- (1.) IN terms of direction given by this Court in ITC Nos. 80 to 82 of 1997, vide order dt. 14th Oct., 1998, the following question of law arising out of common order dt. 14th May, 1996, in ITA Nos. 709 to 711/Asr/1990, passed by the Income -tax Appellate Tribunal, Amritsar Bench, Amritsar (for short 'the Tribunal') for the asst. yrs. 1983 -84, 1984 -85 and 1987 -88, was referred to this Court for opinion: Whether, on the facts and in the circumstances of the case, the learned Tribunal is right in law in holding that the Departmental authorities were not justified in framing the assessment for the asst. yrs. 1983 -84, 1984 -85 and 1987 -88 in the name of M/s Sehgal Oil & General Mills as an AOP ?
(2.) THE facts found by the Tribunal as mentioned in the statement of the case are extracted below: 4. The firm M/s Sehgal Oil and General Mills, Jalandhar, was in existence in accordance with partnership deed dt. 28th July, 1961, which was amended subsequently from time to time on the attaining of majority by some of the minor partners, who were children of Sh. D.D. Sehgal, the main partner and it continued upto the asst. yr. 1981 -82 as per the last partnership deed, which was executed on 28th Dec., 1968. The main source of income of the assessee -firm was arising from the share held by Sh. D.D. Sehgal, in the firm M/s Leader Engg. Works. Subsequently, the firm M/s Leader Engg. Works was converted into a private limited company, namely M/s Leader Valves (P) Ltd,, and the share held by Sh. D.D, Sehgal was converted into equity capital on which dividends were received along with interest on deposits held in the name of Sh. D.D. Sehgal in M/s Leader Valves (P) Ltd. Sh. D.D. Sehgal, expired on 11th April, 1982, It is the claim of the assessee that no business was done thereafter and the firm stood dissolved by the operation of law on the death of Sh. D.D. Bengal. The AO issued show -cause notice under Section 147(a)/148 for the asst. yrs. 1983 -84, 1984 -85 and also issued notice under Section 139(2) for the asst. yr. 1987 -88, in the name of Sehgal Oil and General Mills, The AO completed assessments and matter was agitated by the assessee before the learned CIT(A). The learned CIT(A) uphold the order of the AO and dismissed the appeal filed by the appellant. The matter was adjudicated upon by the Tribunal. The Tribunal, decided the issue in favour of the assessee and gave finding that the Revenue was not justified in framing the assessments for all the three years in the name of Sehgal Oil and General Mills as AOP because no such AOP was in existence. It is further evident from the reply filed by the assessee in response to the show -cause notice issued by the Revenue, that after the death of Sh. D.D. Sehgal there were disputes pending for succession amongst the legal heirs and further that neither dividend nor interest were factually received by the assessee or by any of the co -partners of alleged AOP namely, Sehgal Oil and General Mills. The Tribunal while deciding the case of the assessee in hand, relied upon the judgment of Hon'ble the Supreme Court of India in G. Murugesan and Bros. v. CIT : [1973]88ITR432(SC) .
(3.) LEARNED Counsel for the Revenue argued that the Department was never informed about the death of Sh. D.D. Sehgal; no notice of dissolution of firm was given. Further that in terms of Section 42 of the Indian Partnership Act, 1932 in case of death of one of the partners, the partnership shall stand dissolved, in the absence of any clause in partnership deed to the contrary. Since the firm stood dissolved by operation of law, the rest of the members of partnership had to be treated as an AOP. He also relied upon a judgment of Hon'ble the Supreme Court of India in CIT v. Shelly Products : [2003]261ITR367(SC) . We have gone through this judgment, the counsel could not point out as to how this judgment is even remotely connected with the issue raised in the present case.;