Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 [Corresponding to section 28(1)(c) of the Indian Income-tax Act, 1922] - Penalty - For concealment of income - Assessment year 1948-49 - Whether if there is re-constitution of firm by virtue of section 26 of 1922 Act, ITO in imposing penalty will proceed against firm - Held, yes - Whether if there is discontinuance of business, penalty will be imposed against partners of firm - Held, yes Section 189 of the Income-tax act, 1961 [Corresponding to section 44 of the Indian Income-tax Act, 1922] - Firm - Assessment after dissolution - Assessment year 1948-49 - Whether section 44 of 1922 Act applied only to cases in which there had been discontinuance of business and not to cases where business continued after re-constitution of firm, or there was succession to business - Held, yes Section 256 of the Income-tax Act, 1961 [Corresponding to section 66of the Indian Income-tax Act, 1922] - High Court - Reference to - Assessment year 1948-49 - Whether in a reference only question, which was either raised or argued before Tribunal, may be answered even if language of question framed by Tribunal may apparently include an enquiry into other matters which could have been, but were not raised or argued - Held, yes FACTS The firm which carried on the business during the calendar year 1947 was dissolved on 7-7-1951, when one of the partners, died. The business of the firm was continued with effect from 8-7-1951, by the new firm as successor to the business of the old firm. The terms of the partnership were the same as set out in the deed dated 17-10-1949, and the partners and their shares were also the same except that one 'B' took the place of deceased partner. With effect from 28-4-1952, the business was carried on by a partnership constituted by 'B' and 'K' under an instrument dated 27-8-1952. There was no dissolution of the firm, which was carrying on the business; there was only a change in the constitution of the old firm. In determining the taxable income of the respondent-firm for the assessment year 1948-49 the ITO added certain amount to the income-returned as "undisclosed receipts". The ITO also commenced a proceeding for…

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