BORDUBI RICE FLOUR AND OIL MILLS Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS writ application has been filed by two petitioners. Petitioner No. 1 is a firm which was formed and constituted by the deed of partnership dt. 20th April, 1968. It is stated that one of the partners, Mangatulal Chowkhani, retired and ceased to be a partner of the firm w.e.f. 5th April, 1979. It is further stated that thereafter a fresh deed of partnership dt. 12th Dec., 1979, was executed and another firm was constituted. The petitioner -firm has been submitting returns of their income and the return for the asst. year 1974 -75 was submitted to the ITO, A -Ward, Tinsukia, on 17th Sept., 1974, showing a loss of Rs. 29,063. Thereafter on 2nd Jan., 1987, i.e., after a lapse of about more than 11 years, the petitioner -firm received a letter dt. 31st Dec., 1986, stating thereunder that it has come to the notice that an amount of Rs. 40,000 on 11th April, 1973, Rs. 40,000 on 1st May, 1973, and Rs. 30,000 on 1st June, 1973, appearing as credited in the books of account in the name of Prabhudayal Agarwalla are bogus entries and Prabhudayal Agarwalla is simply a name -lender and he had no capacity to give loan in such name and as such it was proposed to initiate proceedings under S. 147 of the INCOME TAX ACT, 1961. The petitioner was asked to show cause as to why the proceeding as proposed should not be initiated. The petitioner submitted a reply on 7th Jan., 1987, and thereafter a notice under S. 148 of the INCOME TAX ACT, 1961, was issued on 29th March, 1989, and that was received by the petitioner -firm on 1st April, 1989. The validity and legality of this notice is challenged in this writ application.

(2.) I have heard Sri J.P Sarma, learned counsel for the petitioners, and Sri G.K. Joshi, learned counsel for the Revenue. Sri Sarma makes the following submissions:

(3.) SRI G.K. Joshi, learned counsel for the Revenue, places reliance on Agarwal and Aggarwal (P) Ltd. vs. K.J. Mukherjee, ITO (1973) 92 ITR 282 (Gau) : TC 51R.1052, wherein the Division Bench of this Court pointed out that the present case is squarely covered by S. 147(a) of the INCOME TAX ACT, 1961, meaning thereby that in the opinion of the ITO, there is reason to believe that income had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, and once it comes within the purview of S. 147(a), the period of limitation will be 16 years and not 8 years or 4 years as pointed out by Sri Sarma. So, the notice which was issued, cannot be deemed to be barred by time. Regarding service of notice on the legal representatives, Sri Joshi draws my attention to S. 176(3) of the IT Act. Sec. 176(3) provides that any person discontinuing any business or profession shall give to the ITO notice of such discontinuance within fifteen days thereof. That was not done in the instant case by the retiring partner. Further, Sri Joshi draws my attention to S. 184 of the IT Act. Sec. 184 provides for registration. On the retirement of the partner, the firm was reconstituted as alleged by the petitioner. There was necessity to get the firm registered as required under S. 184 of the IT Act. That was also not done. In this connection, Sri Joshi draws my attention to CIT vs. Jai Prakash Singh (1996) 132 CTR (SC) 262 : (1996) 219 ITR 737 (SC) : TC 44R.313. That was a case where out of ten legal representatives, notice was served upon only one. It was held that that would not invalidate the assessment. There is no necessity to go into that case inasmuch as under the provision as quoted above, there is no necessity whatsoever to serve any notice on the legal representatives as the original firm must be deemed to continue in the eye of law. Accordingly, this writ application is dismissed. The stay order passed earlier shall stand vacated. I make no order as to costs.