Law: Income Tax Act, 1922

Section: 44,63

Income-tax Act (XI of 1922)---Ss. 44 & 63-Dissolved firm-To be a deemed as. in existence at date of assessment and provision of S. 44 -applicable to such firm-­Provisions of S. 63 for service of notice also properly applicable to dissolved firm. Sh. Muhammad Iftikhar-ul-Haq v. Income-tax Officer, Bahawalpur P L D 1966 S C 524 rel. JUDGMENT NOORUL ARFIN, J.-In pursuance of the order of the High Court dated 16-12-1966. made under section 66(2) of the Income-tax Act, 1922, the Income-tax Appellate Tribunal has stated the following question for the opinion of the High Court: "Whether in the facts and circumstances of the case the Tribunal was justified in holding that under section 44 of the Income-tax Act as it stood prior to its amendment in 1959, it was not competent to the assessing authorities to assess a firm which is to be dissolved within the knowledge of the Department." 2. The words "which is to be dissolved" would appear to have been used due to some oversight, as the actual position is that the firm was dissolved and was not to be dissolved, and therefore the proper expression in the question should have been "which is dissolved". It is in this context that we will answer the question stated by the Income-tax Appellate Tribunal. 3. The case relates to the assessment year 1955-56. The assessee was an unregistered firm of four partners, who were running a ginning factory. The accounting year of the assessee for the assessment year in question ended on 31-8-1954. By a letter dated 16-9-1954, the-assessee informed the Income­tax Officer that the firm had been dissolved. The assessment order was completed on 29-2-1960, but against this order an appeal was taken to the Appellate Assistant Commissioner who took the view that, under section 44 of the Income-tax Act, 1922, as it stood during the relevant period, only the partners of the firm could be taxed, and they alone were jointly and severally responsible for the assessment. The income-tax Department was not satisfied with this order and went in further appeal to the Income-tax Appellate Tribunal. This appeal, however, was dismissed. 4. In its appellate order, the Tribunal took the view that section 44…

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