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Issues involved:
The judgment deals with an income-tax case where the assessee, a partnership firm, filed a return declaring income, but discrepancies arose due to a change in the firm's constitution and subsequent findings during a search operation. Details of the Judgment: Change in Firm's Constitution: The partnership firm originally had 18 partners, but six retired and were replaced by six others. The firm's business involved the purchase and sale of dry fish on a wholesale basis. A revised return was filed after a note-book revealed a division of income per share. Discrepancies in Income Declaration: The revised return declared an income of Rs. 3,79,689, based on Rs. 4,000 per share for 108 shares, with adjustments for reserve and inadmissible expenditure. However, the Income-tax Officer added Rs. 85,622 to the income, disputing the claim that it was a reserve from the previous year already taxed. Tribunal's Decision: The matter reached the Income-tax Appellate Tribunal, which found that the Rs. 85,622 reserve pertained to the previous year and was not entirely part of the current year's income. The Tribunal remitted the case back to the Income-tax Officer for further clarification on the profit-sharing ratio of outgoing partners. Judgment Outcome: The High Court set aside the Tribunal's order, directing the Income-tax Officer to determine the profit-sharing ratio of the retiring partners and make fresh decisions. The penalty levied on the disputed amount was also set aside. The case was disposed of without costs, emphasizing the need for timely resolution without unnecessary delays.
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