1964 (1) TMI 58

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....47-48 the following persons were partners of the firm:     Rs. As. Ps. 1. Butto Kristo Roy 0 2 8 2. Suniti Bala Devi 0 1 4 3. D.N. Chandra and others 0 4 0 4. Purnendu Narayan and others 0 1 0 5. Krishna Prasad Chatterjee and others 0 3 0 6. Kunj Behari Chandra 0 1 4 7. Lokenath Chandra 0 1 4 8. Mahadeva Chandra 0 1 4   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 J....

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....enalty could not be levied because of the dissolution of the old partnership firm. Under section 66(1) of the Income-tax Act the Appellate Tribunal has submitted the following question of law for the determination of the High Court: "Whether on the facts and in the circumstances of the case the imposition of penalty under section 28(1)(c) of the Indian Income-tax Act upon the petitioner firm as constituted at the time of the levy of penalty was legal and valid?" When the case came before us in the first instance we found that it was not possible for us to furnish an answer to the question of law referred to us by the Income-tax Appellate Tribunal unless an additional statement of facts was furnished under section 66(4) of the Incom....

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.... "Where any business...carried on by a firm...has been discontinued...every person who was at the time of such discontinuance...a partner of such firm...shall, in respect of the income, profits and gains of the firm...be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment." The language of section 44 had been the subject-matter of interpretation by the Supreme Court in C.A. Abraham v. Income-tax Officer, Kottayam([1961] 41 I.T.R. 425 ; [1961] 2 S.C.R. 765) and in Commissioner of Income-tax v. S.V. Angidi Chettiar.([1962] 44 I.T.R. 739 (S.C.). It was held by the Supreme Court in both these cases that the ....

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.... upon the partnership firm as it was constituted at the time of the levy of the penalty, namely, on the 30th July, 1954. On this date the partnership business was carried on by a new partnership constituted of Baidyanath Roy and Bijali Kanti Roy under the instrument of partnership dated the 27th August, 1952. In our opinion the argument put forward on behalf of the assessee is well founded and must be accepted as correct. Upon the facts found by the Appellate Tribunal in the present case it is manifest that the levy of penalty could be legally imposed only upon the firm which was constituted by the eight partners mentioned above for the assessment year 1947-48. In view of the provisions of section 44 of the Income-tax Act as it stood at the....