Reassessment of dissolved partnership invalid; assessments for post-dissolution years quashed for improper reliance on Section 176 and clarified Section 189

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The ITAT held that reassessment proceedings against the dissolved partnership were invalid and the resultant assessment orders are null and void. The Tribunal found the taxpayer had established that the partnership was dissolved and not in existence during the impugned assessment years, and that the AO's reliance on section 176 without prior notice was erroneous. Section 189 was construed as a procedural provision enabling assessment of income of a firm in the year of discontinuation or dissolution, treating the firm as continuing only for that assessment; it does not permit reassessment of a non-existent firm for subsequent years. Consequently the assessments for the post-dissolution years were quashed and the appeals allowed.....