, 1948 to October 10, 1949. Sri Ram Niranjan Satya Narain (hereinafter referred to as the assessee) was assessed in the status of a registered firm which was styled Ram Niranjan Satya Narain. It was carrying on cloth business on commission basis in the name and style of Nand Kishore Jugal Kishore and sarrafa business on a small scale in another branch in the name of Satya Narain Prasad Rameshwar Prasad. THE account books of the head office, i.e., Messrs. Ram Niranjan Satya Narain, were not produced before the Income-tax Officer on the plea that they had been stole away. However, in the account books relating to the business of Nand Kishore Jugal Kishore there existed a cash entry of Rs. 25,000 on May 3, 1949, in the account of the head office. THE Income-tax Officer rejected the explanation of the assessee with regard to the source of Rs. 25,000 and added that amount to the assessable income of the assessee. THE Appellate Assistant Commissioner upheld the assessment and dismissed the appeal filed by the assessee. THE assessee then filed the second appeal before the Tribunal and contended there that the add-back of the cash credit of Rs. 25,000 was bad both under the law and in fact. THE submission made there was that the assessee-firm was dissolved on October 13, 1951, and that an assessment on a dissolved firm could not be made. Reliance was placed upon Manindra Lal Goswami v. Income-tax Officer.

(3.) THIS provision clearly shows that, even though a partner is liable, the liability does not cease after dissolution. The view that we are taking finds full support from Shivram Poddar v. Income-tax Officer, Central Circle II, Calcutta and Commissioner of Income-tax v. Chheharta Button Factory.