R.K. Gulati, J. - (1.) This is a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter to be referred as "the Act"), at the instance of the Revenue, to answer the following question of law : "Whether, on the facts and in the circumstances of the case, there should have been two separate assessments for the two periods as claimed by the assessee or one consolidated assessment as framed by the Income-tax Officer?"
(2.) The assessee is a registered firm. The assessment year in dispute is 1980-81 and the relevant previous year ended on December 31, 1979.
(3.) Originally the assessee-firm consisted of five partners. During the course of the accounting year relevant to the assessment year under reference, Mahboob Alam, one of the partners of the firm, died on June 10, 1979, and Smt. Quamarunnisa retired from the firm. The remaining three partners along with Saghir Ahmad and Athar Hussain entered into a new partnership to carry on business from June 11, 1979. The assessee-firm filed two returns of income, one for the period April 1, 1979, to June 10, 1979, and the other for the period June 11, 1979, to December 31, 1979. It requested the Income-tax Officer to frame two separate assessments for the aforesaid two periods. The Income-tax Officer was of the opinion that the assessee's case was fully covered by the provisions of Section 187 of the Act and, therefore, there should be one single assessment for both the periods. After working out the income of the two periods separately, the Income-tax Officer framed one consolidated assessment for both the periods. Being aggrieved, the assessee filed an appeal before the Appellate Assistant Commissioner who allowed the same and held that two separate assessments ought to have been made for the aforesaid two periods. In taking this view, he relied upon a Full Bench decision of this court in Badri Narain Kashi Prasad v. CIT [1978] 115 ITR 858.;