S.K.MAL LODHA, J. - (1.) THE Income -tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as 'the Tribunal'), has referred the following question of law for the opinion of this court, which is said to arise out of its order dated July 25, 1981, passed in I. T. Appeal No. 422/JP/1980 relating to the assessment year 1978 -79 : 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that on the death of Shrimati Hari Bai (partner) on September 22, 1977, the firm stood dissolved and, therefore, two separate assessments for the two different periods should have been made ?'
(2.) CHHAGANLAL , Ram Chandra, Kailashchandra, Sureshchandra and Smt. Hari Bai constituted a partnership under a deed dated July 12, 1972. Registration was granted to the firm in respect of the assessment year 1973 -74 and this registration continued up to the assessment year 1977 -78. One of the partners, Smt. Hari Bai, died on September 22, 1977. The firm stood automatically dissolved on her death. After the death of Smt. Hari Bai, the remaining four partners admitted two new partners and a new partnership deed was executed on October 5, 1977. This new partnership deed was made operative from September 23, 1977. Two returns (i) for the period ending on September 22, 1977, and (ii) for the period September 23, 1977, to March 31, 1978, were filed. The Income -tax Officer, A -Ward, Bhilwara, by his order dated June 29, 1979, clubbed the income of the aforesaid two periods in the hands of the assessee. He opined that there was a change in the constitution of the firm and there was no dissolution on September 22, 1977. In view of this, a single assessment was made by him in respect of the aforesaid periods. On appeal, the Appellate Assistant Commissioner, vide his order dated January 3, 1980, agreed with the assessee that the firm stood dissolved on September 22, 1977, on the death of Smt. Hari Bai and that a new firm came into existence. According to the Appellate Assistant Commissioner, two assessments should have been made by the Income -tax Officer. Further, appeal was taken by the Income -tax Officer to the Tribunal. The Tribunal dismissed the appeal observing as under : 'The question for consideration before us is whether the firm constituted under the deed dated July 12, 1972, which was granted registration up to the assessment year 1977 -78 was dissolved on September 22, 1977, on the death of Smt. Hari Bai. In this connection, we may rely on the decision of the Andhra Pradesh High Court in the case of Vinayaka Cinema : [1977]110ITR468(AP) . The ratio of this authority is that under Section 42, a firm will be automatically dissolved on the death of a partner unless the dissolution is saved by a contrary agreement: Admittedly, there is no contrary agreement in the deed dated July 12, 1972, that the firm will be dissolved on the death of a partner. Thus, under Section 42, the firm will stand dissolved on the death of Smt. Hari Bai. For these reasons, we agree with the conclusion of the Appellate Assistant Commissioner, that on the fact of the case, the Income -tax Officer should have made two assessments for the two different periods. The appeal is dismissed.' An application was made under Section 256(1) of the Income -tax Act, 1961 (No. XLIII of 1961) (for short 'the Act'), for referring three questions, which have been mentioned in the statement of the case. The Tribunal has, however, referred only the aforesaid question for the opinion of this court.
(3.) MR . D.S. Shishodia invited our attention to Pratap Chitrapat v. CIT, (D.B. Income -tax Reference No. 42 of 1976, decided on December 11, . This case is of the same assessee which is before us. It was held in Pratap Chitrapat's case that the Tribunal was not right in holding that the assessee -firm was not dissolved on the death of the partner, Ganeshlal, and that it was merely a case of change in the constitution of the firm. It was further held that the Tribunal was not right in holding that the provisions of Section 187(1) and (2) of the Act none the less govern the assessment of the firm. In Pratap Chitrapat's case , reference was made to Addl. CIT v. M.K.M. Moosa Bhoy Amin and Surana and Co. v. CIT, . The Tribunal has referred in its order dated July 25, 1981, to Addl. CIT v. Vinayaka Cinema : [1977]110ITR468(AP) . This court in CIT v. Sukhlal Sohanlal agreed with the view taken in Vinayaka Cinema's case : [1977]110ITR468(AP) .;