Judgment

SABYASACHI MUKHARJI, J. - By this judgment we will dispose of two appeals first one at the instance of the assessee and second one at the instance of the revenue-but both these appeals deal with one common situation namely the position of the registered firm during the assessment year if one of the partners dies or retires. Civil Appeal No. 1792(NT) of 1974 is an appeal by the assessee from the judgment and order of the Allahabad High Court dated 22nd December, 1972 answering the following question referred to it under S. 256(l), Income-tax Act, 1961, hereinafter referred to as the Act, for the assessment year 1965-66 in favour of the revenue and in the negative :-

"Whether, on the facts and in the circumstances of the case the Tribunal was justified in holding that for the period covered by the old constitution the income was assessable in the hands of the assessee as a registered firm?"

2. For the assessment year 1965-66 the relevant previous year commenced on 17th November, 1963 and ended on 4th November, 1964. The assessee was a partnership firm styled as Messrs Wazid Ali Abid Ali of Phulpur in the district of Azamgarh It was constituted under a deed of partnership dated 17th March, 1959 with 17 members. The said deed provided, inter alia, as follows:

"That where the deed is silent, it shall be governed by the Indian Partnership Act save and except that on the death or demise of any partner the firm shall not be dissolved but shall be carried on with the remaining partners and that heir and representative of the deceased partner who resides in India on such terms and conditions to which they mutually agree."

3. On June 4, 1964, one of the partners, Qamaruddin died and his son, Fariduddin joined the firm as a partner. New deed of partnership evidencing the change in the constitution of the firm was not executed before 4th November, 1964. The assessee filed a declaration in Form No. XII for the relevant assessment year 1965-66 under S. 184(7) of the Act. The declaration was signed by the 16 members who had continued all along and also by Fariduddin who had become a partner in place of his deceased father. The Income-tax Officer held that the admission of a new partner in place of the deceased partner amounted to a change in the constitution of the firm. He, therefore, held that the assessee was not entitled to the continued benefit of registration under S. 184(7) of the Act. He was of the opinion that the firm had failed to file a fresh application for registration and therefore he disallowed the benefit of registration to the firm. On appeal the Appellate Assistant Commissioner held that the assessee should have filed a fresh application for registration along with the partnership deed embodying the change in the constitution of the firm. The appeal was accordingly dismissed by him. The assessee preferred further appeal to the Tribunal and urged that the change which occurred on the death of Qamaruddin did not require the execution of a new deed of partnership nor a fresh application for registration. Alternatively, it was contended that the assessee was entitled to the continued benefit of registration at least for that part of the previous year during which Qamaruddin had remained alive. The Tribunal was of the view that the death of Qamaruddin and the inclusion of Fariduddin involved a change in fthe constitution of the firm. It was, therefore, necessary that a fresh deed of partnership should have been executed as well as a fresh application for registration filed. The Tribunal, however, accepted the alternative contention and observed that the conditions laid down in sub-s. (7) of S. 184 of the Act had been satisfied and that the assessee would be entitled to the benefit of registration up to 4th June, 1964, that is to say, a part of the previous year. In view of S. 187(2) of the Act, it was obligatory according to the Tribunal and the Income-tax Officer to make single assessment only on the assessee and to apporti