Ajit Kumar Sengupta, J. - (1.) At the instance of the Commissioner of Income-tax, the following question of law has been referred to this court under Section 256(1) of the Income-tax Act, 1961, for the assessment years 1968-69 and 1969-70 : "Whether, on the facts and circumstances of the case and in view of the fact that the business was carried on by the receiver appointed by the High Court, the Tribunal was justified in holding that the assessee-firm was entitled to continuation of registration ?"
(2.) In the assessment of the assessee, Ghosh & Sons, for the assessment year 1961-62, the Income-tax Officer had adopted the status as Hindu undivided family as against the status of registered firm claimed by the assessee. The Appellate Assistant Commissioner, however, granted registration to the assessee which was confirmed by the Tribunal by the order dated June 1, 1970. The registration was allowed to the assessee till the assessment year 1967-68. In 1967, a receiver was appointed to run the business of the assessee in the suit instituted in the High Court being Suit No. 2619 of 1967 (Pannalal Ghose v. Smt. Sarojini Ghosh). The receiver filed the returns for the assessment years 1968-69 and 1969-70 showing the status as registered firm. The applications for continuation of registration of the firm in Form No. 12 were filed on behalf of the assessee by the receiver under his own signature. The said applications were, however, rejected as the applications were not signed by the partners of the firm. Thus, the claim for registration was rejected and the assessee was assessed in the status of a Hindu undivided family for the aforesaid assessment years. The Income-tax Officer in treating the assessee as Hindu undivided family followed the order for the assessment year 1961-62.
(3.) On appeal before the Appellate Assistant Commissioner, the Appellate Assistant Commissioner held that since the receiver appointed by the High Court was running the business and was handing over a portion of the income to the parties to the suit, the firm was not legally permitted to do any business and there cannot be any firm in the eye of law. The Appellate Assistant Commissioner held : "Where a court intervenes and deprives the owner of the right to carry on his own business, he is not the legal owner of the business. A partnership can exist only for carrying on the business and if there is no business, there cannot be any partnership either. For these reasons, the assessee is not entitled to registration or continuation of the registration. The Income-tax Officer was, therefore, right in refusing to grant registration. ";