Commissioner of Income Tax vs Gopi Nath Madan Mohan

This is a reference u/s 256 of the Income Tax Act, 1961 (hereinafter referred to as ''the Act'').

The following questions have been referred to this court by the Tribunal :

"1. Whether, on the facts and in the circumstances of the case, the provisions of section 187 of the Income Tax Act, 1961, were wrongly invoked ?

Whether, on the facts and in the circumstances of the case, the learned Tribunal was legally correct in upholding the order of the Commissioner (Appeals) directing the Income Tax Officer to frame two assessments for the two periods ?"

The facts of the case are that the assessee-firm was constituted by four partners. In the relevant assessment year, one of the partners died on 1-8-1976. The remaining three partners continued the partnership by taking three more persons as partners of the firm. The question is as to whether, in the facts and circumstances of the case, section 187 of the Act is applicable or not. The question has been decided by the Supreme Court in COMMISSIONER OF INCOME TAX Vs. EMPIRE ESTATE., , wherein it has been held that in case of death of a partner of the partnership firm, the change in the constitution of the firm did not fall u/s 187.

In view of the above, we decide both the questions in the affirmative against the department.