SWAROOP CHAND KOJURAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under Section 256(2) of the INcome-tax Act, 1961, the contention, inter alia, of the assessee is that it is a partnership firm. The firm is constituted Of three partners, namely, (1) Shri Dwarka Das Rathi, (2) Smt. Sunder Devi, and (3) Shri Anand Pra-kash. Dwarka Das Rathi was the main working partner and was conducting the business and attending to the affairs of the partnership firm. He died on January 2, 1986. Smt. Sunder Devi, mother of Dwarka Das Rathi, died in or about the year 1981. Anand Prakash was not the working partner, was not attending to the business of the partnership firm and was not conducting the business of the partnership firm. The firm stood dissolved long back. The petitioner-firm was dealing in agricultural commodities and was carrying on arat and had income from interest. The petitioner-firm was maintaining books of account on Diwali year basis. The accounting year for the assessment year 1976-77 ended on November 3, 1975. The petitioner firm returned an income of Rs. 20,960 for the assessment year 1976-77 which was assessed under Section 143 of the INcome-tax Act, 1961, on the total income of Rs. 24,580 on January 27, 1977. A survey under Section 133A of the Act was conducted by the INcome-tax Department on August 3, 1979, in the business premises of the petitioner-firm. Several account books comprising Kachi rokar and truck register were detected and were impounded under Section 131 of the INcome-tax Act, 1961. The impounded record was retained in the possession of the INcome-tax Department. Kachi rokar maintained from July 25, 1975, to November 3, 1975, contained various cash credits and exhibited income. Proceedings under Section 148 of the Act were initiated on the basis of the impounded record. Notice was served upon Dwarka Das Rathi on March 29, 1980. He submitted a return on February 16, 1982, declaring income at Rs. 20,960. An ex parte assessment under Section 144 of the Act was made on March 29, 1982, on an income of Rs. 5,36,580. Such assessment was reopened under Section 146 of the Act vide order dated April 30, 1982. It is contended that Dwarka Das Rathi being ill and infirm could not appear on each and every date and on some of the dates absented from appearance. Dwarka Das Rathi moved an application for settlement to the Commissioner of INcome tax. The Commissioner of INcome-tax, Jodhpur, in his camp at Barmer, discussed the issue with Dwarka Das Rathi and R. S. Rathore, authorised representative of the petitioner-firm. According to the petitioner-firm, the Commissioner of INcome-tax advised as under ;

(2.) THE Department was prepared to take a sympathetic view provided the assessee-firm comes forward with full and final disclosure of concealed income ;

(3.) THE assessee-firm thereafter made a reference application under Section 256(1) of the Income-tax Act, 1961, on the following purported questions of law :