KIRKEND COAL COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Kirkend Colliery was originally acquired by four persons in the year 1894 who carried on the business in partnership. Later on many other persons became interested in the partnership business either by inheritance, survivorship, gift or purchase. In the assessment year 1947-48 the following persons were partners of the fir : <FRM>JUDGEMENT_953_ITR52_1964Html1.htm</FRM>

(2.) FOR the assessment year 1948-49 the Income-tax Officer started penalty proceedings under section 28 of the Income-tax Act and ultimately levied a penalty under section 28(1)(c) of the Income-tax Act upon the partnership firm. The order imposing penalty is dated the 30th July, 1954. Before the Appellate Tribunal the contention of the assessee was that at the time the order of penalty was made the original partnership firm had been dissolved because of the death of Butto Kristo Roy which took place on the 7th July, 1951. It was contended on behalf of the assessee that the partnership had been dissolved and there was reconstruction of a new firm and, therefore, penalty could not be levied upon the partners of the new firm for any concealment or omission made by the old partnership firm in the assessment proceeding. It appears that on the 7th July, 1951, Butto Kristo Roy died &egrave;and his share of 2 annas 8 pies was allotted to the share of Baidyanath Roy on account of a compromise in Partition Suit No. 69 of 1946. Subsequently, in the year 1952, Baidyanath Roy acquired an additional 5 annas 4 pies share of the colliery business and thus became the owner of 8 annas share. By that time the other 8 annas share of the colliery business was acquired by purchase by Bijali Kanti Roy. The result was that in the year 1952 the Kirkend Coal Company was owned by two partners having equal shares, namely, Baidyanath Roy having 8 annas share and Bijali Kanti Roy having the other 8 annas share. Therefore, at the time of the levy of penalty, that is, on the 30th July, 1954, the firm was constituted of two partners, namely, Baidyanath Roy and Bijali Kanti Roy, who had 8 annas share each. The Appellate Tribunal, however, rejected the argument of the assessee that the penalty could not be levied because of the dissolution of the old partnership firm.