B.P.Jeevan Reddy, C.J. - (1.) The Income-tax Appellate Tribunal, Allahabad, has referred the following two questions under Section 256(1) of the Income-tax Act, 1961 : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that, on the retirement of the two partners, namely, S/Shri Jagjiwan M. Patel and Rashik Lal G. Singhavi, there would be succession and not a change in the constitution of the firm ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that there should be two separate assessments for the assessment year 1972-73, one for the period April 1, 1971 to June 30, 1971 and the other for the period July 1, 1971 to March 31, 1972 ?"
(2.) The assessee is a firm. Prior to June 30, 1971, it comprised three partners, viz., S/Shri Jagjiwan M. Patel, Rasik Lal G. Singhavi and Kirti Kumar Shah. On that date, the first two partners retired and the firm was reconstituted under a new partnership deed, consisting of Sri Kirti Kumar Shah and Smt. Ele Ben R. Singhavi. Two returns were filed, one for the period April 1, 1971 to June 30, 1971, and the other for the period July 1, 1971 to March 31, 1972. The Income-tax Officer, however, held that there ought to be one assessment and assessed accordingly.
(3.) On appeal, the Appellate Assistant Commissioner directed that there ought to be two assessments. He was of the opinion that since after retirement of two partners, only one partner remained, the partnership firm came to an end and that the one constituted later was a new firm which succeeded to the old firm. The Department appealed. The Tribunal held, following the decisions of this court in CIT v. Shiv Shanker Lal Ram Nath [1977] 106 ITR 342 ; [1974] UPTC 644 as well as Dahi Laxmi Dal Factory's case [1976] 103 ITR 517 [FB] ; [1974] UPTC 630, that it is a case of succession falling under Section 188 and, accordingly, dismissed the appeal to that extent. Thereupon, the Revenue obtained the reference of the above questions.;