1985 (1) TMI 134 - AT - Income Tax

Summary

Issues:
Rectification of mistake in the order of the Tribunal regarding registration of a firm after the death of a partner and the retrospective amendment of section 187(2) of the IT Act.

Analysis:
The judgment involves a miscellaneous application filed under section 254(2) of the IT Act by the assessee seeking rectification of a mistake in the order of the Tribunal related to the registration of a firm after the death of a partner. The firm, initially constituted with 5 partners, continued with 4 partners after the death of one partner, Smt. Fatima Begum. The Income Tax Officer treated the firm as unregistered due to the absence of a fresh partnership deed and application for registration. This decision was upheld in appeal. The assessee contended that a renewal application for registration had been filed in time, entitling the firm to registration until 9th April 1977. However, the Tribunal relied on previous court decisions and denied registration for a part of the year, upholding the decision of the authorities below.

In the miscellaneous application, the assessee argued that a retrospective amendment to section 187(2) of the IT Act, effective from 1st April 1975, dissolved the firm upon the death of a partner. Therefore, the firm was entitled to registration until 9th April 1977, and income earned during that period should be assessed as that of a registered firm. The Tribunal, after considering the arguments, found an apparent mistake in its previous order and rectified it based on the retrospective amendment. The decision was supported by a previous High Court ruling, stating that errors in assessments made before the enactment of amending Acts could be rectified under the relevant provisions of the Act.

During the hearing, the counsel highlighted that the partnership deed did not contain a clause for the firm's continuation upon the death of a partner, leading to the dissolution of the firm. Consequently, two separate assessments were proposed: one for the period of registration and another for the period without registration. The Departmental Representative contested the need for rectification. However, the Tribunal, in line with the retrospective amendment, directed two separate assessments for the respective periods, allowing registration if the application was filed within the stipulated time. The miscellaneous application by the assessee was allowed, amending the previous Tribunal order to reflect the revised assessment approach.