B.P. Jeevan Reddy, C.J. - (1.) THESE two applications under Section 256(2) of the Income-tax Act, 1961, are filed by the assessee, regarding the assessment year 1981-82 and assessment year 1982-83, respectively. The assessee wants this court to direct the Income-tax Appellate Tribunal to state the following questions : 1. Whether, on the facts and in the circumstances of the case, the view of the Tribunal was legally correct that the provision of Section 3(1)(e)(i) would not be applicable to the assessee ? 2. Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the 'previous year' of the assessee has to be one mentioned in Sub-clause (i) of Clause (d) of Sub-section (1) of sections of the Income-tax Act, 1961 ? 3. Whether, on the facts and circumstances of the case, the interpretation of Section 3 of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal, that it stipulates that the previous year could not be more than 12 months, was legally sustainable ? 4. Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the Income-tax Officer was justified in working out the total income of the assessee-firm in respect of the two assessment years 1981-82 and 1982-83 on pro rata basis ?"
(2.) THE assessee is a partnership firm. It carried on business up to March 31, 1980, with four partners. On March 31, 1980, the partnership was dissolved. Two of the partners constituted a new partnership with effect from May 15, 1980. A deed of partnership was executed on the same day. THE new firm, with which we are concerned herein, opened its accounts on May 15, 1980, and closed them on June 30, 1981, after a period of 131/2 months. THE firm did not file any return for the assessment year 1981-82 nor an application for registration. It filed a return and an application for registration for the assessment year 1982-83. THE Income-tax Officer took the view that the firm ought to have filed a return for the assessment year 1981-82 and since it was not filed, he issued a notice under Section 148. In response, the assessee filed a return showing nil income. Its case was that it commenced business on May 15, 1980, and closed it on June 30, 1981, in respect of which a return was filed for the assessment year 1982-83 and, therefore, there was no necessity to file a return for the assessment year 1981-82. THE Income-tax Officer did not agree. He held that there was no dissolution of the firm on March 31, 1980, but it was merely a reconstitution. He was of the opinion that the assessee was bound to file a return for the assessment year 1981-82 disclosing its income for the period May 15, 1980, to March 31, 1981. He, accordingly, calculated the income and made the assessment. On appeal, the Appellate Assistant Commissioner agreed with the assessee that there was a dissolution of the firm on March 31, 1980, and that the firm which came into existence on May 15, 1980, was a new firm. He held that the assessee had the right to choose its own "previous year" and, accordingly, allowed the appeal. THE Revenue questioned the correctness of the appellate order before the Tribunal. THE Tribunal confirmed the finding that there was a dissolution on March 31, 1980, but it held against the assessee on the other question. Relying upon the language of Section 3, the Tribunal held that the assessee could not choose to have a previous year of 131/2 months. It held that the assessee was bound to file a return for the assessment year 1981-82 disclosing the income for the period May 15, 1980, to March 31, 1981, and that the next previous year would commence on April 1, 1981 and end on March 31, 1982, which would fall within the assessment year 1982-83. THE Tribunal directed that the income for the said years may be recalculated on that basis. It is then that the assessee applied for referring the above questions which the Tribunal declined. Hence, this application. Section 3 defines the "previous year". In so far as it is relevant, it reads thus : "3(1) For the purposes of this Act, 'previous year' means- (a) the financial year immediately preceding the assessment year ; or ... (c) in the case of any person or business or class of persons or businesses not falling within Clause (a) or Clause (b), such period as may be determined by the Board or by any authority authorised by the Board in this behalf ; or (d) in the case of a business or profession newly set up in the said financial year, the period beginning with the date of the setting up of the business or profession and- (i) ending with the said financial year, or (ii) if the accounts of the assessee have been made up to a date within the said financial year, then, at the option of the assessee ending on that date, or (iii) ending with the period, if any, determined under Clause (c), as the case may be or (e) in the case of a business or profession newly set up in the twelve months immediately preceding the said financial year- (i) if the accounts of the assessee have been made up to a date within the said financial year and the period from the date of setting up of the business or profession to such date does not exceed twelve months, then, at the option of the assessee, such period, or (ii) if any period has been determined under Clause (c), then the period beginning with the date of the setting up of the business or profession and ending with that period, as the case may be ; or ..." The assessee's business was newly set up and it started its "previous year" on May 15, 1980. If so, in terms of the provisions of Section 3, it would end with the financial year as provided in Sub-clause (i) of Clause (d) of Sub-section (1). It is not a case where Clause (e) would apply for the simple reason that the facts of this case do not fit in with that clause. At any rate, the period cannot exceed a period of 12 months. It is such a self-evident matter. The Tribunal was, therefore, right in its decision.
(3.) IT is argued by learned counsel for the applicant that the questions raised by him are questions of law. We are not sure. Even if they are questions of law, they are not such as to deserve a direction for reference under Section 256(2). Learned counsel relied upon the decision of the Supreme Court in Esthuri Aswathaiah v. CIT [1966] 60 ITR 411. There, the assessee was allowed by the Income-tax Officer to have a "previous year" of 21 months and the court held that the Income-tax Officer had the power to do so. That is not the situation here. The same comment holds good for the other decision cited by learned counsel, Jamuna Prasad Gur Prasad v. CIT [1986] 159 ITR 986, a decision by a learned single judge of this court. In this case too, the Income-tax Officer permitted the assessee to have a "previous year" exceeding 12 months. On the other hand, the decision of the Madras High Court in the case of General Commercial Corporation Ltd., In re [1954] 26 ITR 316 clearly militates against the contention of the assessee.;