S.K. Mal Lodha, J. - (1.) THE Income-tax Appellate Tribunal, Delhi Bench "A", New Delhi ("the Tribunal" herein), has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that in a case even though one assessment may be called for being made on the assessee in the status of an 'association of persons', the tax liability to be determined would have to be to the same extent and in the like manner as in the case of the beneficiaries directly or on the erstwhile partners through their representatives under the provisions of Section 41 of the Indian Income-tax Act, 1922, in respect of assessment years 1960-61 and 1961-62 and under Section 161 of the Income-tax Act, 1961, in respect of the assessment years 1962-63 to 1966-67?"
(2.) THE assessee, M/s. Duduwala & Co., was a registered firm consisting of two partners : (1) Shri Rai Bahadur Rameshwar Nathany, who died on January 18, 1957, and had 12 annas share; and (2) Shri Ram Kumar Agarwal, who had three annas share. One anna share was kept for charity. Shri Rameshwar Nathany was the karta of a Hindu undivided family, which was known as M/s. Baldeo Das Rameshwar and in the firm, he was a representative of the Hindu undivided family up to September 21, 1943. A complete partition of the Hindu undivided family by the court was made on September 21, 1943, by a consent decree. Even after September 21, 1943, Shri Rameshwar Nathany continued as a partner in the firm of M/s. Duduwala & Co. with the same share, in the capacity of the representative of the following five persons, as a partition by metes and bounds of the share of the karta could not be made : (i) Himself; (ii) Smt. Muniya Devi (wife); (iii) Shri Satya Narain Nathany (son); (iv) Shri Hari Ram Nathany (son); (v) Shri Mahaveer Prasad Nathany (son); and (vi) Shri Shree Gopal Nathany (son). The Department did not accept the claim of the assessee for registration on the ground that the application for registration should have been signed by seven partners (not by two), who were in reality the partners of the firm. The matter was carried to the High Court. Ultimately, it was decided in favour of the assessee in 1950. After the death of Shri Rameshwar Nathany, his son, Shri Ram Kumar Nathany, instituted a suit in the court of District Judge, Bhilwara, for declaring the four sons as partners in M/s. Duduwala & Co. in place of their father, Shri Rameshwar Nathany. This suit was instituted on January 18, 1957. By that time, Shri Muniya Devi had also expired. The other partner, Shri Ram Kumar Agarwal. also filed a suit in the Calcutta High Court praying that on account of the death of Shri Rameshwar Nathany, the firm should be treated as dissolved with effect from January 18, 1957. During the pendency of the suit, the Calcutta High Court appointed an official receiver on June 26, 1957. The official receiver took over charge on March 17, 1958. The official receiver continued up to September 30, 1960, as there was a compromise between the parties in both the suits, which were pending at Calcutta and Bhilwara. The compromise provided that the firm, M/s. Duduwala & Co., would be managed by Shri Ram Kumar Agarwal and Shri Satya Narain Nathany, as joint receivers with the aim to wind up the business in regular process. The Calcutta High Court passed the order on September 15, 1960, and according to this, Shri R. K. Agarwal and Shri Satya Narain Nathany became joint receivers. The Department refused to grant registration to the firm after the death of Shri Rameshwar Nathany as no fresh partnership deed was executed by the parties. The Department initiated proceedings for assessing the concern, M/s. Duduwala & Co., in the status of an unregistered firm (URF) up to the assessment year 1966-67. The Tribunal, however, directed in the appeals that the status should be taken as that of "association of persons" from the assessment year 1960-61. The assessee submitted a miscellaneous application under Section 254(2) of the Income-tax Act, 1961 (No. XLIII of 1961), and invited the attention of the Tribunal that the following grounds of appeal were not disposed of by the Tribunal: (1) that the Appellate Assistant Commissioner has failed to appreciate that after the appointment of the joint receivers by the Calcutta High Court, the business which was being run by the receivers was for and on behalf of the five persons; (2) that in any case the Appellate Assistant Commissioner ought to have directed that the assessment should be made by the Income-tax Officer on behalf of the five beneficiaries in the hands of the receiver. The Tribunal accepted the application of the assessee, vide its order dated August 31, 1978. It observed as under: "We are of the view that in the matter before us also even though one assessment may be called for being made on the assessee in the status of an 'association of persons', the tax liability to be determined would have to be to the same extent and in the like manner as in the case of the beneficiaries directly or on the erstwhile partners through their representatives under the provisions of Section 41 in respect of the first two years (1960-61 and J961-62) and under Section 161 in respect of the later four years." According to it, no tax was to be levied on the income determined in the case of M/s. Duduwala & Co. by treating it as a single unit and that the tax was to be worked out in the hands of each beneficiary and further that the recovery of the whole amount of tax was to be made from the assets of M/s. Duduwala & Co. and that the demand was to be raised on the joint receivers representing M/s. Duduwala & Co. The Commissioner of Income-tax submitted an application under Section 256(1) of the Act. The Tribunal was of the opinion that a question of law does arise out of its order dated August 31, 1978 and, therefore, it has referred the aforesaid question for our opinion.
(3.) WE have heard the learned counsel for the Revenue and nobody has appeared on behalf of the assessee-non-petitioner. The question which we are called upon to determine is of great importance. It is clear from the question referred by the Tribunal that in this case, if one assessment is to be made on the assessee in the status of an association of persons, the tax liability to be determined would have to be to the same extent and in the like manner as in the case of beneficiaries directly or on the erstwhile partners through their representatives under the relevant provisions of the Act. Here, we may mention that the relevant provisions for the assessment years 1960-61 and 1961-62 is Section 41 of the Indian Income-tax Act, 1922 (the "old Act"), and for the assessment years 1962-63 to 1966-67, the material provision is Section 161 of the Act. Learned counsel for the Revenue submitted that the provisions of Section 41 of the old Act are in pari materia with those of Section 161 of the Act. ;