DHANNALAL GULABCHAND SETHI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) IN these two writ petitions question posed for consideration is whether the order passed by AO and directions issued under Section 144a of the IT Act, 1961, by Addl. CIT treating the partnership firm as AOP, liable to assessment under Section 185 of the IT Act, 1961, (hereinafter referred to as 'the Act') are proper.

(2.) THE fact which is not in dispute that there existed a partnership firm. One of the partners, namely Shri Gulabchand Sethi died on 16th Aug. , 1997, owing to which the partnership firm stood dissolved. Fresh partnership deed was drawn on 20th Aug. , 1997, in which it was mentioned that the old firm was dissolved due to the death of Shri Gulabchand and that there was no business from 17th Aug. , 1997 to 19th Aug. , 1997. New firm started the business from 20th Aug. , 1997 to 31st March, 1998.

(3.) ACCORDING to ITO, the accounts were not closed of dissolved firm on the death of Shri Gulabchand Sethi and the actual profit has not been distributed amongst the partners for the period 1st April, 1997 to 16th Aug. , 1997. Petitioner filed two returns, i. e. , one for the period 1st April, 1997 to 16th Aug. , 1997, and the other for the period 20th Aug. , 1997 to 31st March, 1998. Owing to the death of Shri Gulabchand Sethi on 16th Aug. , 1997, the firm was legally dissolved for the reason that in the deed of partnership executed on 1st April, 1995, which was effective at that time, there was no provision to continue the partnership. A new partnership deed was executed on 20th Aug. , 1997, in which it was mentioned that the old firm was dissolved due to the death of Shri Gulabchand and that there was no business transaction from 17th Aug. , 1997 to 19th Aug. , 1997.