1989 (1) TMI 60

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..... S. SODHI J.-The matter here pertains to the liability of the partners of a firm for payment of penalty under section 271(1)(iii) of the Income-tax Act, 1961, in respect of the amount received by way of refund of sales tax paid by the firm. The relevant assessment year here is 1968-69. To give the factual background, in 1958, the firm, Behari Lal Piarey Lal, consisted of three partners, namely....

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....er 7, 1967, a sum of Rs. 4,498 rounded off to Rs. 4,500 was received as refund of sales tax by the firm. This amount, when received, was credited in equal shares to the account of the two partners, namely, Lachhman Dass and Sat Parkash. It was not, however, shown in the return either of the firm or of the two partners. On October 14, 1968, the said amount of refund of Rs. 4,500 was treated by t....

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....f the Act, would be an income for the non-disclosure of which penalty could be levied under section 271(1)(c) of the Act. When the case went back to the Tribunal for decision on merits, the Tribunal, by its order of October 9, 1971, deleted the penalty against the firm and, by a separate order on the same day, also against the two partners. A reference was then sought by the Revenue which was a....

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....nder section 271 (1)(iii) of the Income-tax Act, 1961 ? " The question posed has clearly to be answered in the affirmative, in favour of the assessee and against the Revenue. Keeping in view the definition of "person" as given in section 2(31) of the Act, it will be seen that it includes a firm too which means that a firm will succeed a firm while its partners in their individual capacity are s....